The major US airlines produced another record-breaking performance in the third quarter, but profits were marred by growing fears that this may now be the peak of the cycle, with rising fuel prices and re-imposition of the federal fuel tax promising to dampen the boom.
Trans World Airlines reported a net loss of $14 million, admitting that the crash of Flight 800 on 17 July appears to have had an impact on premium-fare bookings, with yields dipping by 3%. Although the modest loss represents a turnaround from the losses a year ago when the carrier was re-emerging from its bankruptcy reorganisation, outgoing president Jeffrey Erickson says that the performance was disappointing after six consecutive profitable quarters.
He adds that, apart from the impact of the crash, "pricing issues and capacity", growth in lower-yielding markets are also having an effect, as well as increased bills for maintenance and fuel.
The concerns over rising costs have echoed throughout the industry. Southwest Airlines, for example, has seen its third-quarter profits fall back from the record levels of a year ago. Chairman Herb Kelleher says that fuel and the ticket tax penalties added $30 million to quarterly expenses, helping to push the airlines seat costs up by 6.5%.
Source: Flight International
