VALUJET REPORTS a net loss of nearly $21 million for the fourth quarter of 1996, its first since restarting operations after the three months' grounding which was imposed in the wake of the Florida crash. The airline warns that there will be more red ink to come in the first half of this year.
ValuJet says that its struggle back into the air, which began at the end of September, was hindered by its limited fleet and "predatory pricing" from rival carriers.
The impact of the restart promotions showed through in fares which averaged only slightly above $54 for the quarter, compared with more than $70 a year ago. A total of 480,000 passengers were carried over the quarter, but, even with a reduced fleet-load factors were down at 57%.
The airline admits that a combination of competitive pricing and continued fall-out from the 11 May Florida crash contributed to further poor load factors in January, but believes that promotional offers should improve bookings for February and March. Services have now been resumed to 21 cities.
Officials predict a net loss during the first quarter of 1997 and possibly the second, including further charges to cover costs of getting the airline back into service. The fourth-quarter loss included an exceptional expense of $13 million which left the underlying loss at $12 million
For the full 1996 year, the airline reported a net loss of $41 million, after taking costs of $68 million as a direct result of the three-month grounding. Chairman Robert Priddy points out, however, that the airline, which had been among the most profitable in the industry at its height, ended 1996 with cash of $150 million.
The airline is already flying 22 of the 43 McDonnell Douglas DC-9-30s which its still owns, and at least two more aircraft are expected to go into operation in March.
A total of 30 DC-9-30s should be in service "hopefully not later than this summer".
Non-DC-9-30-series aircraft are being sold under orders from the US Federal Aviation Administration and the 13 DC-9-30s stored in the Mojave Desert in California are still being offered for sale or short-term lease.
The Atlanta, Georgia-based airline say that it remains "optimistic about eliminating some excess capacity", with negotiations in hand for the sale of one aircraft and the lease of a second aircraft.
Source: Flight International
