U.S. Airlines Pull Out Of Tailspin Most Carriers Expect Smooth Flying After Five Years Of Losses

The U.S. airline industry expects to tally up an annual profit for the first time since 1989, thanks to a steady economy, higher fares and cheap fuel.

After five years of losses totaling $13 billion, the industry reported a number of bright spots in 1995, including more passenger and cargo traffic and fewer delays and crashes.

The improved outlook is good news for Washington’s largest employer. The Boeing Co. saw orders drop as the airline industry slumped.

The trade group for U.S. airlines expects the industry’s total profit in 1995 won’t change much from the $2.2 billion reported in the first three quarters.

“Wall Street projections for the fourth quarter are for a break-even financial performance,” said the Air Transport Association, “so 1995 year-end profits are likely to remain in the $2 billion range.”

The recovery has spurred a yearlong rally in airline stocks. The S&P index of four major airline shares rose nearly 45 percent this year, outracing the 33.8 percent gain in the S&P 500.

Ridership is up. The number of miles flown by paying passengers rose 4.0 percent over 1994 to a record 540 billion miles, according to preliminary data from the ATA. Meanwhile, air freight jumped 11.0 percent to 15.2 billion ton miles.

There were fewer fatal accidents, too. So far in 1995, 175 people have died in crashes on U.S. airlines, the ATA said. That number includes the Dec. 20 crash of an American Airlines flight in Colombia, which killed 160. In 1994 the death toll was 264.

“Nineteen ninety-five was a good year for U.S. airlines, and it came just at a time when the industry needed a good year,” said ATA President Carol Hallett.

“The outlook for next year is hopeful if the economy stays strong, if airline employees continue to cooperate on more efficient work rules and if government tax collectors keep their hands out of the industry’s pocket,” she said.

It wasn’t a great year for travelers and airline workers, though. Fares went up and jobs got scarcer.

Average domestic air fares - measured by the amount of revenue per mile for every passenger, excluding ticket taxes - increased 3.8 percent to average 13.5 cents per mile for the first 11 months of 1995, the ATA said.

Airlines continued to eliminate jobs to cut costs. Total U.S. airline employment is now 542,500, down from the 1994 average of 543,325. More than 120,000 airline employees have either been laid off or furloughed since 1990, the ATA said.

Compensation for those who remain continued to rise, though. The airline group said average salary and benefits for industry workers totalled $60,800 in 1995, an increase of 5.4 percent over last year.

Flight delays also declined in 1995, the ATA said, despite several big snafus in air traffic control stations. Delays of 15 minutes or more dropped 7 percent in 1995, to an average of 640 per day, the ATA said.

On the capital side, the trade group said U.S. airlines will have to invest between $10 billion and $15 billion annually over the next four years to buy new planes. The expected growth in air travel is one reason. Under federal law, airlines are also required to phase out older, noisier aircraft.

ATA President Hallett said the industry’s strong showing in 1995 does nothing to change its opposition to a new fuels tax.

Airlines say the $500-million-a-year jet fuel tax - which they began paying this fall - will drain hardwon profits from strong carriers and drive the weak into bankruptcy.

Republicans have vowed to erase the airline levy once a budget compromise is reached. But the Clinton administration says the industry can afford to pay the tax, now that it’s back in the black.