Airlines face big losses

Press, Volume CX, Issue 32461, 23 November 1970, Page 2

Airlines face big losses

(N.Z.P.A. Staff Correspondent) WASHINGTON, November 22. The $2.5m profit announced by Air New Zealand looks particularly attractive when compared with the struggle by United States airlines to hold down Tosses. Major airlines are cutting staff, seeking to rationalise competition on internal routes, grounding planes, and curbing handouts to passengers. Higher fares are also considered likely on main routes as the industry and Government agencies contemplate the reduced traffic growth resulting from the uneasy United States economic situation.

The two United States airlines flying to New Zealand,

American and Pan-Ame’rican are feeling the pinch as much as other noted carriers, such as Eastern, United and Trans World Airlines. In the first nine months this year American Airlines is reported to have earned only slm. It expects to show a loss on the full year—the first for 22 years. Sale of planes The company is laying Off about 700 workers and plans to sell 32 of its short-haul jets, action that in normal economic conditions would be hard to understand against its background of involvement for the first time in international, not just internal air routes.

/ The 12 biggest United States airlines .are expected to lose among them this, year about slBom after malting about sl3om profit last year. Within airline circles there is much talk that the economic position might well lead, to the demise of a numX

ber of carriers, hard-put to resist the financial problems affecting all. “Sick industry” The "Wall Street Journal” this week quoted Morton Ehrlich, vice-president for economics and marketing at Eastern Airlines, as saying: “We are facing a desperately sick industry.” Unless the airlines got help, he said, they were in danger of showing that they too could produce “a Penn Central.” The Penn Central is a major United States railroad company serving New York which recently filed a petition of bankruptcy. The problems the airlines are facing in drawing passenger traffic are emphasised by Civil Aeronautics Board figures which show a growth rate of only 3.1 per cent in the first nine months of this year, compared with an annual average rise of 17 per cent in the five years to the end of 1968.