Western Profit May Hit Record High in Quarter
Western Airlines, which in 1984 had its first operating profit in five years, expects to report record second-quarter net profits, Gerald Grinstein, the airline’s president and chief executive, told securities analysts here Wednesday.
Grinstein gave no figures but said the earnings for the period would equal or surpass Los Angeles-based Western’s 1979 second-quarter net profit of $14 million. In the second quarter last year, Western had a net loss of $13.7 million on revenue of $293.9 million.
Grinstein said the second-quarter results were boosted by the 29-day pilots’ strike at United Airlines that ended June 14. The 1979 record second quarter also occurred during a United strike, one that lasted 59 days and saw United suspend operations completely. In the strike just ended, United flew 14% of its schedule.
Lower Fuel Costs Help
A profitable second quarter would follow a record $13.3-million net profit in the first quarter, which airline officials attributed to lower fuel costs and wage-concession agreements reached with its more than 10,000 employees last September.
The same factors had been credited for the 1984 operating profit of $11.4 million and a reduction of the year’s net loss to $29.2 million from the $96 million lost in 1983.
In an interview after his talk, Grinstein said he expected that the benefits from the United strike “are going to be a permanent, rather than a one-time, windfall because we find passengers who experience the use of the Salt Lake hub prefer it to Denver. The strike gave us a chance to showcase our system, and we hope to hold on to some of these passengers.”
Many of Western’s flights using its Salt Lake City hub compete with those that United flies through its Denver hub.
Grinstein also said that, in the past, Western had been perceived as a leisure carrier but that leisure travel was too seasonal. Accordingly, Western has started a concerted effort to lure more business travelers, he said, and toward that end, it is including more same-day round trips in its schedules and expanding both its frequent-flyer program and its advertising.
The number of first-class seats also will be increased and such special services as round-trip check-in advance boarding passes have been instituted.
Grinstein said that about 39% of the airline’s passengers now are business travelers. Western wants to increase that figure to 45%, he said, but estimated that it would take at least two years to achieve that.
Western also is redesigning the outside of its aircraft.
Over two years, white paint is being stripped from the planes and the fuselages will be left unpainted except for a maroon stripe. Besides giving the planes a new look, Grinstein said, the design lightens the planes by about 300 pounds apiece, saving the airline between $3,000 and $4,000 per plane per year in fuel costs.
