Wednesday, April 22, 1998 | 10:31 a.m.
Scattered fare sales and a projected increase in bookings on night flights next month should boost America West Airlines' sagging passenger counts at McCarran International Airport, a company executive said.
But regardless of whether the Phoenix-based airline fills more seats on its flights to Las Vegas, the company's business traveler-centered yield-management strategy seems to be working. America West reported record profits for its first quarter.
America West and Northwest Airlines, which will make a splash in Las Vegas in June when it inaugurates nonstop service to Japan, were among the airlines reporting favorable earnings this week.
Minneapolis-based Northwest's earnings exceeded analysts' expectations. The fourth-largest U.S. airline said net income rose to $71 million, or 66 cents a diluted share, from $65 million, or 53 cents, a year earlier.
America West's strategy and low fuel costs contributed to net income of $25 million -- 80 percent more than the $14 million profit recorded the same quarter a year ago. It's also responsible for a decline in the number of Las Vegas passengers, which was 18.7 percent lower in March than a year ago.
America West's revenue management strategy emphasizes greater use of resources on the airline's most profitable routes, those between Phoenix and the nation's East Coast business markets. That's why the company's Las Vegas passenger counts are falling at a time when the airline is most profitable. Leisure markets like Las Vegas traditionally yield lower profits.
"Advanced bookings look nice," said Chief Financial Officer Doug Parker in a conference call on earnings this morning.
He said while he could not disclose specific figures on how many more seats have been sold as a result of a schedule change due to take effect May 3, Parker said the company is hopeful that the current 65 percent load factor could be boosted to 70 percent as a result of modifying the schedule.
Under the new schedule, night flights will arrive and depart up to two hours earlier, with more operations between 10 p.m. and midnight instead of midnight to 2 a.m.
In addition to the schedule change bookings, Parker said Las Vegas was a beneficiary of one of the company's summer fare sale promotions. He said 27,000 passengers were booked on flights to Las Vegas as a result of a three-day sale for summer flights that lowered the cost of a round trip to the East Coast to $238 and to the West Coast for $68.
Parker said America West actually is offering fewer fare sales as part of the yield-management program.
America West, the No. 2 operator at McCarran by passenger volume, had record income based on revenue of $471 million for the quarter, a 1.9 percent increase over the $462 million reported for the same quarter in 1997.
At Northwest, revenue rose 2.2 percent to $2.43 billion from $2.38 billion. Analysts expected earnings of 49 cents a share, the average estimate in a First Call survey.
The results mirror the better-than-expected performance of other U.S. airlines this quarter as they benefit from lower fuel costs and strong U.S. demand.
"The general expectation is that the airline group will continue to outperform consensus," said Tom Schreier, a Credit Suisse First Boston analyst. "Domestic revenue still looks extremely favorable and capacity is growing slowly."
AMR Corp.'s American Airlines posted a far better-than-expected 91 percent boost in first-quarter earnings, while Continental Airlines Inc. beat estimates with a 9.5 percent profit gain.
SUN WIRE SERVICES contributed to this report.
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