Losses in the Air

U.S. domestic airlines are carrying more passengers in more planes than they ever have before. But the Civil Aeronautics Board reported last week that they are losing money, nevertheless.

During the first five months of 1946, passenger revenues jumped 60% (over the same period of 1945) to a record-breaking $95 million. But the 20 U.S. air-- lines showed an operating deficit of $1.6 million during the period (v. a net operating revenue of $16 million in the first five months of 1945). Only six of the carriers had greater revenues than expenses.

Some of the trouble was due to the rise in operating costs, which has sliced the profits of most U.S. companies. But most of the trouble was peculiar to the airlines: 1) unprecedented expenditures to expand routes, increase personnel and buy new equipment; 2) a $5 million drop in airmail revenues; 3) "no-show" passengers, who are costing the lines an estimated $8 million a year (CAB is expected to approve a penalty on "no-show" passengers soon).

Cautious Eastern Air Lines, long the lowest-cost operator of the lot, made the best showing. Eastern's net revenue did not fall off as sharply as the net revenues of lines which were expanding more rapidly. On Jan.1, 1946, U.S. domestic airlines owned 414 planes. By August, they had 597. But Eastern took delivery on only 14 planes (it has more on order), hired fewer people proportionately than other lines.

Most of the lines hoped that the new routes and equipment which had put them temporarily into the red would eventually send their profits soaring. Whether they would depended almost entirely on airline management. The crossroads had been reached.

Said one expert: "Airline management is _ faced with the critical test of its ability to organize. The history of every fast-developing large industry reflects a heavy turnover of management. The airlines are now on the threshold of this period."

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