Inside Track: Analysts Expect Airline Profits For 2006 And 2007

American, Continental and Southwest—the major domestic carriers that released earnings this week—were three for three in scoring a profit last year, living up to the expectations of analysts and economists who predicted 2006 would bring a turnaround for the long-suffering airline industry. While other major domestic carriers have yet to release full-year or fourth-quarter earnings, it appears that the domestic industry's balance sheet has turned from red to black, according to projections. Calyon Securities analyst Ray Neidl in a research note prior to earnings said, "We expect 4Q06 results to be disappointing for the industry relative to what we had been previously forecasting. Currently, we expect the industry to lose $31 million for the fourth quarter but produce a $2.1 billion profit for FY2006." Like Neidl's projections, the Air Transport Association said the industry should report profits in the $2 billion to $3 billion for 2006. ATA, meanwhile, said the economic outlook for the airline industry in 2007 is even more promising, with a projected net profit of approximately $4 billion, according to its annual economic outlook released this month.

BA Trims Fuel Surcharges As Oil Cost Drops
British Airways beginning Jan. 12 reduced fuel surcharges from £35 to £30 per way on long-haul flights of less than nine hours, which include many flights to and from the eastern United States, the carrier said. The reduction took hold on flights between Atlanta, Boston, Baltimore, Chicago, Detroit, New York, Washington, D.C., and Philadelphia and London and Manchester, as well as other international destinations. British Airways, however, said it is maintaining fuel surcharges on flights of more than nine hours, including some destinations in the United States. Likewise, short-haul surcharges will remain at £8 per way. The carrier cited recent drops in the cost of oil, which last week hovered around $50 per barrel.

TSA Clears Reg. Traveler To Launch At Four Airports
Four airports committed to launch the Clear Registered Traveler program gained Transportation Security Administration approval and will begin operating programs last week, Verified Identity Pass said. Airports in Cincinnati, Indianapolis, New York-JFK and San Jose now are poised to roll out the program. The program promises to speed travelers who satisfy a background check through security checkpoints and costs $99.95 annually. Meanwhile, Air France next month plans to sponsor Registered Traveler lanes at JFK's Terminal 1 through a partnership with Verified Identity Pass. The agreement mimics an arrangement between British Airways and Verified ID to launch Clear lanes at JFK's Terminal 7, which launched last week.

All-Business New York-Paris Startup Lifts Off
All-business class transatlantic carrier L'Avion this month launched its inaugural flight between Newark Liberty International Airport and Orly South Airport outside of Paris. Flying Boeing 737s fitted with 90 business-class seats, L'Avion is taking the London-bound models of Eos Airlines and MaxJet to the French market. With roundtrip fares starting at $1,599, the carrier is launching with limited service, but in March will move toward its full schedule of two daily flights, except Saturdays. Although L'Avion touts its service as the only all-business class carrier between the New York area and Paris, Eos late last year said that with an infusion of cash it is expanding its fleet of Boeing 757s, listing Paris as a possible new market. Eos said new routes, possibly including Zurich, would debut this year.

Hilton Searches For Bollenbach Successor
Hilton Hotels Corp. CEO Stephen Bollenbach will leave his leadership post at the year-end, the company announced Thursday. Hilton has begun the search process for its next CEO and expects to finish by this summer. Following that appointment, Bollenbach will keep his position as Hilton's board co-chairman until the end of 2010 and will to provide consulting services for Hilton until the end of 2012.

DHS To Launch Traveler Redress Mechanism
The U.S. Department of Homeland Security on Feb. 20 plans to launch the Traveler Redress Inquiry Program, offering travelers faster means to correct watchlist misidentification, point of entry issues or rectify situations where passengers "have been unfairly or incorrectly delayed, denied boarding or identified for additional screening at our nation's transportation hubs," DHS said. The system uses the online-based Traveler Inquiry Form, which will collect requests for redress by the DHS TRIP office. "This collection serves to distinguish individuals from an actual individual on any watch list used by DHS, and it helps streamline and expedite future check-in or border crossing experiences," DHS noted in the Federal Register early this month.