Buttrick, Kellner Tell ACTE Of Improving Conditions

The airline industry's leading financial analyst, UBS Warburg managing director Sam Buttrick, told more than 100 members of the Association of Corporate Travel Executives gathering in New York today that the airline industry is recovering despite his projection that the sector will lose $5.7 billion in 2003. The good news, he said, was that $4.5 billion of the loss came in the first half of the year, so the second-half loss of $1.2 billion was a marked improvement. His forecast for 2004 is that the industry will break even. He also noted that there have been only two periods in which discount carriers other than Southwest Airlines were more profitable than legacy carriers: from 1991 to 1993 and from 2001 to 2003.

Continental Airlines president and COO Larry Kellner followed Buttrick's remarks with some of his own, mostly focused on expanding the airline's scope through alliances and also noting the airline's improved cash position and intention to add aircraft in the coming year. Kellner told the audience that while plans are to bring his airline together with Air France, KLM, Northwest and Delta in the new Sky Team Alliance by next summer, it's more likely to take a year and a half before they can, and about two years before they can provide meaningful benefits to corporate customers.

Meanwhile, Kellner said, "We won't look at launching a low-cost carrier within a carrier," citing Continental's previous unsuccessful attempt. He also noted that Continental is the only airline that didn't ask for labor concessions, because, he said, "If our employees aren't happy there's a good chance our customers aren't."

ACTE executive director Nancy Holtzman announced that ACTE and Paragon--which includes the National Business Travel Association, the U.K. Institute of Travel Management and the European Business Travel Association--are meeting with the International Air Transport Association within 90 days to discuss IATA rules that are blocking industry progress. She said ACTE also has embarked on conducting the first business travel worldwide needs analysis.