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Growth is expected to be reported by most air carriers for the 4th qtr of 1998 and early 1999, even though not at the 5% rate of 1997. Increased capacity growth, pricing uncertainties, and strategic alliances between domestic and international air carries are other industry trends which investors must also consider. These cyclical stocks have an average timeliness rating through the years 2001-2003.

Airline traffic for the first four months of 1995 increased 6%. This trend, higher ticket prices, and better cost control will increase airlines earnings for the next three to five years, although short-haul operations are not as successful financially. Most carriers have followed Delta in its travel agent commission arrangements. Airline profits will be higher in 1996, and their stocks should perform well.

Airlines did not break even in 1994, though several made a profit in the latter part of the year. Traffic rose 5% in 1994 and load factor was up 2.8% to 66.3%, while airlines capacity grew only 1%, compared to 1993 figures. Profits are likely for 1995 because of higher fares and more passengers, even though higher labor costs, fare discounts, and competition will be problems. Several airline stocks are well positioned for investment in 1995.

The number of low-priced, short-haul service air transport services increased during 1994, giving such firms as Southwest more competition in the short-haul area. Airline traffic has increased during the year and short-haul service firms have not been able to meet the demand. Some carriers have even eliminated routes and have cut the number of aircraft used. The improving economy, higher ticket prices and more demand will increase earnings during 1997 through 1999.

A resumption of fare discounting in Aug 1994 will hurt airline bottom lines in the latter half of the year, but the industry will post its first profit since 1989. It will become even more profitable if it can control capacity growth and increase fares and if the economy improves. Sales and earnings growth information for specific carriers is provided.

The airline industry should be profitable in 1994, following four years of heavy losses. Tickets will continue to be discounted but at lower rates than in previous years. Airlines have benefitted from the reduced expenditures achieved by eliminating routes, aircraft and employees. The most profitable airline, Southwest Airlines, has prospered with its inexpensive short-haul service.