ATLANTA -- ValuJet Inc.'s senior management said yesterday that the company is recovering after the crash of one of its planes, but probably won't return to its full schedule until at least year-end.
The no-frills airline, which has halved the number of its daily flights to 160 from 320, said it may have to cut more flights and won't resume the suspended ones for at least several weeks. ValuJet may delay delivery of its six new jetliners as well.
"We have stabilized our situation," said Robert Priddy, ValuJet chairman and co-founder, in a conference call with investors.
Executives didn't answer questions about the total financial impact of the crash, analysts said.
"I still wouldn't recommend that our clients buy the stock," said Steve Lewins, a Gruntal & Co. analyst. He said ValuJet implied that it will post a loss for the quarter but withheld many details.
ValuJet, which owns the 51 planes in its fleet, has postponed the delivery of one DC-9 and may defer delivery of five other planes -- three DC-9s and two MD-80s -- that were due to be delivered this year.
The company said it will consider leasing aircraft in the future.
Its $750 million in liability insurance should be adequate to cover costs tied to the crash, including replacing the 27-year-old DC-9 that was destroyed, the airline said.
Last week, ValuJet halved its daily flights so it can inspect each plane it owns. By cutting its flights in half and not grounding any of the jets, ValuJet said, it has enough planes to fly each of its routes.
ValuJet said it expects its intense aircraft inspection program to help restore public confidence and satisfy Federal Aviation Administration regulators.
"There is no airline in the country that can guarantee they won't be shut down the next day by the FAA," Priddy said.
Federal Aviation Administrator David Hinson said at a news conference in Atlanta yesterday that ValuJet is "operating safely." The FAA met with ValuJet officials earlier in the day.
The FAA has 50 inspectors monitoring ValuJet's operations and in four days has overseen 154 of the airline's safety inspections.
Hinson said the FAA will continue its special oversight of the airline until at least mid-June.
Shares of the low-fare airline fell 50 cents, about 6 percent, to BTC $12.625, yesterday in trading of 4.9 million shares. Valujet's shares have dropped 29 percent since May 10, the day before Flight 592 crashed in the Florida Everglades, killing all 110 aboard.
ValuJet said it refunded $4.1 million last week to customers.
Priddy said ValuJet may take a charge against second-quarter earnings, but he didn't elaborate.
Passenger traffic dropped 5 percent last week as the airline flew 80 percent of its scheduled flights, carrying three-quarters of the customers who had bought tickets. In all, the company operated last week at a 51 percent load factor, meaning its planes were slightly more than half full.
Calls from customers booking flights have declined, ValuJet said, but demand hasn't dried up or been "significantly impacted."
Robinson-Humphrey slashed its 1996 earnings forecast for ValuJet to 45 cents a share from $1.35 a share, and lowered its 1997 earnings forecast to $1.25 a share from $1.60.
For the second quarter, Robinson-Humphrey estimates, ValuJet will lose 9 cents a share.
"Year-to-year earnings growth will not resume until the first half of 1997," Parker said.
Merrill Lynch analyst Candace Browning yesterday downgraded ValuJet stock to long-term "neutral" from long-term "accumulate." Pub Date: 5/23/96
