ValuJet planes nearly half-empty in May Traffic declines after Florida crash

June 06, 1996|By BLOOMBERG BUSINESS NEWS

ATLANTA -- ValuJet Inc. said its planes flew almost half-empty last month as passenger traffic dropped sharply after one of its planes crashed in the Everglades, killing 110 people.

The low-fare, no-frills airline said its load factor -- the percentage of seats sold -- was 52.7 percent in May, compared with 71.5 percent in May 1995. In April, ValuJet's load factor was 61.8 percent.

"Near-term traffic is terrible," said Samuel Buttrick, an analyst at PaineWebber.

"The recovery process, the traffic rebuilding, will be slow and arduous."

ValuJet shares fell 50 cents to $13.375 yesterday in trading of 1.1 million shares. The shares reached a high of $34.75 in November.

The decrease in ValuJet's load factor had been expected because of nervous travelers avoiding the airline after the crash.

Analysts said a 50 percent load factor is the airline's break-even point, but 52.7 percent isn't good news for the Atlanta-based carrier, said Michael Boyd, president of Aviation Systems Research in Golden, Colo. "If it's not 65 percent or more, we are talking real problems," Boyd said.

The Atlanta-based airline said its total traffic -- the number of miles flown by paying passengers -- declined 6 percent to 190.9 million miles in May from 203.2 million in May 1995. That decline was in part due to ValuJet's reduced schedule; the airline cut its daily flights to 160 from a peak of 320 after the crash.

In May, ValuJet's enplaned passengers declined 7.4 percent to 378,600 from 409,130 for the same period a year earlier.

In addition, Standard & Poor's Corp. yesterday reduced ValuJet's junk-bond rating to "BB minus" after the airline reported the passenger decrease.

Meanwhile, ValuJet's main competitor, Atlanta-based Delta Air Lines Inc., reported its best May results ever. Analysts had forecast Delta's traffic would rise, as jittery fliers spurned ValuJet.

Delta's load factor increased to 70.8 percent, from 63.8 percent in May 1995. The airline's total traffic surged 13.1 percent year-to-year to 8.08 billion miles.

USAir Group Inc. said its May load factor gained 4.4 percentage points to 69.8 percent.

UAL Corp., United Airlines' parent, said yesterday that its domestic load factor increased 1.3 percentage points to 71 percent.

American Airlines said its May domestic load factor increased 1.8 points to 67.5 percent.

Pub Date: 6/06/96

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