CIVIL AIR RESERVE FLEET

The Civilian Air Reserve Fleet (CRAF) is entirely dependent on the existence of a competitive, operationally effective, and cooperative of a private airline industry in the United States (US). Each of these factors is affected by airline profitability. Profitability in the American airline industry, however, has been an on an off affair since the advent of deregulation in the industry at the beginning of the 1980s. Airline deregulation coincided with the advent of the Reagan Administration and the most severe economic recession in the US since the 1930s. As a consequence of the chaos introduced by deregulation and the decline in traffic stemming from the recession, profits in the industry plunged. By the mid1980s, industry profitability had recovered, although some individual airlinessome old and some newfailed to survive (Collins, 1991). Since 1988, however, airline industry profitability has once again been in steady decline (Collins, 1991).

The CRAF is heavily dependent on the major trunk carriers, because these airlines are the ones most likely to possess the type of aircraft required for CRAF support. Profitability among the major carriers is even more dismal than that for the industry as a whole. American Airlines reached a postderegulation profitability peak in 1985 (Collins, 1991b). The profitability peak came for Continental Airlines, in 1986 (Collins, 1991c); for D

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nditions for the industry. This point may be illustrated through an examination of profitability at six of the nation's major trunk carriersAmerican Airlines (the largest American carrier), Continental Airlines (the fourth largest American carrier), Delta Airlines (the third largest American carrier), Pan American Airlines (sixth largest American carrier), United Airlines (the second largest American carrier), and USAir (the seventh largest American carrier). Northwest Airlines in the fifth largest American carrier. Continental, Pan American, and USAir have sought protection from creditors through filing under Chapter 11 of the federal bankruptcy act. Trans World has simply suspended payments to creditors, while the company attempts to renegotiate loan and lease terms (Collins, 1991b). Operating profitability reached a postderegulation peak 14.2 percentat American Airlines in 1985 (Collins, 1991a). By 1990, operating profitability had slipped to 7.2 percent. Overall, American remained profitable through 1989. In 1990, however, American suffered a net loss of $39.6 million (Collins, 1991a). Depreciation charges at American increased from $336.9 million in 1985 to $723.1 million in 1990 (Collins, 1991a). American's
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Approximate Word count = 3305
Approximate Pages = 13 (250 words per page)

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