Flying High on Their Own

WESTERN EUROPE

Frightened by a severe slump in their business in the early 1960s, European airlines began negotiating a major merger in the hope of gaining strength in union. After four years of bickering over terms, that ambitious project has been all but scrapped. Chief reason: European carriers are suddenly flourishing on their own. Last year Lufthansa in creased its profits over the previous year by almost 500 times, to $9,230,000. Air France has flown 16.3% more passengers so far this year than last, and its overall revenues are up 6.1%. Sweden's SAS moved from a $17 million deficit three years ago to a profit of $14 million last year. KLM Royal Dutch Airlines last month announced its first profitable quarter in five years--$4,000,000 in earnings for the April-June period. Rising on the New York Stock Exchange along with the buoyant stocks of U.S. airlines--which are also having an excellent year--KLM stock in the last two weeks has gained 18 points, closing at 62 1/4.

Going Boeing. The dramatic upsurge of Europe's airlines, all of which are wholly or partially state-owned, stems both from continuing economic prosperity and from the growing urge of Europeans for air travel. By their eagerness to fly, they are helping the airlines get fuller use of their costly jet fleets, pushing up load factors past the break-even point for almost all major carriers. To increase profit margins as well as loads, the airlines are streamlining operations. Computerized electronic reservations systems and automated baggage handling have enabled SAS to eliminate 2,700 employees from the payroll in three years. BOAC plans a staff reduction of 18% by 1967. KLM has not only cut back personnel but has also reduced its fleet from 85 planes to 40--and is doing more business than ever. Lufthansa is switching completely to Boeing planes, plans to add 21 short-haul 737s to its fleet of longer-range 707s and 727s. Reason: nearly 48% of the parts of the 737 are interchangeable with those of the 727, a fact that will produce major economies in maintenance costs.

A Touch of Loren. The European airlines are almost unanimously opposed to in-flight entertainment, prefer to lure passengers by stressing service. Though their service is basically the same as that offered by U.S. airlines, each carrier still manages to provide some individual touches. First-class passengers on Lufthansa drink German draft beer, eat smoked-ham sandwiches on black pumpernickel. Alitalia bills itself as the "simpatico" airline: its stewardesses, though trained to wear makeup that looks made down, never quite conceal that tantalizing touch of Loren that they all seem to have. The newest wrinkle in service is the package tour that KLM and Belgium's Sabena (as well as the U.S.'s Pan American) will propose at the International Air Transport Association meeting in Bermuda this month. Under KLM's plan, a passenger will be able to fly from Amsterdam to New York, stay two weeks in a hotel (without meals), and return to Holland--all for $360. Reason for the bargain: so many transatlantic planes fly full one way, half empty the other, that the lines would rather have low-fare passengers than no one in the seats.

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