CANADIAN AIRLINES EXPECTS TO TURN PROFIT IN 1996

CANADIAN AIRLINES EXPECTS TO TURN PROFIT IN 1996

Canadian Airlines International will be profitable next year as route restructurings and cost-saving labor pacts improve the bottom line, the company forecast.

"We'll make a profit in 1996," said Drew Fitch, senior vice president, finance, after the company Wednesday announced a US$10 million (C$13.5 million) loss for second-quarter 1995.The Calgary airline had forecast a C$52 million profit for 1995, but revised that to a C$35.4 million shortfall due to a slowing economy and fierce transcontinental competition.

The large loss for the second quarter compared with a year-earlier profit of C$1.5 million.

Operating revenue for the same quarter was C$771.8 million, an increase of C$44.9 million, or 6.2 percent, compared to the second quarter of 1994.

Cargo revenue rose 23.5 percent to C$75.2 million on strong international activity.

"While these financial results are unacceptable, we have a plan in place that will produce significant results in the future," said Kevin Jenkins, chief executive.

"We are further strengthened by the synergy between American Airlines and Canadian Airlines and I am encouraged by the traffic growth on our joint services between Canada and the United States," Mr. Jenkins said.

The airline announced Wednesday it will cut 160 maintenance jobs by October. This is expected to save the company C$7 million annually.

Earlier this summer, Canadian Airlines International cut 394 employees through a route restructuring.

A new collective agreement with pilots is expected to yield annual savings of more than C$41 million, and the airline is pursuing cost-cutting pacts with other unions.

Mr. Fitch indicated the company had fully drawn its lines of credit and denied reports the carrier could face a liquidity crisis in the first quarter of 1996.