Allegheny Airlines supports passage of legislation now in the House that would revamp federal regulation of the airline industry substantially, its president, Edwin Colodny, told shareholders here yesterday.

Although Allegheny has opposed such legislation in the past on the grounds that it could lead to increased concentration in the industry, Colodny said at the annual meeting that inclusion of a provision directing the Civil Aeronautics Board to strengthen smaller airlines had paved the way for his support.

He did not endorse Senate-passed legislation that industry observers generally believe to be more procompetitive.

Colodny said the CAB under Chairman Alfred Kahn already has taken "drastic steps" to modify the regulatory climate in which the airlines operate. "We are already as a company moving toward making our airline a viable entity in this new environment," he said. He cited as examples the airline's discount fares and applications for longer routes and to "Sunbelt" cities to balance its heavy Northeast emphasis.

With a generally strong economy, the discount fares and more disposable income stimulating increased passenger traffic, 198 would be "another record year" for the company, Colodny said. Last year, the Washington based airline reported record profits of $16.4 million. Despite the worst January in its history because of the severe weather, results for the first four months of 1978 show strong improvement over 1977, Colodny said. [TEXT OMITTED FROM SOURCE] senger traffic, 1978 could be "another lion in that period compared with a loss of $8.6 million in the same months of 1977.

At the board of directors meeting following the annual meeting yesterday, Colodny was elected chairman to replace Henry Satterwhite, who is retiring.

Other Highlights of yesterday's meeting:

Shareholders were told that restrictions placed on the carrier by its lenders to bar payment of dividends to holders of common stock are in effect lifted now that the company has $24 million in accumulated earnings. Under even the most restrictive of the covenants, Allegheny had about $5.5 million of retained earnings available at the end of 1977 from which dividends may be declared, Senior Vice President W. Blake Thompson said. The board did not authorize or even take up the question of resuming dividends at its meeting yesterday, an airline spokesman said later. The last time Allegheny paid a dividend on commom stock was in October 1966.

George Goodman, who writes columns and books about financial matters under the pen name of "Adam Smith," was elected to the board.

In response to questions, officials said that there is one black among almost 1,000 pilots employed by Allegheny, and that two women are about to become pilots.

Shareholders approved a management-sponsored resolution allowing it to create 3 million shares of a new class of capital stock to give the airline the "flexibility" to raise additional equity capital by issuing preferred stock.