UAL, Delta, US Airways post wider-than-expected losses
Wednesday, April 18th 2001, 12:00 am
By: News On 6
Three of the nation's largest airlines, UAL Corp., Delta Air Lines Inc., and US Airways Group Inc., reported larger first-quarter losses than Wall Street analysts had anticipated.
The companies blamed their losses on the U.S. economic downturn, which has crimped business-travel spending. They also cited rising fuel and labor costs.
UAL and Delta reported declining revenues, whereas US Airways said its increased revenues were offset by higher expenses.
UAL, the parent company of United Air Lines, suffered its third straight quarter of losses, while Delta reported its first quarterly loss in six years.
The parent company of United Airlines lost $313 million, or $5.97 per share, in the three months ended March 31, compared with a loss of $99 million, or $2.72 a share, a year ago.
Excluding one-time charges, the company reported a loss of $5.82 per share. Wall Street analysts surveyed by Thomson Financial/First Call had estimated United's loss would be $4.28 per share.
Revenues fell 2.7 percent to $4.42 billion from $4.55 billion in the first quarter of 2000.
Shares of United rose 85 cents to $34.50 early Wednesday on the New York Stock Exchange, down considerably from its 52-week high of $64.75.
United said it was hit hard by the drop-off in business travel as well as higher labor and fuel costs.
Chairman and chief executive James Goodwin said the Elk Grove Village, Ill.-based carrier is suffering worse from the business travel decline than its rivals because a higher percentage of its customers are business travelers.
United is the world's second-biggest airline, overtaken for the No. 1 spot this month when American Airlines acquired Trans World Airlines.
Delta Air Lines Inc.
Atlanta-based Delta lost $133 million, or $1.11 per share, in the three months ended March 31, compared with net income of $172 million, or $1.27 per share, a year earlier.
Excluding one-time charges, Delta had operating losses of $1.02 per share, far worse than the 85 cents per share loss expected by Wall Street analysts surveyed by Thomson Financial/First Call.
Revenue for the quarter fell to $3.84 billion from $3.91 billion a year ago.
Shares of Delta rose $1.26 to $42.36 in early trading Wednesday on NYSE.
Delta said its earnings and revenue were damaged by the slowing economy and by a pilots strike at its Kentucky-based regional carrier, Comair. The company said the strike, which has kept Comair shut down since March 26, has shaved $24 million, or 12 cents per share, from its first-quarter profit.
Adding to the carrier's labor unrest, Delta's 9,800 pilots have threatened to strike on April 29 without a new contract.
``We faced several challenges in the first quarter of 2001,'' said Delta chairman and chief executive Leo F. Mullin.
Delta said revenues suffered as it trimmed its flight schedule during the quarter to minimize service problems related to pilot shortages. Some pilots have stopped requesting overtime to express their displeasure with Delta's contract proposals.
Mullin said Wednesday he expects the pilots would not be able to strike because President Bush would enact a presidential emergency board to recommend a settlement.
The pilots and Delta were scheduled to meet Wednesday with federal mediators in Washington.
US Airways Group Inc.
US Airways losses widened to $178 million, or $2.66 a share, in the first quarter from $115 million, or $1.72 a share, during the same period last year.
Excluding one-time charges, the company had an operating loss of $2.55 per share, larger than the $1.77 per share loss expected by analysts surveyed by Thomson Financial/First Call.
Revenue grew 7 percent for the three months ended March 31 to $2.24 billion, compared with $2.10 billion a year ago.
But expenses grew by 10 percent for the Arlington, Va.-based airline, which is seeking federal approval to be acquired by United Airlines for about $4 billion. Fuel costs, for example, rose 14 percent in the quarter.
Shares of US Airways were down $2.01 to $33.34 early Wednesday on the NYSE.
US Airways president and CEO Rakesh Gangwal blamed the losses on the weakening economy and increased competition along the East Coast from discount carriers.
Company chairman Stephen Wolf said ``the competitive environment underscores the necessity of US Airways becoming a part of a larger network and thus we remain fully focused on our merger with United Airlines.''