NEW YORK (CNNfn) - The air was filled with red ink Wednesday as four of the nation's largest airlines reported big losses for the second quarter.|
The widest loss came from UAL Corp. (UAL: down $0.74 to $35.00, Research, Estimates), parent of United Airlines, the world's largest carrier. It posted a second-quarter loss worse than Wall Street forecast.
AMR Corp. (AMR: down $1.16 to $35.24, Research, Estimates), the world's largest airline company, which owns both American Airlines and Trans World Airlines, posted a loss that was a penny a share less than forecasts, and it warned that if conditions don't improve it will lose money in the third quarter and full year, rather than posting the third-quarter profit previously seen by analysts.
Among smaller carriers, No. 6 airline US Airways Group Inc. (U: up $0.13 to $16.85, Research, Estimates), and Phoenix-based America West Holdings Corp. (AWA: down $0.07 to $10.12, Research, Estimates), owner of the No. 9 airline, posted smaller-than-expected losses when special charges are excluded.
UAL was hit with by a combination of increased operating costs from more expensive labor contracts and flying emptier planes, coupled with a weaker revenue base.
It said it lost $292 million, or $5.50 a share, in the quarter, excluding special charges. Analysts surveyed by earnings tracker First Call had expected a loss of $4.73 a share. The carrier earned $374 million, or $3.19 a share, a year earlier.
UAL said it expects losses to continue in the third quarter and for the full year, and that it expects to cut its overall fleet capacity by 1 percent in the fourth quarter rather than expanding it by 4 percent as previously† planned.
Revenue fell 8.8 percent to $4.66 billion in the quarter, as revenue per mile flown by paying passengers fell 10 percent. Most major U.S. air carriers are expected to post losses for the second quarter due to a drop in high-paying business travelers. Only Continental Airlines (CAL: down $0.22 to $50.95, Research, Estimates), which has already reported results, and discount carrier Southwest Airlines (LUV: down $0.09 to $19.69, Research, Estimates) are expected to post profits in the quarter.
AMR sees losses continuing
AMR reported a loss of $105 million, or 68 cents a share, excluding special items. First Call analysts forecast a loss of 68 cents a share following a June 18 warning that it expected to lose more than $100 million in the period.
The company earned $285 million, or $1.75 a diluted share, before a gain on sale of stock in the year-earlier period.
AMR did not give specific per share guidance going forward, although it did say if current conditions persist, it anticipates a loss for the third quarter and full year. First Call's forecast called for third-quarter earnings per share of 55 cents, down from $1.96 a year earlier. It also forecast a full-year loss per share of 48 cents, compared with EPS of $4.65 in 2000.
Revenue rose 11 percent to $5.58 billion, but all of that was due to the addition of TWA. Revenue at American Airlines fell 5.2 percent in the period, as fares paid per mile by passengers fell 7 percent.
Smaller carriers beat loss forecasts
US Airways lost $24 million, or 36 cents a share, doing much better than First Call's loss forecast of 63 cents per share. The company earned $80 million, or $1.19 a share, in the year-earlier period.
The airline agreed to a purchase by UAL a year ago, but the deal has hit a roadblock with U.S. regulators, and UAL officials confirmed earlier this† month that they wanted to get out of the deal.
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The two airlines have asked for a final decision from the Department of Justice on the proposed $4.3 million deal, but UAL said Tuesday it may yet have to take a second-quarter charge to cover $66 million in incremental merger costs and a $50 million break-up fee if the deal is terminated.
America West reported a loss of $20.3 million, or 60 cents a share, excluding special charges for reduction in the size of its fleet. Analysts had expected a loss of 73 cents a share. Including special charges, the net loss came to $53.9 million, or $1.26 a share, compared with net income of $57.5 million, or 91 cents a diluted share, a year earlier.