Big LV airline America West lost money in fourth quarter

Wednesday, Jan. 17, 2001 | 10:45 a.m.

The No. 2 air carrier serving Las Vegas today reported quarterly losses worse than analysts expected, blaming the poor performance on rising fuel costs and bad weather.

America West Holdings Corp., parent company of America West Airlines, which operates a hub at McCarran International Airport, reported it lost $32.1 million in the fourth quarter before nonrecurring expenses. The loss of 95 cents per share compares with earnings of $20 million, or 52 cents per share, a year ago before a one-time gain.

Nonrecurring expenses included charges related to the early termination of leases on some of the company's jets.

A survey of analysts by First Call/Thomson Financial had forecast losses of 44 cents a share for the quarter.

Revenues for the quarter were up 0.7 percent to $573 million from $568.9 million in the fourth quarter of 1999.

William Franke, chairman and chief executive officer of America West, said a combination of factors resulted in the poor showing.

"We are dissatisfied and disappointed with the results of the fourth quarter," Franke said in a statement accompanying results today. "The sharp increase in jet fuel prices, bad fourth quarter weather in Phoenix and Las Vegas and the lingering effect on revenues of our poor operating performance this summer resulted in a very poor quarter."

An airline spokeswoman said Franke's reference to poor weather in Las Vegas referred to delays in other cities that resulted in traffic snarls at McCarran. A McCarran official said there were no weather-related delays in Las Vegas for the quarter.

The average price of fuel for the quarter was $1.08 a gallon compared with 61 cents in the fourth quarter of 1999. America West canceled 482 flights it attributed to bad weather in the quarter, a 128 percent increase over the fourth quarter 1999.

"The good news is that we have seen improvement over the last few months in our operating reliability as the service initiatives we put in place in late summer have driven down the number of aircraft out of service," Franke said.

Franke's statement said nothing about the airline's strategy in the wake of merger proposals between United Airlines and US Airways and American Airlines and TWA.

America West, the nation's ninth-largest carrier, has been speculated as a potential buyout target by No. 3 Delta Air Lines if it chooses to expand through consolidation like its larger rivals.

Phoenix-based America West's stock was trading this morning at $12.75 a share, down 31 cents from Tuesday's closing price.

Separately, high fuel prices caused US Airways Group Inc. to record a fourth-quarter loss and pushed earnings at American Airlines' parent AMR Corp. lower than the year-ago period.

Arlington, Va.-based US Airways lost $101 million in the fourth quarter, hurt by the fuel costs and increased competition within the industry.

The airline, which is seeking federal approval of its acquisition by the parent company of United Airlines, reported a loss today of $1.50 per share for the last three months of 2000.

That was far greater than analysts' expectations of a $1.10 loss per share, based on a survey of analysts by First Call/Thomson Financial. It was also worse than the fourth quarter of 1999, when the company lost $81 million, or $1.16 a share.

Quarterly revenue rose 10 percent, from $2.14 billion to $2.36 billion.

And Fort Worth, Texas-based AMR earned $47 million, or 29 cents per share, down from $209 million, or $1.37 per share, a year earlier.

Excluding one-time items in both quarters, the nation's No. 2 airline earned $56 million, or 34 cents a share, down from $87 million, or 57 cents per share a year earlier.

Analysts surveyed by First Call/Thomson Financial had expected AMR to earn 30 cents per share.

Revenue rose 8 percent, to $4.86 billion, from $4.49 billion a year ago.

"We had a challenging fourth quarter," Chairman and Chief Executive Donald J. Carty said in a statement. "While demand for air travel was strong, severe weather across much of our system resulted in lost traffic and higher operating costs. And of course, fuel prices remained very high."

AMR said its average price per gallon for jet fuel rose 49 percent in the fourth quarter compared to a year earlier; for the full year, the airline spent 47 percent more on fuel than the previous period.

Still, Carty said, the company enjoyed strong revenue for all of 2000 -- up 11 percent over 1999 -- as airplane occupancy rose.