Wednesday, July 18, 2001 | 11:03 a.m.
America West Airlines, the No. 2 carrier serving McCarran International Airport and the nation's eighth largest airline, today reported a second-quarter loss of $20.3 million.
The airline is the latest U.S. carrier to report losses for the period, with United Airlines' parent company also reporting a loss today. Only two major carriers -- Texas-based Continental and Southwest -- are expected to be profitable this quarter. Continental reported earnings of $42 million Tuesday while Southwest, Las Vegas's largest carrier, is due to report earnings Thursday.
The aviation industry is critical to Las Vegas' economic health, since about 46 percent of the city's visitors arrive by plane.
America West Holdings Inc., parent company of America West, reported a loss of $20.3 million, 60 cents a share, on revenues of $587.2 million. In the same period a year ago, the airline reported earnings of $27.3 million, 74 cents a share, on revenues of $617.9 million. It was the fourth consecutive quarter of losses for America West, which has about 13,500 employees and a fleet of 122 planes.
Including charges related to cost-reduction measures reported earlier in the year, the airline posted a loss of $42.5 million or $1.26 a share.
America West had announced earlier this month that second-quarter losses were expected to be substantial.
The Tempe, Ariz.-based carrier, which operates a hub at McCarran and has about 80 daily flights to and from Las Vegas, said high fuel prices and a weakness in the U.S. economy would result in losses of between $40 million and $50 million after the previously announced special charge.
The airline reported earlier this year that it was taking a pretax charge of about $30 million for the early return of seven Boeing 737 twin-engine jets to their lessors. Other cost-reduction initiatives resulted in total expenses of $35.7 million.
America West said fuel cost the company $8.3 million more in the current quarter than a year ago. Revenue per available seat mile -- a closely watched unit revenue indicator in the industry -- fell by 5.8 percent due to reduced business travel spending.
The airline said it mitigated some of the financial damage by operating with loads above the industry average.
"America West, like the rest of the airline industry, continues to experience the effects of a sharp reduction in business travel and high fuel prices," said William Franke, chairman, president and chief executive officer of America West. "While we are encouraged that we are outperforming the industry, we are not immune to the business cycle."
The company took a step toward improving passenger check-in services in Las Vegas this week when its America West Vacations unit signed an agreement with Certified Airline Passenger Services. Henderson-based CAPS offers remote check-in service from several hotel counters for $6 per passenger.
CAPS' service helps travelers avoid airport lines by allowing baggage check-in and picking up boarding passes up to 12 hours before flight time at the hotel. Bags are transported directly to the airport by CAPS.
In another earnings announcement, United Airlines, the No. 3 carrier at McCarran, also reported losses.
United's parent company, UAL Corp. of Chicago, lost $292 million in its second quarter, battered by the dropoff in business travel and higher labor and fuel costs.
It was the company's fourth money-losing quarter in a row after more than five years without one.
The second-quarter loss amounted to $5.50 a share, far worse than the the $4.73 consensus loss estimate by analysts surveyed by Thomson Financial/First Call.
In the same period in 2000, UAL reported a profit of $336 million, or $3.08 a share, before the airline hit severe turbulence with labor disruptions, the slowing economy and its ill-fated May 2000 proposal to acquire US Airways for $4.3 billion.
Revenues slumped 9 percent to $4.66 billion for United, which was overtaken by American Airlines this year as world's largest carrier. Passenger revenues were nearly 12 percent lower, at $4.023 billion.
UAL's second-quarter loss will end up being as much as $116 million higher if the US Airways merger proposal fails within the next month, as is widely expected. The airline said it has deferred $66 million in merger-related costs and acknowledged it may have to pay a $50 million termination fee if the acquisition doesn't take place. Both charges would be reflected in second-quarter results if the proposal is settled by Aug. 14.
United last week asked the Justice Department for a formal ruling on the merger, even though it signaled early this month that it was no longer interested in going through with the costly deal. Airline industry analysts have said the effort is being made in an effort to protect against litigation from US Airways and its shareholders in connection with calling the deal off.
"We continue to feel the disproportionate effect of the weaker economy on business travel, particularly on the West Coast and Asia, two of our key regions," said UAL chairman and chief executive officer James Goodwin.
Goodwin promised to continue cost-cutting initiatives.
The Associated Press
contributed to this report.
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