Thursday, April 18, 2002 | 11:08 a.m.
DALLAS -- Southwest Airlines, the No. 1 carrier of gamblers to Las Vegas, said today it managed to remain the only profitable major carrier after last year's recession and terrorist attacks.
Southwest said it earned $21.4 million, or 3 cents per share, down from a profit of $121 million, or 15 cents per share in the first quarter of 2001.
The results met the expectation of analysts surveyed by Thomson Financial/First Call and set Southwest apart from other large carriers American, Delta, Northwest, US Airways and Continental, which have reported large first-quarter losses.
Revenue fell 12 percent to $1.26 billion, compared to $1.43 billion a year earlier.
The number of miles flown by passengers, a key measure in the airline industry, declined 2.5 percent, and Southwest -- which, unlike rivals, did not eliminate flights after Sept. 11 -- saw its planes flying 62.9 percent full, down from 67.3 percent occupancy in early 2001.
Analysts expected Dallas-based Southwest to remain profitable while other carriers lost money because it has been less affected by a drop in business travel and because of its ability to control costs. Spending fell slightly, to $1.21 billion, helped by lower costs for jet fuel.
Chief Executive James F. Parker said profitability will steadily improve but earnings for the second quarter will lag behind the $175.6 million profit in the second quarter of last year. Occupancy on planes will also continue to decline, he said.
Separately, Northwest Airlines of Minneapolis today reported a first-quarter loss of $171 million, blaming the decline in business travel and the impact of reduced airfares. The carrier beat the low expectations of Wall Street analysts.
Northwest's loss of $2.01 per share for the first three months of 2002, was slightly better than the loss of $2.05 per share a year earlier, when the fourth-largest carrier also reported a net loss of $171 million. Last year's quarter included $48 million in nonrecurring charges.
Analysts surveyed by Thomson Financial/First Call expected a loss of $2.46, with estimates ranging from $2.00 to $2.90. Northwest shares were flat at $20.05 in early trading on the Nasdaq Stock Market.
Richard Anderson, Northwest's chief executive. said he was encouraged that Northwest generated a profit in March, due partly to the early Easter holiday, but said current economic conditions are still unfavorable.
"We believe the best way to manage the airline in the near term is to remain fiscally disciplined by continuing to control costs and by adding capacity only when economically justified," Anderson said.
And US Airways said today it lost $269 million in the first three months of 2002 and that it would "likely" ask for loan assistance under a federal program created after Sept. 11 to help the ailing industry.
Up to $10 billion in loan guarantees was made available to airlines by Congress as part of a larger industry bailout. US Airways would be only the second major carrier, after America West, to apply for assistance through the loan program.
Shares of US Airways fell 8 percent on the news, dropping to $5.70 in early trading on the New York Stock Exchange.
The Arlington, Va.-based carrier's first-quarter loss is equivalent to $3.97 per share, which compares with a loss of $171 million, or $2.55 per share, during the same period a year ago.
Excluding one-time items, the company lost $286 million, or $4.22 per share. Wall Street analysts surveyed by Thomson Financial/First Call had predicted a loss of $6.08 a share.
But US Airways' president and chief executive, David Siegel, said the results were unacceptable, even if better than Wall Street expected.
"To be successful, US Airways must restructure to lower its unit costs, optimize the revenue potential of its East Coast presence and improve its overall balance sheet position," Siegel said in a statement.
"To implement our restructuring plan," he added, "it is likely US Airways will file an application with the federal Air Transportation Stabilization Board for a government-guaranteed loan."
The government's strict conditions for the loans have kept most airlines from seeking them. If the government grants the loan guarantee, it would also get the option to buy a significant stake in the company.
US Airways employees have been warned that the airline might eventually seek salary concessions from its workers.
The airline is hoping that its pilots will approve as early as today an agreement that would let the airline double its use of cheaper regional jets from 70 to 140. Airline officials have identified the expanded use of regional jets as a top priority.
The company said it has cash reserves of $561 million and considers its cash position stable.
US Airways had $1.7 billion in revenue for the quarter, compared with $2.2 billion in the same quarter last year.
The airline, which reduced capacity 23 percent following the Sept. 11 attacks, carried 11.8 million passengers in the 2002 first quarter, a decline of 16.7 percent compared to the 14.2 million in the first three months of 2001.
archive
