America West reports profit

Tuesday, April 20, 2004 | 11:11 a.m.

BLOOMBERG NEWS

America West Holdings Corp., parent of the eighth-largest U.S. airline, had a first-quarter profit as it cut costs and travel increased. America West said it expects to be profitable for the full year.

Excluding a gain of $600,000, or 1 cent a share, related to aircraft lease costs, America West had a profit of $600,000, or 1 cent. On that basis, the carrier was forecast to lose 42 cents a share, the average of seven analysts polled by Thomson Financial. America West shares rose as much as 13 percent.

America West has lured travelers with cheaper last-minute fares, fewer restrictions and lower prices on first-class seats. The Phoenix-based carrier's traffic in miles flown by paying passengers rose 8.9 percent and costs to fly each seat a mile fell 8.5 percent to 7.59 cents by flying longer flights and each plane spent more time in the air.

"It's pretty impressive," said Ray Neidl, a Blaylock & Partners analyst who rates America West "buy" and doesn't own the shares. "They are doing a pretty good job both on the pricing and cost side."

Net income was $1.2 million, or 2 cents a share, compared with a loss of $62 million, or $1.84, in the same period last year, the company said in a statement. Sales rose 10 percent to $576.5 million.

America West's shares rose 83 cents, or 8.9 percent, to $10.18 at 9:59 a.m. in New York Stock Exchange composite trading, and earlier touched $10.52. The shares have more than tripled from a low of $2.84 on April 21.

Southwest Airlines Co., the largest low-cost airline, last week reported a higher first-quarter profit. Delta Air Lines Inc. and Continental Airlines Inc. had narrower losses from a year ago.

America West's average costs for a gallon of jet fuel rose 14 percent in the quarter from a year earlier and total fuel costs rose 19 percent. Spending on travel agent commissions fell 24 percent and maintenance costs declined 22 percent.

Yield, or average fare per mile, slipped 1.4 percent to 10.13 cents as the carrier added flights in a competitive transcontinental market. The airline increased its average daily usage of planes 6.9 percent to 10.8 hours.

"The utilization flying and the longer stage length routes have lowered our unit costs even more than we expected," Chief Financial Officer Derek Kerr said in the statement.