GRAHAM WARWICK / WASHINGTON DC & REBECCA RAYKO / MIAMI
Despite substantial financial aid from the government, losses for the third quarter were heavy
US airlines tried to put a brave face on dire third-quarter results, citing a gradual return of traffic, but warned of worse to come in the traditionally poor fourth quarter. With all the majors having reported, net losses for the quarter before special charges and aid totalled $1.98 billion. Without $2.1 billion in bail-out money from the US Government, losses would have exceeded $2.5 billion.
Of the airlines reporting, only Continental, Northwest and Southwest posted net profits for the quarter, helped by the first tranche of grants under the $5 billion US airline stabilisation act rushed through following the 11 September terrorist attacks. Only Southwest would have been in profit without government aid.
After issuing a dire warning to its employees, United Airlines posted a third-quarter loss of $542 million before special charges, taking net losses for the first nine months of the year to almost $1.16 billion. Charges totalling $1.3 billion were offset by $391 million government grant. Analysts believe United is on track to lose $2 billion this year, more than any other US airline, but chief financial officer Jake Brace is confident the carrier can avoid Chapter 11 bankruptcy protection. United is in talks with unions on how to cut costs further, he says.
Delta Air Lines posted a third-quarter loss of $295 million excluding special charges totalling $36 million, taking its net losses for the year to $492 million. The company is in talks with Boeing to defer delivery of all 30 aircraft set to arrive by the end of next year. "We don't foresee the need for new [aircraft] in the next 24 months," says chief executive Leo Mullin. The carrier has already deferred delivery of eight Bombardier CRJ regional jets due to arrive this year.
Continental Airlines posted a net loss of $97 million but with government aid of $243 million it managed to report a slim net income for the third quarter of $3 million, excluding charges.
A loss was expected, but a good measure of cost control meant the damage was less than analysts had forecast. The airline is still in the black for the first nine months, with a $54 million net profit. With more than 40 Boeings on order for next year, Continental expects to decide this month whether to defer any aircraft, but chief executive Gordon Bethune says financing is secure for 2002 deliveries.
Already struggling operationally and financially before 11 September, US Airways posted a loss of $433 million, taking its net loss for the first nine months to $960 million. Including unusual items, the third-quarter net loss was $766 million despite a $331 million government grant. The carrier is to eliminate the Boeing 737-200, MD-80 and Fokker 100 from its fleet and has deferred to 2006 three Airbus A321s due next year and now has no deliveries planned for 2003 or 2004. The airline can reschedule "without significant penalty" four of the remaining nine A321s due next year, says chief executive Rakesh Gangwal.
Northwest, boosted by a $249 million grant, turned in a profit of $19 million for the third quarter after $61 million in special charges. Revenue fell 17% to $2.59 billion. Earlier American Airlines had posted the largest quarterly operating loss in its history.
America West Airlines, which had begun to show operating performance improvement before 11 September, posted a third-quarter net loss of $69.2 million, excluding a government grant of $60 million. The net loss for the first nine months is $87 million. America West says it is in talks with Airbus and lessors on deferring deliveries and restructuring or terminating leases. The carrier may defer seven A320 family aircraft due for delivery next year and has 15 aircraft due to come off lease in 2002.
AirTran Airways posted a net loss of $6.1 million, excluding a grant of $30.3 million and special charges, but remains in the black for the year to date, with an $11.4 million net profit.
Source: Flight International
