DAVID FIELD / WASHINGTON DC
Analysts are forecasting a cumulative US airline loss of $1.4 billion for the three months to June and $4-5 billion for the full year, versus a $6.2 billion loss last year.
The prediction comes as American Airlines, Continental Airlines, Delta Air Lines and Northwest Airlines reported deficits last week for the normally profitable second quarter. America West Airlines, Alaska Airlines and United Airlines were due to report by 22 July.
"A lack of fare increases, growing low-fare competition and uncertainty surrounding airport security details are the three biggest factors working against the industry," says Deutsche Bank analyst Susan Donofrio.
American Airlines topped the losses table, reporting second-quarter losses of $495 million - a slight improvement on last year's $507 million. Sales fell20% to $4.48 billion. Chief executive Donald Carty says that the airline has suffered losses topping $1 billion in the first half of 2002. "That is unprecedented - an almost unbelievable amount of money," he says.
Continental blamed much of its second-quarter loss of $139 million on security costs and heavy fare discounting. Repeated industry-wide attempts to raise fares have failed and it is not clear where the airlines will turn next for cost cuts.
Delta's net losses widened from $123 million last year to $162 million, with sales down 8% to $3.47 billion. Chief executive Leo Mullin says that the results "clearly show that difficult times are not yet behind us", adding the airline is "recovering slowly".
Northwest also reported widening net losses - $93 million against $55 million in 2001, from sales down 11% at $2.4 billion. Chief executive Richard Anderson says it is"difficult to predict when Northwest will announce a quarterly profit". He reiterates his intention to retire older McDonnell Douglas DC-10-40s and Boeing 727s.
Southwest Airlines stayed in the black, but net profits dipped 42% to $102 million, on sales down 5% to $1.47 billion. Chief executive James Parker blames falling yields on "a significantly greater proportion of customers travelling on lower-yielding discounted fares". He predicts unit revenue will continue to fall in the next quarter.
Source: Flight International
