US airlines are expected to report industry-wide fourth- quarter net losses of more than $2 billion this week. Carriers and analysts are also warning of continuing tough conditions this year, and estimate for 2003 full-year losses widening to $4.5 billion from previous estimates of around $3 billion.
Continental Airlines and Delta Air Lines reported first, and as Continental chief executive Gordon Bethune says: "The results are nothing to cheer about."
Delta posted a $365 million fourth-quarter net loss compared to $734 million in the 2001 fourth quarter. Its full-year losses were essentially flat at $1.2 billion.
Continental's fourth-quarter net loss narrowed to $109 million compared with $149 million a year ago, but its full-year net loss was $451 million compared to $95 million. Neither carrier expects to see a profit in 2003.
American Airlines, Northwest Airlines and Southwest Airlines are among the rest of the majors reporting their results this week, with only low-cost Southwest expected to be profitable.
JP Morgan senior analyst Jamie Baker underscores the gloomy prospects for 2003. "The year is likely to be defined by war, continued downward pressure on wages and a new fare structure," he says.
He believes, however, that no other major carriers will join United Airlines and US Airways in Chapter 11 bankruptcy protection. "It is unlikely in our opinion that bankruptcy courts will get any busier than they already are," he says.
United is now concentrating on its reorganisation plan and ultimate emergence from Chapter 11. The carrier has secured temporary pay cuts that will save the airline $70 million a month and allow it to meet critical debtor-in-possession (DIP) funding commitments.
Source: Flight International
