Chris Jasper/LONDON
The first effects of the US economic slowdown combined with high fuel prices and a rise in labour costs to deliver a hefty financial blow to most of the country's major airlines in the first three months of the year, with nine of the ten largest carriers (TWA failed to report) suffering an overall loss of $750 million.
United Airlines parent UAL took the worst net loss, of more than $300 million, while Northwest Airlines, Delta Air Lines and US Airways all ended the quarter more than $100 million in the red - although for the latter, the result represented an improvement on the first three months of 2000. Alaska Air Group's $33 million loss also represented an improvement.
Delta's loss saw the biggest reversal, after its $216 million net profit in the first quarter last year, while American Airlines parent AMR also saw a big profit turn into a loss. Only Continental Airlines and Southwest Airlines reported a net profit, with only the latter improving its profitability - and by fully 66%.
Several US majors have warned that the first quarter is unlikely to mark the peak of their losses, with UAL predicting a "considerably worse" decline in unit revenue in the current quarter and a full-year loss should the trend continue.
UAL chairman and chief executive James Goodwin says that, like other US majors, United has "experienced a decline in higher-yielding business travel due to the impact of the softening US economy", adding that its West Coast-bias means it is particularly vulnerable, given the decline in the technology sector. Its costs have also soared.
Delta (which took its first loss in 24 quarters) is also pessimistic, saying continued economic weakness and lingering concern over a possible pilot strike could hit second quarter revenues by $300-350 million (excluding the dispute at its Comair subsidiary). America West, which took a small loss, responded with moves aimed at saving $100 million, including the return of five leased Boeing 737-300s.
The big losses suffered by the US majors come just as the sector undergoes a major transformation - AMR completing its take-over of TWA (which it claims will show a profit in this and the third quarter) and UAL closing on its acquisition of USAir, although it does not expect to close this until mid-year.
Source: Flight International
