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Posted on 04/13/2002 1:59:59 PM PDT by TigerLikesRooster
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Airlines Face Losses Over $2 Billion
By Patrick Markey NEW YORK (Reuters) - Wall Street expects major U.S. airlines to report more than $2 billion in first-quarter losses next week even as the aviation industry steadily recovers from the weak economy and the steep travel slump that followed the Sept. 11 attacks on the United States. A spike in oil prices, lingering airfare sales and higher security costs have tempered the industry's recovery, chipping away at fragile revenues in its traditionally weakest quarter. Despite signs of improved traffic, leading carriers have already warned they expect to post big first-quarter losses -- possibly the second worst in their history -- as they struggle with negative cash flow since the hijacking attacks. Only Southwest Airlines Co. (LUV) among the majors is expected to post a slight profit of about 3 cents a share.
"It's clearly getting better on all fundamental vitals -- though it helps to remember that the current revenue declines remain more than twice as bad as the worst months in previous recessions," said UBS Warburg analyst Sam Buttrick, who is predicting a quarterly loss of more than $2 billion. Wall Street analysts said they are watching how airlines manage expenses and for guidance on the second quarter and beyond. Several carriers have said they are eyeing a revenue recovery in the second half of the year. Airlines must balance restoring fleet capacity -- dramatically reduced after Sept. 11 -- with the return of air travel demand. Too swift a return to larger fleets could hamstring financial health, analysts said. QUARTERLY WARNINGS ABOUND The first quarter is usually one of the airline industry's weakest as fewer people travel in winter months. But this year, bad news could not come at a worse time after the record losses sustained in 2001; major U.S. air carriers reported losses of $3.2 billion in the fourth quarter alone. Still, first-quarter results have already been discounted into airline stocks, said Buttrick. Shares of major airlines have corrected about 15 percent over the past month from recent highs as investors express worries over fuel prices, fare changes and analyst downgrades, he said. The American Stock Exchange airline index (XAL) is up more than 17 percent since the start of the year compared with the S&P 500 benchmark (SPX), which is down about 3.2 percent. American Airlines, a unit of AMR Corp. (AMR) and the world's largest carrier, said that it expects to report a sizable loss for its first-quarter and would likely report a full-year loss. Delta Air Lines (DAL), the No.3 U.S. carrier, said it also expects to post a loss, but that it could be profitable by year-end, assuming a recovery in traffic and yields. US Airways Group (U) also warned about a first-quarter loss. Several airlines may also give further guidance or updates on their recovery plans. United Airlines, a UAL Corp. (UAL) unit, has approached its unions seeking billions of dollars in concessions from employees. US Airways, under new management, is also approaching workers to trim costs. Both airlines have said they are studying an application for the federal loan guarantee portion of the government's $15 billion bailout program. OUTLOOK MIXED With airlines reliant on an economic rebound and a return of lucrative business travel, outlook beyond the first-quarter remains mixed. Credit Suisse First Boston analyst James Higgins said he increasingly believes the second quarter may bring more negative news, driven by the depressed revenues and fuel. "In general, we expect airline managements to guide second quarter estimates downward," he said in a note to clients. Earlier this month Continental Airlines (CAL), one of the few profitable carriers last year, warned a recent hike in fuel prices and a weaker revenue recovery would make it a challenge for the airline to post a second-quarter profit as it earlier forecast. |
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As an American, anytime you fly an airline, you should fly a US Flag carrier - your tax dollars are at work. The airlines buy (lease) planes from the manufactures (same as defense contractors but civilian) and then sell tickets to fuel and pay salaries.... There is a cycle of profit in each airline based on purchase dates for aircraft, however, the bottom line is that these BIRDS serve as a National asset which the Government reseves the right to Nationalize in the event of National Emergency. The airlines and the insurance industry takes this into account also.
Nice coup on the Fed Govt in taking the responsibility for SECURITY away from the "flag Carriers" and thus saving the "investment" component of this industry.... Tax payers subsisdize every flight made by US Airlines......
The only reason I could even rationalize for flying on a foreign national flag carrier is that the flight attendants are usually beautiful and female, not old, ugly and protected by regulations of the US and Equal Opportunity.....:)
Fly American Airlines and promote the National Defense, the National Economy and weaken our World Rivals!!!
The "government issued ID" requirement was bad enough, but it has gotten worse and worse - pat downs and strip searches, checked luggage searches, etc. I simply refuse to submit myself to their nonsense.
When an airline decides to treat me like a responsible adult and a paying customer, I will consider flying again. When an airline allows the pilots and qualified passengers to be armed (as the current laws and FAA regs allow), I will be ready to fly. Until then - FORGET IT!
The searches are conducted by government employees at the request of the Transportation Department.
The airlines have nothing to do with them, and, in fact, would like to eliminate them.
All went fairly well, until the return trip at McCarren International. There, I arrived at 6:20AM for an 9:15 scheduled departure. I needed just about every minute of it. The delay in getting to the ticket counter was 100 minutes. The delay in getting through security was 25 minutes.
By the time I took the tram to the D concourse and then walked to the gate, the plane was boarding.
I'm going to cancel my scheduled trip to Washington DC in May rather than go through this stuff again.
If some way cannot be found to allow people to protect themselves without strip-searching everyone and assuming everyone is a criminal, I simply will not participate.
I go out of my way to be as free as possible in my daily life. I will continue to do this as we lose more and more of our liberties...will you? It is not easy or convenient, but it is what I must do for the sake of my own conscience.
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