=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2002/10/17/f= inancial1051EDT0075.DTL ---------------------------------------------------------------------- Thursday, October 17, 2002 (AP) Airlines struggle, but beat Wall Street's low expectations DAVID KOENIG, AP Business Writer (10-17) 18:17 PDT (AP) -- Continental, Northwest and America West all posted third-quarter losses, while Southwest -- the only major carrier to record a profit -- warned that its streak of 46 quarters of profitability could come to end soon. All the major airlines that reported earnings Thursday exceeded the low expectations of Wall Street analysts and their stock prices rose in afternoon trading. Separately, Delta Air Lines announced Thursday it would cut up to 8,000 more jobs. Executives blamed their third-quarter woes on higher fuel costs, reduced spending by business travelers and the anniversary of last year's terrorist attacks, which they said caused an even steeper slump in travel demand. They said the fourth quarter, which is traditionally weaker than the third, could also be difficult because of the threat of war in Iraq. Lehman Brothers airline analyst Garrett L. Chase said the airlines manag= ed to beat Wall Street's earnings projections by keeping costs down. "That said, it's not like the results are good," said Chase, who said industrywide profitability isn't likely to return until 2004. Combined, the industry is expected to report some $1.6 billion in third-quarter losses, and more than $7 billion in losses for the year. Executives cautioned that business could get worse in the fourth quarter. Continental said government-mandated security measures had become "burdensome." Northwest said it could not predict when it would be profitable again. America West, which received a federal loan guarantee, called the industry's crisis "unprecedented." Earlier in the week, American Airlines reported a $924 million loss in t= he July-September period, and Delta Air Lines lost $326 million. Delta said Thursday that the latest round of job-cutting would leave the carrier with 25 percent fewer workers than it had before last year's terror attacks. ^Continental Airlines Inc. The Houston-based carrier lost $37 million in the third quarter. The net loss of 58 cents per share compares to a profit of $3 million, or 5 cents per share, a year earlier, when Continental received federal aid after the Sept. 11 attacks. Analysts surveyed by Thomson First Call had expected the Houston-based airline to lose 74 cents per share. Revenue fell to $2.18 billion from $2.22 billion a year earlier. Chairman and chief executive Gordon Bethune complained that security expenses, taxes and other government restrictions cost the airline $65 million and that war-risk and other insurance costs rose by $20 million compared with last year. Speaking to analysts, Bethune said Continental could benefit next year if some of its rivals "disappear." US Airways is in bankruptcy and UAL Corp., parent of United Airlines, is considered close behind. For the year so far, Continental has lost $342 million, or $5.36 per share, compared to a gain of $54 million, or 97 cent per share, at this time last year. Revenue is down 12 percent, to $6.35 billion from $7.23 billion. Shares of Continental rose 41 cents, or 8.5 percent, to close Thursday at $5.21 on the New York Stock Exchange. ^Northwest Airlines Corp. The Eagan, Minn.-based airline reported a $46 million net loss for the third quarter. The loss was equivalent to 55 cents a share, which compares with a gain = of $19 million, or 20 cents per share, a year earlier. Analysts surveyed by Thomson First Call anticipated a loss of 82 cents per share. Revenue dropped slightly to $2.56 billion, from $2.59 billion a year earlier. "While we cannot forecast when the airline will return to profitability = in this difficult period, the performance of Northwest relative to that of other network carriers compares favorably," said Chief Executive Richard Anderson. The company's profit a year earlier included a one-time gain of $158 million, part of the federal government's industrywide bailout. For the first nine months of the year, Northwest lost $310 million, or $3.63 per share, compared with a loss of $207 million, or $2.47 per share, a year earlier. Revenue over the same period dropped nearly 10 percent to $7.15 billion, from $7.92 billion. Shares of Northwest rose 47 cents, or 7.4 percent, to close Thursday at $6.85 on the Nasdaq Stock Market. ^Southwest Airlines Co. The Dallas-based airline said profit was halved to $75 million in the third quarter. Southwest earned $75 million, or 9 cents per share in the July-September period, down from $151 million, or 19 cents per share, a year earlier. Revenue was $1.39 billion, compared to $1.34 billion in the same quarter last year, which included the Sept. 11 terror attacks and brief shutdown of the U.S. aviation system. Excluding a one-time gain of $48 million related to the government's industrywide bailout, Southwest said it earned $50.5 million, or 6 cents per share. On that basis, analysts surveyed by Thomson First Call had expected the low-fare carrier to earn 5 cents per share. For the first nine months of the year, Southwest earned $199 million, or 25 cents per share, compared to $448 million, or 55 cents per share, a year earlier. Revenue for the year has dipped to $4.12 billion, compared to $4.32 billion at this time last year. Parker said Southwest also faces higher insurance and security costs and the uncertain effects of a possible war against Iraq. "Based on these cost pressures and the uncertain revenue outlook, it is impossible to predict whether we will earn a profit in (the) fourth quarter," Parker said. The last time Southwest reported a quarterly loss was in the first quarter of 1991. Shares of Southwest rose $1.18, or 8.9 percent, to close Thursday at $14.48 on the NYSE. ^America West Holdings Corp. The parent company of the Tempe, Ariz.-based airline lost $31 million in the third quarter. America West lost 92 cents per share in the quarter that ended Sept. 30. That compared with a loss of $31.7 million, or 94 cents per share, a year earlier. Analysts surveyed by Thomson First Call expected a loss of $1.01 per sha= re from the country's eighth-largest airline. Third-quarter revenue rose 6 percent to $520 million, compared with $491 million a year ago. Douglas Parker, America West Holdings Corp.'s chief executive officer, said he was encouraged by the company's improvement over last year and he believes America West will be among the first airlines to return to profitability. "The fact remains, however, that our industry is struggling through an unprecedented financial crisis, and our continued losses are a clear indication that America West is not immune to the industry environment," he said in a written statement. Pushed to the brink of bankruptcy shortly after the Sept. 11 terrorist attacks, America West secured a $429 million loan guarantee from the federal government. Shares of America West rose 17 cents, or 13.3 percent to close Thursday = at $1.45 on NYSE. On The Net: www.continental.com www.southwest.com www.northwest.com www.americawest.com =20 ---------------------------------------------------------------------- Copyright 2002 AP