This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ Major U.S. Airlines Report Profits July 18, 2003 By THE ASSOCIATED PRESS Filed at 8:33 a.m. ET Three of the nation's largest airlines on Thursday reported net profits in the second quarter largely because they were reimbursed for airport security fees by the federal government. But executives warned that, while costs are coming down, passenger revenue and ticket prices remain weak, and more losses are likely. Delta, Northwest and Continental reported combined net profits of $490 million. Excluding one-time items, though, the carriers lost a total of $421 million. The stock prices of all three airlines fell Thursday. The carriers said the second quarter was made difficult by high fuel costs, the war in Iraq and fears of severe acute respiratory syndrome. They also face increasingly tough competition from low-cost carriers. The government's security-fee assistance program is scheduled to end Sept. 30, and as far as Blaylock & Partners airline analyst Ray Neidl is concerned, ``There's no profits, they're still losing money.'' Neidl, who commended the airlines for ``stabilizing'' losses, noted that the industry's second-quarter results were bolstered by seasonality -- summer being the busiest period for the leisure travel industry. But there is little optimism that autumn will bring hordes of corporate travelers, who are particularly important customers because they typically buy higher-priced tickets. ``The key to a robust and sustained industry revenue recovery,'' says Fitch analyst William Warlick, ``will be the return of the business traveler.'' ^ Delta Air Lines Inc. The Atlanta-based carrier had net income of $184 million, or $1.40 a share, compared to a loss of $186 million, or $1.54 a share, for the same period a year ago. Excluding one-time items, such as the federal security-cost reimbursement and the sale of its stake in ticket processor Worldspan, Delta lost $237 million, or $1.95 a share. Analysts surveyed by Thomson First Call had expected a loss of $2.08 a share for the latest quarter. Revenue for the quarter was $3.31 billion, down 4.8 percent from $3.47 billion a year ago. Shares of Delta fell 12 percent as the carrier said it expects heavy losses to continue in the months ahead, despite efforts to reduce labor and other expenses. The carrier has reduced its work force by 16,000 since the Sept. 11, 2001, terrorist attacks and has furloughed hundreds of pilots. Capacity was down 10 percent in the second quarter, compared with last year. In late June, Delta and its pilots union opened talks to discuss wage concessions. Delta has said it wants to cut pilots' hourly wages by 22 percent, cancel pay raises due over the next year and reduce some benefits. Other cost-cutting initiatives include placing more self-service kiosks in airports and offering more low-fare travel options, like its newly launched discount carrier, Song. Chief financial officer Michele Burns said she expects Delta to lose $200 million to $250 million in the July-September period, similar to its losses a year ago. Delta's one-time items in the quarter included gains of $251 million from government reimbursements and $176 million from the sale of Delta's 40 percent stake in Worldspan and a $6 million charge for adjustments related to accounting changes. For the first six months of the year, Delta lost $282 million, or $2.35 a share, compared to a loss of $583 million, or $4.79 a share, for the year-ago period. Six-month revenue slipped to $6.46 billion from $6.58 billion a year earlier. Shares of Delta were down $1.80 to close at $13.05 on the New York Stock Exchange. ^ Northwest Airlines Corp. The Eagan, Minn.-based carrier reported a second-quarter net profit of $227 million, or $2.45 a share, compared with a loss of $93 million, or $1.08 a share, in the same period a year ago. Excluding unusual items, including a $209 million federal security-fee reimbursement and $199 million from the sale of its stake in ticket distributor WorldSpan, Northwest lost $160 million, or $1.86 per share -- the company's worst second-quarter performance ever. The estimate of analysts surveyed by Thomson First Call was for a loss of $2.75 a share. The airline had quarterly revenue of $2.30 billion, down from $2.41 billion a year earlier. ``Second-quarter results were impacted by the war in Iraq and SARS,'' said chief executive Richard Anderson, even though the airline reduced capacity by 9 percent by switching to smaller airplanes on some routes and parking other planes in the desert. Higher fuel prices -- nearly 17 percent above the second quarter of 2002 -- also hurt Northwest's performance, he said. ``Clearly, with losses of the magnitude that we are experiencing, our top priority remains to bring the company's costs in line with our new level of revenues,'' Anderson said. Northwest has asked its labor unions to take cuts in pay and benefits and has asked suppliers to lower their prices to bring the airline's costs in line with revenues and with the costs of its major competitors. Northwest is seeking $950 million in annual concessions. For the first six months, Northwest lost $169 million, or $1.97 a share, compared with a loss of $264 million, or $3.09 a share. Revenue for the first six months of 2003 were $4.55 billion, down from $4.59 billion. Shares of Northwest fell 89 cents, or 8 percent, to close at $9.96 on the Nasdaq Stock Market. ^ Continental Airlines Inc. The Houston-based carrier earned $79 million, or $1.10 per share, in the April-June quarter, compared with a loss of $139 million, or $2.18 per share, a year earlier. Excluding a $111 million after-tax reimbursement for security costs and an $8 million after-tax charge related to deferred plane deliveries, the airline lost $24 million, or 37 cents per share. Analysts surveyed by Thomson First Call expected a loss of 83 cents per share for the latest quarter. Continental said First Call's consensus, adjusted to include the security fee reimbursement and the special charge, was a profit of 69 cents per share. Continental's quarterly revenue was $2.2 billion, up from $2.1 billion. Capacity decreased 6.8 percent, largely because of the suspension of many international flights as fears of SARS and the war depressed demand. In the first six months of the year Continental lost $142 million, or $2.18 per share, compared with a loss of $305 million, or $4.79 per share in the year-ago period. The company said it has $1.6 billion in cash on hand, $129 million of which is restricted. Continental said the airline is making progress on its plan to cut costs by $500 million by 2004 and expects to realize more than $150 million of those savings in 2003. That's in addition to $400 million in cost cuts this year. ``We continue to focus on achieving efficiencies and savings that will result in a stable, long-term competitive cost structure,'' said Jeff Misner, senior vice president and chief financial officer. Continental shares dropped $1.36, or 9 percent, to close at $14.11 on the NYSE. ^------ www.delta.com www.nwa.com www.continental.com ------------------------------------------------------------------------------------------------------ AP Business Writers Karren Mills in Minneapolis and Kristen Hays in Houston contributed to this report. http://www.nytimes.com/aponline/business/AP-Earns-Airlines.html?ex=1059536342&ei=1&en=cd12031d781901fa --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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