US Airways Group Inc. yesterday reported a third-quarter loss of $85 million, more than three times the amount that analysts had predicted in an industry beginning to show signs of an overall slowdown.
"These results are clearly unacceptable," US Airways President Rakesh Gangwal said in the airline's earnings report. He said operational difficulties such as bad weather, crew shortages and air traffic control delays "have taken a significant toll on our financial performance."
Last month the Arlington-based airline said it would not report a profit for the third quarter. Earlier this month Gangwal warned that the airline's financial problems could carry over into the final three months of the year. The company did not address the prospects for the fourth quarter in the earnings report released yesterday.
The airline's performance translated into a loss of $1.19 a share for the quarter, more than three times the consensus forecast of industry analysts polled by First Call/Thomson Financial. Analysts predicted the airline would lose 35 cents a share, or $25 million. In the year-ago quarter, US Airways earned $142 million, or $1.51 a share.
Although US Airways is one of only two major airlines that so far have reported actual losses for the quarter--Trans World Airlines Inc. yesterday reported a $36.2 million loss (61 cents a share)--other major airlines are generally experiencing inferior financial results as a result of bad weather, rising fuel costs and air traffic delays. The industry also has experienced a softening in air fares as a result of an overcapacity of seats and a slowdown in travel demand.
Even Southwest Airlines Co., consistently one of the most profitable airlines in the industry, reported a 2 percent drop in profit compared with the same period last year, largely the result of a 32 percent increase in the cost of jet fuel. At US Airways fuel costs have risen an average of 40 percent over the past 12 months.
The nation's two largest carriers, United Airlines and American Airlines, each reported a drop in earnings for the quarter.
Fully distributed net earnings at UAL Corp., United's holding company, were $456 million ($3.75 a share), compared with $516 million ($4.02) for the third quarter last year.
AMR Corp., American's parent company, reported third-quarter earnings of $279 million ($1.76 a share), compared with $433 million ($2.49) for the same period last year.
The two airlines either met or exceeded the estimates of industry analysts polled by First Call/Thomson Financial. The analysts predicted United would report earnings of $3.76 a share and that American would report earnings of $1.69 a share.
Of all the airline earnings reports, the worst performance so far was turned in by US Airways. Chairman Stephen M. Wolf, the former United Airlines chairman brought in three years ago to rescue the carrier, yesterday called the third-quarter loss "an immense disappointment to all of us."
The airline said as a result of the bad weather, flight delays and crew shortages, it flew "significantly fewer available seat miles than it had planned." An available seat mile is one seat transported for one mile. The airline said so far this year it has flown 6.6 percent fewer available seat miles than it had planned.
A key economic measure for the industry is the cost per available seat mile, which shot up to 13.51 cents, compared with 12.26 cents for the same period a year earlier. US Airways continues to have some of the highest per-seat costs in the industry.
The company said the cost increase was the result of lost revenue from cancellations not being offset by a corresponding cut in expenses.
US Airways also has faced new competitive pressures. Southwest and Delta Express have directly taken on MetroJet, US Airways' year-old low-fare airline; United and Delta have mounted a direct challenge to US Airways' shuttle operations to both New York and Boston; and United is overflying many of US Airways' major domestic routes in the eastern half of the nation from its new hub at Dulles International Airport. Additionally, US Airways is the only major carrier without an alliance partner for overseas flights.
Beginning this month, top managers at US Airways have begun to brief employees at its bases throughout the country on the financial and competitive problems facing the airline.
US Airways stock closed yesterday at $26.31 1/4, down $1.81 1/4 a share.
CAPTION: US Airways Chairman Stephen M. Wolf, brought in three years ago to rescue the carrier, called the third-quarter loss "an immense disappointment." The airline blamed the results on difficulties such as crew shortages.
CAPTION: US Airways Group (This chart was not available)