Air Transport World

Off to a bad start: massive special gains at US Airways made the first quarter look much better than it was. (Finance).

The 10 US Major airlines collectively lost $1.94 billion in the first quarter ended March 31, substantially improved over the loss in the year-ago period of $3.42 billion. Comparisons, however, are distorted heavily owing to the fact that US Airways recognized a $1.92 billion special gain related to its emergence from bankruptcy at the end of the quarter.

Excluding the impact of this one-time event, the industry lost $3.86 billion. Additionally, year-ago results were impacted by noncash accounting-related charges at several carriers that inflated the net loss figure by some $1.5 billion.

The industry's deterioration is demonstrated at the operating level, where the Majors lost $3.05 billion, widened from $2.7 billion in 2002. Industry revenues were virtually flat at $19.05 billion while operating expenses, boosted by rising fuel prices, climbed 1.9% to $22.1 billion. Of the 10, only Southwest Airlines was profitable at both the operating and net levels if special gains are excluded, while ATA Airlines (formerly American Trans Air) managed a tiny operating profit for the quarter.

The largest quarterly net loss was recorded by United Airlines parent UAL Corp., a total of$1.34 billion--$958 million excluding special items. This compared to a loss of $510 million in the year-ago period, or $487 million if special items are excluded. The company's first-quarter cash burn rate was $2 million per day and its total cash burn, adjusted to exclude a $92 million DIP financing drawdown, was $4 million per day.

Going forward, UAL said its quarterly results will "more substantially" reflect lower salary and benefit costs as well as added "flexibility and productivity enhancements" associated with new wage and work-rule agreements implemented last month that will save $2.56 billion on an annual basis. …

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