Air Transport World

Stock sales spur earnings.(second quarter earnings for major US airlines)(Brief Article)

Nonoperating gains at UAL Corp. and US Airways pushed the US Majors to a record second quarter despite a softening of industry fundamentals

The 10 US Major airlines earned $2.1 billion in the second quarter ended June 30, up 24.8% over the year-ago period, as substantial nonoperating gains at UAL Corp. and US Airways Group more than offset a decline in operating performance at those airlines and for the group as a whole. Every airline except TWA was profitable.

Operating revenues for the 10 rose 3.7% against a 5.1% increase in operating expenses, resulting in a 5.3% drop in operating profit to $2.8 billion. Despite the lower operating performance, industry results were a pleasant surprise to analysts who had feared that overcapacity coupled with a weak fare environment would result in a much sharper decline. Other factors affecting industry performance included a large increase in air traffic control delays as well as severe weather in the quarter. Although the price of fuel rose, it remained below year-ago prices, contributing to favorable cost comparisons.

Industry traffic (RPMs) was up 3.2% against a 4.4% rise in seat-miles and load factor declined 0.8 points. Reflecting softer demand, yield per passenger-mile was off nearly 1% while operating revenue per ASM fell 1.4%. Savings from reduced distribution expense and lower fuel prices offset rising labor costs, keeping cost per ASM virtually fiat at 9[cent].

Delta Air Lines continues to run on all cylinders. ATW's Airline of the Year posted record net income of $364 million in the quarter, actually Delta's fiscal fourth quarter, up 1% over the year-ago period. For the full fiscal year, Delta's earnings totaled $1.1 billion, also a record and 10% up on FY 1998 earnings of $1 billion. Returning to the quarterly results, the Atlanta-based airline posted the industry's highest operating profit while its operating margin of 16.2% was second only to perennial frontrunner Southwest Airlines, Delta saw its load factor dip 1. …

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