Air Transport World

The party's over.(Statistical Data Included)

Hurricane Floyd helps put a dent in airline earnings, already under pressure

Rapidly rising fuel prices, stagnant yields, falling load factors and the impact of Hurricane Floyd combined to push US Major airlines' third-quarter earnings down 2.1% compared to the year-ago period. The industry earned $1.3 billion for the three months ended Sept. 30 versus $1.33 billion in the year-ago period.

Virtually all industry comparisons are distorted, however, owing to the impact of the 15-day pilot strike that occurred at Northwest Airlines during August-September 1998. The strike pushed that airline into the red for the quarter, inflated the results of its competitors and depressed overall industry results. If Northwest's results are excluded from the 1998 and 1999 periods, industry earnings plummeted 28% year-over-year.

With Northwest back in the picture, industry revenues rose 6.4% to $24.3 billion and operating costs climbed 8.3% to $22.1 billion. As a result, operating profit fell 9.1% to $2.3 billion (excluding NWA, profit plunged 29.1%). Industry yield was down 0.4% based on a simple average, while revenue per ASM dropped 0.7%. Largely owing to rising fuel prices, cost per ASM rose 1.4%. Industry RPMs were up 6.4% against a 7.2% rise in ASMs and load factor was virtually flat at 73.6%.

The biggest loser was US Airways, which previously had warned Wall Street that it would be unprofitable in the period. Nevertheless, the market was stunned by the size of the deficit--$85 million--which the airline blamed on the impact of Hurricane Floyd in September as well as ATC delays and crew and aircraft shortages attributed to training and maintenance backups. President and CEO Rakesh Gangwal called the results "clearly unacceptable. …

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