Air Transport World

Red ink continues to flow in 2002: US major airlines lose another $2.5 billion in first quarter. (Finance).(Statistical Data Included)

As had been anticipated, the financial bloodletting that began in the first quarter of 2001 continued into 2002, with the 10 US Major passenger airlines reporting a combined quarterly loss for the three months to March 31 of $2.46 billion. In the year-ago period-- itself no picnic--the industry lost $754.7 million. Results would have been far worse but for substantially cheaper fuel during this year's quarter. Fuel prices began to rise again in March, however, and airlines are unlikely to see the same benefit in the June period.

The biggest surprise was that Southwest Airlines was not the only Major to post a profit. American Trans Air, smallest of the group, reported a tiny gain, reversing a loss in the year-ago quarter. Like Southwest, ATA is a low-fare/low-cost airline, although its business model is dissimilar.

American Airlines, now larger than United Airlines in all respects owing to its acquisition of TWA last year, also grabbed the top spot in terms of red ink. At the parent company level it lost $575 million compared to a loss of $43 million last year. AMR Corp. CFO Tom Horton declined to speculate as to when the world's largest airline will return to profitability. Current-period results were net of a $27 million after-tax charge related to tax law changes that enabled the company to receive a $393 million federal tax refund in March. Excluding that special item, net loss was $548 million. The airline's daily cash burn rate was $5 million during the quarter, improved from around $9 million in the 2001 fourth quarter.

"We have a very long way to go," Horton said, adding that AMR expects to see a loss for the second quarter as well. …

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