UAL Suffers Loss; TWA Net Drops
UAL Inc. said Tuesday that it lost $91 million in the second quarter because of the 29-day strike by pilots against its United Airlines unit.
Trans World Airlines, meanwhile, said industry price cutting contributed to a 67% decline in its second-quarter profit compared to a year earlier.
Chicago-based UAL said its latest loss compared to net income of $123.1 million a year earlier. Second-quarter revenue fell to $1.19 billion from $1.82 billion.
“The short-term impact of the strike will ultimately be overcome,” Richard J. Ferris, UAL chairman, president and chief executive, said in a statement.
“The agreement that ended the strike establishes pilot wage rates that will produce long-term savings needed by United to succeed in the competitive air-travel marketplace,” Ferris said. The pilots walked off their jobs May 17 and approved a contract June 14.
“The strike eliminated the momentum United needed to take full advantage of the peak summer travel season,” Ferris said. “However, we are better prepared for 1986 and the years beyond.”
United Airlines alone had a second-quarter loss of $102.9 million, compared to earnings of $114.3 million a year ago, which included a $13.1-million one-time gain.
New York-based TWA said its second-quarter profit tumbled to $18.2 million from $55.4 million a year earlier. The latest earnings included a $3.14-million one-time gain from a stock-for-debt exchange. Revenue climbed to $1.04 billion from $961 million.
“Although TWA’s system traffic performance remains strong, revenue gains in the second quarter and first half were diluted by the continued availability of deeply discounted industry fare programs, principally on domestic routes,” C. E. Meyer Jr., president and chief executive, said in a statement.
TWA has agreed to be acquired by Texas Air Corp., the parent of Continental Airlines, for $925 million. However, investor Carl C. Icahn leads a group that already owns 33% of TWA’s shares, and he has been talking to TWA’s major unions about making a bid to take control of the airline in exchange for labor concessions.
