EARNINGS : High Fuel Bills Hurt Airline Firms’ Profits

The parent companies of United Airlines and USAir reported first-quarter losses Thursday, while Delta Air Lines said its profit for the latest quarter dropped 63%.

* UAL Corp., parent of United, said it lost $36.4 million in the three months ended March 31, primarily due to the settlement of several lawsuits involving its computer reservation system.

Without a charge against earnings of $77.5 million due to the settlement, earnings would have been $10.2 million, the Chicago-based company said. UAL reported earnings of $65.4 million for the first quarter of 1989.

UAL reported first-quarter operating revenue of $2.5 billion, compared to $2.3 billion for the same period last year.

“Although we achieved a slight profit for the quarter after excluding the one-time charge for settlement of lawsuits, we are nevertheless disappointed by these results,” said UAL Chairman Stephen M. Wolf.

He said higher fuel costs contributed to the company’s poor showing.

UAL in March settled a lawsuit filed by Continental Airlines and several other carriers accusing United of unfair competition in the computerized reservations business. The lawsuits, filed in 1985, contended United illegally monopolized or attempted to monopolize the computer reservations business or the air transportation business in various markets.

Continental, owned by Texas Air Corp., had sought $336 million in damages, arguing that United programmed its computer reservations system to unfairly favor United flights over its competitors.

On April 10, UAL’s board approved a $4.38-billion buyout bid for the airline by its unions.

* USAir Group, the parent of USAir, reported a first-quarter loss of $38 million, blaming it on higher fuel prices and the fact that the peak Easter travel period fell in this year’s second quarter.

USAir Group, based in Arlington, Va., earned $16 million in 1989’s first quarter.

First-quarter 1990 revenue totaled $1.54 billion, up from $1.48 billion for the same period a year earlier.

“Traffic levels through the first quarter were up 8.5%, slightly ahead of our projections,” USAir Chairman and President Edwin I. Colodny said. “Despite relatively strong passenger traffic, revenue continues to be on the weak side.”

Colodny said several factors boosted last year’s first quarter, hurting the comparison with the first quarter of this year: a strike against Eastern Airlines that began in early March, 1989, and the peak Easter travel period falling in March last year and April this year.

* Delta Air Lines Inc., Atlanta, blamed sharply increased fuel costs for its lower earnings in its third fiscal quarter.

Profit totaled $31.31 million for the three months ended March 31, down from $85.02 million in the same period last year. Operating revenue rose 4%, to $2.12 billion from $2.04 billion.

Higher fuel prices outweighed strong business traffic, fare increases and increased cargo revenue, said Thomas J. Roeck, senior vice president for finance.

Roeck also cited the timing of Easter and the start of the Eastern strike in last year’s first quarter as factors that made it difficult to match the results of a year earlier. Eastern is a major competitor of Delta at Atlanta, where both airlines have their main hubs.

For the nine months ended March 31, Delta said its net income was $228.69 million, down 15% from $270.14 million, or $5.49 a share, during the same period a year earlier. Revenue rose 10% to $6.34 billion.