Airlines’ Losses Still High as Recession Slows Travel
UAL Corp. and Delta Air Lines reported sharply lower quarterly earnings Thursday and USAir posted a $56.8-million loss as the effects of the recession and the Persian Gulf War continued to hurt travel.
The airlines blamed fare wars for cutting into profits during the last quarter.
Their performances were substantially better than the first three months of 1991, when they posted losses as higher jet fuel costs and the Gulf War drastically cut into travel.
UAL
The nation’s second-largest air carrier after American Airlines reported net income of $52.7 million, or $2.23 per share, for the three months ended June 30. That was down 64.5% from the $148 million, or $6.81 per share, reported in the same period a year ago.
Revenue rose 7% to $2.95 billion from $2.74 billion.
UAL Chairman Stephen M. Wolf said paying customers flew 13.1% more miles in the second quarter of 1991 than a year ago, but domestic revenue was held down by fare wars and a decline in high-profit business travel.
Wolf said in a statement that the Chicago-based firm was forced to match price cuts by “financially distressed competitors whose primary focus appears to be on cash flow in the short term.”
Delta
The No. 3 U.S. air carrier reported profits of $19.2 million, or 30 cents per share, down 74% from $74.1 million or $1.47 per share, a year earlier. Revenue rose about 13% to $2.52 billion from $2.24 billion.
Delta said growth in traffic during the most recent quarter was spurred partly by costly discount fare promotions, which caused Delta’s profit yield per passenger mile flown to decline 1%.
The Atlanta-based airline said operating expenses rose 16% because of new international routes to Europe and Asia. In addition, cash expenses rose 30% because of to higher costs for repairs and maintenance, rental and landing fees, and higher travel agency commissions.
USAir
The Arlington, Va.-based carrier’s $56.8-million loss came to $1.47 per share, compared to a loss of $75.1 million, or $1.86 per share a year earlier. Revenue fell to $1.66 billion from $1.71 billion.
The company said the second-quarter results included a tax provision of $45.4 million, less than 1990’s tax provision of $90.5 million.
USAir Chief Executive Seth Schofield said the company was adversely affected by the nationwide economic recession, which depleted passenger traffic particularly on the East Coast.
MORE EARNINGS NEWS: D3
Company Reports
Delta Air Lines (in millions of dollars) 1990: +74.1 1991: +19.2
Quarter ended June 30
United Airlines (in millions of dollars) 1990: +148.3 1991: +52.7
Quarter ended June 30
