Profit Up at 3 Airlines; UAL’s Takes Off by 11%

UAL Corp., the world’s largest airline company, on Wednesday reported a surprisingly strong 11% jump in second-quarter earnings, boosted by lower fuel prices, surging U.S. demand and cost cuts that helped offset declining traffic in Asia.

Struggling Trans World Airlines Inc., meanwhile, posted a profit in the mid-range of analyst estimates, its largest quarterly profit since the second quarter of 1996, before the crash of its Flight 800 off Long Island, New York.

USAirways Group Inc., the sixth-largest U.S. carrier, said lower fuel costs also helped it exceed profit estimates for the quarter.

UAL, parent of United Airlines, reported net income of $418 million, or $3.24 a fully distributed share, up from from $376 million, or $2.82, a year earlier. Revenue increased 1.4% to $4.44 billion.

The company was expected to earn $3.20 a fully distributed share in the latest quarter, based on a survey of analysts by First Call.

The strong results from the largest U.S. carrier to the Far East showed that it could overcome falling demand amid the continuing economic turmoil there. The airline’s exposure to Asia, where it generates more than 20% of its revenue, hurt its first-quarter earnings and has been a drag on its stock.

United, like other U.S. airlines, also got a boost from soaring domestic travel demand.

Unit costs fell 2.4% as the carrier moved large planes, which are hard to fill, out of Asia to regions including Europe where demand for travel is higher. In addition, the average price for jet fuel fell 14%.

US Airways, based in Arlington, Va., said profit from operations rose 46% to a record $374 million as revenue rose 3.8% to $2.3 billion and fuel expenses fell. The airline’s per-share earnings of $1.95 per diluted share exceeded analyst estimates of $1.86.

The carrier said a tax change resulted in a 5.5% drop in net profit to $194.3 million.

TWA said it earned $24.8 million, or 28 cents a share, as the St. Louis-based airline attracted more high-paying business travelers, compared with a loss of $12 million, or 31 cents, a year earlier. Analyst estimates ranged from 25 cents to 30 cents. Revenue rose 4.6% to $883.5 million.

Like other airlines, TWA got a boost from the lowest fuel prices in almost a decade.

At a Glance

Other earnings, excluding one-time gains and charges unless noted:

OIL

* Amoco Corp. said its earnings dropped 36% to $395 million, or 41 cents a share, before a gain and a charge, as revenue fell 9.9% to $7.77 billion, on lower oil prices. The company said it will consider a new round of cost-cutting, including firings, in response to its latest results.

* Mobil Corp.’s profit fell 25% in the second quarter to $655 million, or 81 cents a diluted share, beating analyst forecasts by a penny, due to lower crude oil prices. The nation’s second-largest oil company said its revenue fell 12% to $16.74 billion.

UTILITIES

* Duke Energy Corp., owner of large electric utilities in the Southeast and an extensive natural gas pipeline network, said second-quarter profit grew 30% to $274.4 million, or 76 cents a share, far exceeding estimates of 67 cents, because of higher power sales during last month’s heat wave. Revenue climbed 29% to $4 billion.

* PacifiCorp said its second-quarter earnings fell 60% to $36 million, or 12 cents a share, partly because it bet wrong on the direction of electricity prices during a Midwest heat wave. The utility company’s revenue rose 30% to $1.03 billion. The second-quarter profit included losses totaling $32 million, or 11 cents, for power trading during the June heat wave.

OTHER INDUSTRIES

* Allegiance Corp. said second-quarter net income rose 40% to $30.8 million, or 52 cents a diluted share, exceeding estimates of 48 cents, as revenue rose 4.5% to $1.12 billion. The supplier of medical products also said it will split its stock 2-for-1, raise its dividend and repurchase about 5% of its shares.

* Anheuser-Busch Cos., the world’s largest brewer, said second-quarter earnings rose a higher-than-expected 2.6% to $391.2 million, or 80 cents a diluted share, beating estimates by 3 cents, as it continued to ship more beer in advance of a possible strike at its U.S. breweries. Revenue edged up 0.4% to $3 billion.

* Avon Products Inc. said its second-quarter net income advanced 17% to $111.4 million, or 84 cents a diluted share, beating estimates by 2 cents, as sales gained 2% to $1.25 billion. The direct seller of beauty products also said it will split its stock 2-for-1 and add $600 million to its share-buyback program. Double-digit sales growth in the Americas and Europe offset weaker sales in Asia, Avon said.

* Allegheny Teledyne Inc., maker of specialty metals, said second-quarter earnings were flat at $80.4 million, or 40 cents a share, meeting estimates, as sales fell less than 1% to $1.019 billion from $1.025 billion.

* Allstate Corp., the No. 2 property and casualty insurer in the U.S., said second-quarter profit from operations rose 7.7% to $619 million, or 74 cents a diluted share, beating forecasts of 73 cents, as the insurer held down costs while premiums grew. Revenue rose 7.7% to $6.54 billion. * Charter One Financial Inc. said its second-quarter earnings rose 24% to $68 million, or 52 cents a diluted share, beating estimates by a penny. The thrift’s non-interest income rose 41%, led by gains in retail banking fees.

* Coca-Cola Enterprises Inc. reported flat earnings for the second quarter of $111 million, or 27 cents a diluted share, and warned that its profit for 1998 and 1999 would be less than expected as it revs up spending on new trucks and vending machines. The soft-drink bottler, which is 44%-owned by Coca Cola Co., was expected to earn 29 cents. Revenue rose 27% to $3.69 billion.

* DuPont Co. said second-quarter earnings fell 12% to $1 billion, or 87 cents a diluted share, blaming costs related to acquisitions, lower prices for oil, fibers and crop-protection chemicals and the strike at General Motors. The owner of energy company Conoco Inc. and manufacturer of chemicals said these problems are expected to push third-quarter earnings below the year-earlier level. The results matched the 87-cent average estimate of analysts surveyed by First Call, which was lowered from $1.01 earlier this month after a DuPont warning. Conoco’s profit fell 27% to $180 million.

* Eli Lilly & Co. said second-quarter profit rose 18% to $491.3 million, or 44 cents a diluted share, beating estimates by a penny. Sales jumped 18% to $2.34 billion, with a boost from a 12% rise in sales from the antidepressant Prozac, its top drug. Sales of the schizophrenia drug Zyprexa and cancer drug Gemzar more than doubled, and the clot-preventer ReoPro saw a 69% rise in sales, offsetting weak sales of Evista, its new treatment for osteoporosis.

* Halliburton Co.’s second-quarter profit rose 34% to $136.5 million, or 51 cents a diluted share, a penny higher than estimates, helped by revenue from customers’ offshore projects. The oil-field service company’s revenue rose 11% to $2.48 billion.

* Jefferson Smurfit Corp. rebounded to a profit in the second quarter from a year-earlier loss, as prices rose for its corrugated boxes. Net income was $11 million, or 10 cents a diluted share, compared with a loss of $4 million, or 4 cents, a year ago. The paper recycler’s results matched analyst estimates. Revenue rose 7.5% to $844 million.

* Providian Financial Corp. said it earned $62.9 million, or 65 cents a diluted share, up 38% from a year ago, exceeding estimates of 62 cents. Earnings comparisons are pro forma because Providian, the largest issuer of credit cards to customers with previous credit problems, became a public company in June 1997.

* Ralston Purina Co.’s fiscal third-quarter earnings rose 3.5% to $77.2 million, or 23 cents a diluted share, missing analyst estimates by 4 cents, on higher spending to advertise its Energizer and Eveready batteries. Revenue rose 3% to $1.07 billion. The company said higher sales of Purina Puppy Chow and other pet-food products boosted results.

* Sempra Energy, formed last month by the merger of Enova Corp. and Pacific Enterprises, reported second-quarter net income of $31 million, or 13 cents per share including merger-related charges, on revenue of $1.3 billion, compared with net income of $112 million, or 47 cents, on revenue of $1.1 billion a year ago.

* Stratus Computer Inc. posted a second-quarter loss as sales fell 20%, forcing it to cut 350 jobs, or 15% of its work force, as it struggles to deal with weak demand in Asia and the Americas. The computer maker lost $9.97 million, or 42 cents a diluted share, including a charge of $10 million to write down the value of excess inventory for Asian customers, as sales fell to $134.3 million. It had net income of $17.4 million, or 71 cents a diluted share, a year ago. The company said it will take a restructuring charge of about $20 million, or 83 cents a share, to cover costs of firing workers.

* Tandy Corp. said profit from continuing operations advanced 16% in the second quarter to $47.5 million, or 44 cents a diluted share, on strong sales at its Radio Shack chain of electronics stores. Revenue increased 9% to $762 million. The latest figures exclude results from the money-losing Computer City Chain, which Tandy has agreed to sell to CompUSA Inc. later this year. The results were in line with analyst estimates that stripped out Computer City’s results, Tandy said. Computer City’s operating loss and a provision for a loss on the sale totaled $67.6 million, gave Tandy a final loss of $20.1 million, or 21 cents a share.

* UST Inc.’s second-quarter earnings rose 1.9% to $119.1 million, or 64 cents a diluted share, missing estimates by a penny. The company said lower costs and higher prices on its Skoal, Copenhagen and other moist snuff helped offset slowing unit sales. Revenue edged up to $357.4 million from $355.8 million.

* United Technologies Corp. said second-quarter profit rose a better-than-expected 18% to $360 million, or $1.44 a diluted share, as operating profit rose in all of its businesses despite weakness in sales at its automotive and Otis elevator units. Sales were strong in its Pratt & Whitney jet engine, Carrier air conditioning and flight systems units. Total revenue rose 2.9% to $6.67 billion.

* Unum Corp., the largest U.S. disability insurer, said second-quarter profit from operations increased 17% to $97.2 million, or 69 cents a diluted share, fueled by a rise in premiums. Revenue rose 12% to $1.16 billion.

*

Bloomberg News and Reuters were used in compiling this report.