2 Airlines Put Up Surprising Numbers

Delta Air Lines Inc. and Southwest Airlines Co. on Tuesday reported quarterly earnings that beat expectations, sparking a rally in airline shares.

The two were the first major airlines to report earnings for the quarter ended in March, one in which the toughest year-over-year fuel price comparisons in 10 years are expected to cut airline profits by 45% or more.

Despite recent fare hikes and fuel surcharges, tight fare price competition prevented most of the added fuel costs from being passed on to customers.

Fuel costs more than doubled at Southwest, which was minimally hedged on fuel prices, and were up almost a third at Delta, the best-hedged in the quarter. But strong revenue trends and cost controls helped the airlines give a positive surprise to Wall Street.

The S&P; airlines index gained 3.99% on Tuesday, while the S&P; 500 index gained 2.86%.

Delta said profit in its fiscal third quarter dropped 11% to $179 million, or $1.33 a share, but exceeded the $1.10 a share analysts expected. Revenue rose 13% to $3.96 billion as the airline’s passenger traffic and average fares each rose about 0.6%.

At Southwest, the nation’s largest low-cost airline, earnings edged downward less than 1% to $95.6 million, or 18 cents a share, but beat forecasts of 16 cents. Revenue gained 16% to $1.24 billion.

Delta shares gained $1.44 to close at $50.19 on the New York Stock Exchange, while Southwest gained 69 cents to close at $19.81, also on the NYSE.

At a Glance

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

* Avis Group Holdings Inc. said first-quarter earnings jumped 80% to $19.6 million, or 48 cents a share, well beyond the consensus estimate of 41 cents, as revenue climbed 79% to $1.01 billion. Avis raised car-rental rates 4.5% in the quarter and also benefited from its $5.14-billion purchase of Cendant Corp.’s auto-leasing business in June, which added $424.2 million in revenue,

* Alza Corp. said its operating earnings grew 7% to $31 million, or 30 cents a share, a penny better than estimates, as revenue increased 8% to $201 million. Sales of Alza’s incontinence drug, Ditropan XL, were particularly strong.

* Bank One Corp.’s profit plunged 40% in the first quarter to $689 million, or 60 cents a share, as the bank lost credit card customers and struggled to regain investor confidence after its stock lost half its value in the last year. Non-interest income fell 30% as credit card revenue dropped 38%. Bank One lost 13% of its credit card customers. Net interest income fell 3.8%.

* Ben & Jerry’s Homemade Inc. said profit edged up to $1.3 million, or 18 cents a share, from $1.2 million, or 15 cents, a year ago, as margins improved and sales grew 8.2% to $54.2 million.

* Boston Scientific Corp., one of the biggest makers of angioplasty products, said first-quarter earnings rose 6% to $106 million, or 26 cents a share, better than forecasts of 23 cents, as it reduced manufacturing costs and improved inventory management. Revenue fell 4.1% to $679 million.

* Caterpillar Inc.’s profit grew a much-better-than-expected 26% to $258 million, or 73 cents a share, in the first quarter, as the company cut costs, boosted production and sold more engines. Sales rose 1.1% to $4.92 billion. Analysts were expecting 58 cents a share.

* Cendant Corp.’s first-quarter profit rose 4% to $181 million, or 24 cents a share, a penny better than estimates, led by gains in its Century 21 real estate franchise and diversified services units. Revenue fell 14% to $1.13 billion.

* Coca-Cola Co., said operating profit fell 28% to $537 million, or 22 cents a share, a penny better than forecasts, from $747 million, or 30 cents, a year ago, as sales fell to $4.39 billion from $4.40 billion. The results exclude charges the soft-drink giant took for cutting thousand of jobs and writing off assets.

* Immunex Corp., one of the world’s biggest biotechnology companies, said first-quarter profit soared to $32.2 million, or 6 cents a share, a penny better than forecasts, from $251,000, or less than a cent. Immunex, which is majority owned by drug maker American Home Products Corp., said revenue surged 82% to $179 million on growing sales of Enbrel, Immunex’s only major product.

* MGM Grand Inc. said first-quarter earnings rose to $44.3 million, or 38 cents a share, from $9.4 million, or 8 cents, after several one-time items in the year-earlier quarter. Results were helped by more winnings from the MGM Grand in Las Vegas and a new casino in Detroit. MGM Grand said it earned 42 cents in the latest quarter excluding pre-opening and restructuring charges, topping expectations of 34 cents. Revenue jumped 76% to $442.9 million.

* Maytag Corp. said first-quarter profit fell 13% to $75.9 million, or 89 cents a share, beating revised estimates of 85 cents, as sales edged down 1% to $1.10 billion.

* Mellon Financial Corp. said profit grew 10% to $253 million, or 50 cents, in the first quarter, beating expectations by 1 cent, on a surge in trust and investment fees as well as lower costs.

* PaineWebber Group Inc.’s first-quarter profit rose 10% to $176.3 million, or $1.16 a share, beating expectations of $1.09 a share, as rising commissions, boosted by stock market volatility, offset declines in trading and investment banking. Net revenue rose 23% to $1.6 billion.

* Philip Morris Cos. said first-quarter earnings rose 5.6% to $2.07 billion, or 89 cents a share, matching estimates, as sales rose 4.2% to $20.3 billion. Cigarette shipments rose 7%, the first gain in two years, as stores that had cut orders ahead of an increase in federal taxes restocked shelves. Profit grew 6.6% at Kraft Foods and was up 13% at Miller Brewing Co.

* Tyco International Ltd., the world’s biggest maker of electronic connectors, said fiscal second-quarter profit rose 50% to $853.6 million, or 50 cents a share, matching estimates, as revenue grew 35% to $7.07 billion.

* Weyerhaeuser Co., the world’s biggest seller of pulp used to make paper, said first-quarter profit more than doubled on soaring pulp prices. Net income increased to $244 million, or $1.04 a share, from $101 million, or 51 cents. Sales jumped 47% to $3.91 billion.

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Earnings Reports

A sampling of companies reporting quarterly earnings Tuesday and expected to report today, ranked by year-over-year earnings-per-share (EPS) growth, compiled by First Call/Thomson Financial.

Reporting Tuesday

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Analysts’ % above/ Year- Ticker est. Actual below ago Company symbol EPS EPS estimate qtr. Teradyne TER $0.52 $0.60 +15 $0.10 Weyerhaeuser WY 0.92 1.04 +13 0.51 McGraw-Hill MHP 0.14 0.24 +71 0.12 ICU Medical ICUI 0.32 0.33 +3 0.25 Jefferies JEF 0.59 0.62 +5 0.50 Golden State Bancorp GSB 0.59 0.59 0 0.50 Automatic Data Proc. AUD 0.41 0.42 +2 0.36 Dun & Bradstreet DNB 0.36 0.42 +17 0.36 Southern SO 0.36 0.37 +3 0.32 St. Jude Medical STJ 0.43 0.45 +5 0.40 Pitney Bowes PBI 0.57 0.57 0 0.51 Milacron MZ 0.37 0.43 +16 0.40 Schlumberger Ltd. SLB 0.24 0.24 0 0.23 Tellabs TLAB 0.26 0.26 0 0.25 Parametric Tech. PMTC 0.00 -0.02 NM 0.16

Year- over-year Company % change Teradyne +500% Weyerhaeuser +104 McGraw-Hill +100 ICU Medical +32 Jefferies +24 Golden State Bancorp +18 Automatic Data Proc. +17 Dun & Bradstreet +17 Southern +16 St. Jude Medical +13 Pitney Bowes +12 Milacron +7 Schlumberger Ltd. +4 Tellabs +4 Parametric Tech. NM

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Expected Today

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Ticker Analysts’ Year-ago Predicted Company symbol estimated EPS quarter pct. chg. USX-U.S. Steel Group X $0.39 $0.02 +1,850% Extreme Networks EXTR 0.12 0.01 +1,100 Cognixant CNXT 0.19 0.04 +375 Applied Micro Circuits AMCC 0.14 0.05 +180 Placer Dome PDG 0.08 0.03 +167 PLX Technology PLXT 0.12 0.06 +100 Georgia-Pacific GP 1.02 0.57 +79 TRW TRW 1.21 0.85 +42 Minimed MNMD 0.18 0.13 +38 Apple Computer AAPL 0.81 0.60 +35 Sysco SYY 0.29 0.22 +32 Lucent Technologies LU 0.22 0.17 +29 Citrix Systems CTXS 0.19 0.15 +27 Warner-Lambert WLA 0.56 0.45 +24 IMS Health RX 0.16 0.13 +23 Mead MEA 0.27 0.22 +23 ITT Industries IIN 0.55 0.45 +22 Dole Foods DOL 0.63 0.52 +21 Springs Industries SMI 1.00 0.84 +19 Household International HI 0.77 0.65 +18 General Dynamics GD 0.92 0.78 +18 Danaher DHR 0.46 0.39 +18 Bard (C.R.) BCR 0.60 0.51 +18 Tetra Tech WATR 0.20 0.17 +18 Chase Manhattan CMB 1.55 1.32 +17 Colgate-Palmolive CL 0.37 0.32 +16 Meredith MDP 0.47 0.41 +15 United Technologies UTX 0.72 0.63 +14 AllTel AT 0.67 0.59 +14 Illinois Tool Works ITW 0.70 0.62 +13 Ingersoll-Rand IR 0.82 0.73 +12 PepsiCo PEP 0.28 0.25 +12 Liz Claiborne LIZ 0.78 0.70 +11 Textron TXT 1.03 0.93 +11 Wachovia WB 1.30 1.18 +10 CNF CNF 0.63 0.58 +9 Avon Products AVP 0.30 0.28 +7 American Home Products AHP 0.51 0.49 +4 Rohm & Haas ROH 0.62 0.61 +2 Sabre Group TSG 0.55 0.55 0 Equifax EFX 0.31 0.31 0 Cooper Tire & Rubber CTB 0.38 0.41 -7 Owens-Illinois OI 0.36 0.41 -12 Boeing BA 0.35 0.50 -30 Varco International VRC 0.07 0.18 -61 Raytheon RTNB 0.24 0.71 -66 Unova UNA -0.01 0.06 NM Mattel MAT -0.03 0.02 NM AMR AMR 0.40 -0.01 NM Occidental Petroleum OXY 0.63 -0.20 NM USX-Marathon Group MRO 0.66 -0.04 NM VeriSign VRSN 0.01 -0.02 NM Cadiz Land CLCI -0.23 -0.22 NM EarthLink ELNK -0.48 -0.15 NM Tut Systems TUTS -0.28 -0.32 NM

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Notes: NM = not meaningful. A loss in any period makes percentage change not calculable.

Year-over-year growth and percentage changes are based on earnings-per-share figures and may differ from percentage changes based on total profit.

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