Delta, Northwest Post Second-Quarter Losses
Delta Air Lines Inc. and Northwest Airlines Corp. on Thursday reported steep second-quarter losses, joining other industry leaders in reporting continued financial suffering as a result of higher fuel and labor expenses and lower spending by corporate travelers.
Profit fell at Southwest Airlines Co. and Alaska Air Group Inc.
Northwest, the nation’s fourth-largest carrier, also said it will eliminate 1,500 jobs, equal to 2.8% of its work force, and scale back flights to reduce expenses.
The St. Paul, Minn.-based carrier posted a loss of $55 million, or 65 cents, contrasted with profit of $115 million, or $1.26, a year ago. Sales fell 5.9% to $2.72 billion.
Northwest said expenses rose 4.5% to $2.75 billion, led by increases of 8.1% for labor and 5.3% for fuel.
Delta, the nation’s No. 3 carrier, reported a loss of $123 million, or $1.03 a share, blaming costs from its fresh pilot contracts and the protracted strike at its Comair regional carrier unit as well as higher fuel costs and low demand for business travel.
Delta’s loss was smaller than the $1.20-a-share average forecast of analysts. That forecast was reduced from a loss of 58 cents after a warning from Delta on June 15.
In the year-earlier quarter, Delta had operating profit of $374 million, or $2.85 a share. Revenue fell 15% to $3.78 billion.
The Comair strike, which ended June 22, cost the company $195 million in lost profit and Delta said the quarter would have been profitable without the walkout. Delta also began to pay higher costs of a new contract with pilots at the main carrier.
Southwest, the largest low-fare carrier, said its net income declined 7.9% to $175.6 million, or 22 cents a share, as sales rose 6.4% to $1.55 billion.
The Dallas-based carrier’s flight capacity expanded faster than passenger demand.
Alaska Air’s net income slid 80% to $4.7 million, or 18 cents a share, on a 4.8% increase in sales to $579.3 million, as the airline carried fewer business travelers and capacity expanded.
The Seattle-based company has been rebuilding after cutting back flights last year following an Alaska Airlines crash off the California coast that killed 88 people.
Other earnings, excluding one-time gains or charges unless noted, include:
* R.J. Reynolds Tobacco Holdings Inc., parent of the No. 2 U.S. tobacco company, said second-quarter profit rose 9% to $127 million, or $1.26 a share, a penny better than forecasts, as it gained market share. Sales rose 10% to $2.27 billion.
* Tosco Corp., the U.S. oil refiner that is being acquired by Phillips Petroleum Co., said second-quarter net income nearly doubled to $313.7 million, or $2 a share, from $145 million, or 95 cents, a year earlier, on higher refining profit margins. Revenue rose 21% to $6.79 billion. The results far exceeded analyst expectations of $1.43.
* TRW Inc.’s second-quarter profit fell 51% to $82 million, or 65 cents a share, a penny better than analyst forecasts, as revenue declined 4.5% to $4.23 billion. The aerospace and auto parts company blamed auto makers’ cutbacks in production for the weakness. Separately, the company lost a $2.4-billion contract to build a new battlefield radio system for Britain to a Canadian unit of General Dynamics Corp.
* Tribune Co., which publishes the Los Angeles Times and Chicago Tribune and owns several television stations, said profit from continuing operations fell 29% to $87 million, or 24 cents a share, amid a weak advertising environment. The results were 2 cents better than analysts’ reduced forecasts. Tribune, which acquired Times Mirror Co. last year, said revenue rose 1.6% to $1.37 billion.
* United Parcel Service Inc. said second-quarter earnings fell 9.4% to $630 million, or 55 cents a share, as a shipment slowdown spread to more global regions. Sales rose 3.9% to $7.57 billion.
