US Airways Posts $766-Million Loss
US Airways Group Inc., hit especially hard by the aftermath of the Sept. 11 attacks, said Tuesday its third-quarter loss was $766 million, or $11.42 a share, even after getting aid from the airline industry’s federal bailout. The loss was far worse than expected on Wall Street.
The latest loss compared with a year-earlier loss of $30 million, or 45 cents a share. Revenue at US Airways, the nation’s sixth-largest airline, dropped 17% to $2 billion from $2.4 billion.
The effect of the Sept. 11 attacks on the World Trade Center and Pentagon caused particular damage for US Airways, because the Arlington, Va.-based carrier is heavily concentrated in the Northeast. The extended shutdown of Reagan National Airport in Washington further contributed to the airline’s third-quarter loss.
US Airways followed other major airlines and slashed its operations by 23%, which led to the elimination of 11,000 jobs. Even before the attacks, US Airways was struggling because it operates with some of the highest costs in the business.
US Airways expects to receive $331 million as its portion of the $5 billion in direct cash aid that’s part of the bailout. Even though the airline so far has received only half of that amount, it booked the full grant in the third quarter.
Excluding the bailout money and other one-time gains and losses, US Airways said its loss was $433 million, or $6.45 a share. Analysts surveyed by Thomson Financial/First Call had forecast a loss of $4.65 a share.
But US Airways officials sounded a note of optimism Tuesday. In a conference call with analysts, Chief Executive Rakesh Gangwal said the airline still has about $1 billion in cash, is not in danger of violating any loan covenants and is aggressively retiring older, less-efficient jetliners that it no longer needs in light of its reduced capacity.
“We are now able to realign our business in a manner that will allow us to dramatically streamline our operations,” he said.
Still, he said US Airways continues to lose about $6 million a day because of the slump in air travel.
So far this month, US Airways’ load factor--the percentage of its seats filled--has been 62.4%, up from 45.9% in the week after the attacks. But that is still far below the 80%-plus load factor that analysts say the airlines need to break even, because so many passengers are flying on sale fares.
US Airways had agreed to be purchased by UAL Corp., the parent of United Airlines, for $4.3 billion, but the deal was scrapped this summer in the face of antitrust objections by the Justice Department. UAL reports its third-quarter results Thursday.
US Airways stock fell 2 cents a share to close at $4.65 on the New York Stock Exchange.
