Losses shrink at USAir

April 20, 1995|By Suzanne Wooton | Suzanne Wooton,Sun Staff Writer

Raising the prospect of a long-awaited turnaround, USAir Group Inc. reported yesterday that its first-quarter losses narrowed by nearly $100 million as the company turned decidedly profitable last month.

The Arlington, Va.-based carrier, which handles half the daily passengers at Baltimore-Washington International Airport, still lost money for the three months just ended. But the $42 million in operating losses was far less than the $140 million reported a year ago.

USAir stock rose 21.3 percent, or $1.25 a share, to close at $7.125 a share. More than 3.5 million shares changed hands, making it the 13th most active stock on the New York Stock Exchange.

Company officials said yesterday that the first-quarter performance signaled "a changing financial picture" for the company. Advance bookings for the summer look promising, they said.

"Traffic trends for 1995 are on an upward curve, and our financial results reflect this strength," USAir Chairman and Chief Executive Seth E. Schofield said in a statement.

Other major U.S. carriers are also expected to report improved first-quarter results. Yesterday, AMR Corp., parent of American Airlines, said it earned $38 million, or 48 cents a share, in this year's first three months, compared with a loss of $7 million, or 30 cents a share, last year. Revenues grew 4 percent to $3.97 billion.

As USAir moves into the second quarter, the carrier should also enjoy a boost from the demise of CalLite, Continental's discount fare program, which had forced USAir to keep its fares low, particularly in heavily traveled East Coast markets.

USAir pointed to a sharper upward trend in this year's first quarter. The $96 million loss in January this year improved to a $42 million profit last month as passenger revenues were the highest in the company's history. By comparison, the company's $102 million loss in January 1994 narrowed to a $5 million loss in March last year.

Overall, the airline carried 5.7 percent more passengers during the first quarter of 1995 than during the same period in 1994.

Despite the improved results, some analysts were reluctant to proclaim an end to the financial troubles at USAir, which has lost $3 billion since 1988 and has the highest operating costs in the airline industry.

"It's too early to call it a turnaround," said Alex C. Hart, airline analyst for Ferris, Baker Watts in Baltimore.

The company said that because of cost-cutting steps, it now dTC needs fewer passengers per flight to break even. Still, with its planes on average just 59.7 percent full, USAir remains far below the industry average.

Far more revealing, Mr. Hart said, will be results in the second quarter, traditionally USAir's strongest period. "If you can attain a decent level of profit, then you have turned the corner, perhaps," he said.

The improved first-quarter results stemmed partly from this year's mild winter weather compared with last year, when winter storms forced the airline to cancel hundreds of flights. The latest numbers also seem to indicate that USAir has recovered from the devastating impact of two crashes in 1994.

Company officials also attributed the reduced losses to declining capacity in the airline industry, with a number of major airlines cutting flights and grounding planes in an effort to reduce the number of seats they need to fill. USAir has said it plans to cut the number of daily flights by 5 percent by June.

The first-quarter results were a welcome sign, coming after bleak financial news for the company just last week. In its year-end filing with the U.S. Securities and Exchange Commission, the company auditors expressed "substantial doubt" whether USAir could continue operating as it is.

But company officials said yesterday that the latest financial results -- along with the airline's $400 million in cash -- should ease speculation about USAir seeking bankruptcy protection.

USAir Group Inc.

Arlington, Va.

Ticker ........ Yesterday's

Symbol ........ Cls. .. Chg.

U ............. 7 1/8 . +1 1/4

Period ended

3/31 ......... 1st qtr. ..... Year ago ... Chg. .

Revenue ..... .$1,763,338 ... $1,685,901 .. +4.6%

Net Income ... $(96,883) ... .$(196,655) .. ...--

Primary EPS ...$(1.91) ...... $(3.64) .. .. ...--

Figures in thousands (except per share data.)

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.