USAir lost $32 million in quarter, still a gain Federal shutdown, severe winter blamed

April 25, 1996|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

USAir yesterday reported a disappointing first quarter, with a net loss of $32.3 million on revenues of $1.9 billion even as other major carriers made substantial profits.

The Arlington, Va.-based airline, which concentrates heavily on the East Coast, said severe winter weather in January and February and the government shutdown cost it $55 million in revenue for the period ended March 31.

USAir is the largest East Coast carrier, handling two-thirds of all North-South traffic. During the Blizzard of 1996, many airports were closed for days, including USAir's hubs in Baltimore, Philadelphia, Pittsburgh and Charlotte, N.C. In addition, the government shutdown resulted in a falloff of business travel to Washington.

Still, the results represented an improvement over the year-ago quarter, for which the airline reported a net loss of $96.9 million on revenues of $1.8 billion.

After an allowance for $22.3 million in preferred stock dividends, the net loss to common stockholders was $54.6 million, or 86 cents per share, compared with $117.5 million, or $1.91 per share, for the first quarter of 1995.

On an operating basis, the carrier reported it made $10.8 million, compared with a $42 million operating loss a year ago.

"Even though USAir's costs remain the highest in the industry, these results underscore the revenue potential and inherent strength of our East Coast core business," Stephen M. Wolf, USAir chairman and CEO, said yesterday in a statement.

While the results were clearly disappointing -- coming after a profitable fourth quarter and the first money-making year since 1988 -- they amounted to less than half the company's losses during the same period in 1995.

Furthermore, the carrier performed better than the $1.02 per-share loss expected by analysts.

"I was fairly pleased to see relative year-over-year improvement," said Howard T. Kaminsky, an analyst for Alex. Brown & Sons in New York who predicted profitable second and third quarters.

While figures for March were not available, the month was probably very profitable, Mr. Kaminsky said, with the airline showing a record percentage of available seats filled with paying passengers.

Nevertheless, Mr. Kaminsky warned that "the cost side of the equation is still increasing at a fairly large rate."

Earlier this week, Continental Airlines reported record profits for the quarter, and Southwest Airlines said its profits almost tripled.

Last year, USAir, which handles half the 31,000 daily passengers at Baltimore-Washington International Airport, cut $500 million from operating expenses by eliminating unprofitable flights and slicing other costs. Yet it failed to reach critical agreements with its labor unions on a proposed $2.5 billion reduction in wages and benefits over the next five years.

Pub Date: 4/25/96

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