ValuJet reports net losses for 4th quarter and the year Operations and cash level hurt by grounding

February 27, 1997|By BLOOMBERG NEWS

ATLANTA -- ValuJet Inc. said it was unprofitable in the fourth quarter and for the year as costs related to a three-month grounding hurt its operations and cash level.

The discount airline's quarterly loss from operations was $12.3 million, or 22 cents a share, compared with net income of $19.2 million, or 32 cents a share, a year earlier.

ValuJet took an $8.3 million charge for costs of the June-September shutdown, which federal authorities ordered after a fatal crash in May. The charge made a final loss of $20.6 million, or 38 cents a share.

Revenue fell 75 percent to $28.1 million from $110.8 million.

The company was expected to report a loss of 28 cents a share, based on the average estimate of four analysts surveyed by IBES International Inc.

ValuJet shares lost 14.0625 cents yesterday to close at $7.234375.

In the latest quarter, the airline's cash on hand fell 16 percent, to $150 million, from $179 million in the third quarter and $208 million in the second quarter.

"Revenue came in a little bit better" than expected, said Mark Abrahamsen, an analyst with BDS Securities. "The cash level is less than what I thought. I thought it would be in the $160 million to $165 million level."

ValuJet remains in violation of loan covenants covering its $65 million debt, said Steve Nevin, chief financial officer. The company is in talks with seven banks, including the Bank of Montreal and NationsBank, to restructure the loan agreement.

ValuJet said its planes were more than half-full during 1996, but below 1995's level. Its load factor, the percentage of seats sold, fell to 57.1 percent from 68.8 percent.

Meanwhile, ValuJet slowly continues to rebuild its operating fleet.

In recent weeks, the airline added two jets, raising to 22 the total number of planes it flies.

ValuJet could add two more jets in the coming months, said President Lewis Jordan. The company has said it needs 25 to 30 jets to return to profitability.

For 1996, ValuJet had profit from operations of $1 million, or 2 cents a share, compared with net income of $67.8 million, or $1.13 a share, in 1995.

After charges of $42.5 million for the suspension of service, it had a 1996 loss of $41.5 million, or 76 cents a share.

Revenue fell 40 percent to $219.6 million from $367.8 million.

Jordan said the airline's load factors in February and March will be close to last year's levels of 58.6 percent in February and 65.3 percent in March.

Pub Date: 2/27/97

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