Profit gains altitude, up 19.8%, at US Airways More paying passengers boost results

net income soars 40.1% at Southwest

October 22, 1998|By Robert Little | Robert Little,SUN STAFF

US Airways Group Inc., the Arlington, Va.-based airline that is the largest carrier at Baltimore-Washington International Airport, reported that third-quarter profit rose 19.8 percent, as passengers filled more airplanes and paid more to fly.

Earnings for the three months that ended Sept. 30 were $140.1 million or $1.49 a share, excluding a one-time gain from the sale of two aircraft. That compared with $116.9 million, or $1.14 a share, in the year-ago period before one-time gains and charges. Including the gain, net income was $141.9 million.

The company reported a revenue gain of 4.4 percent for the quarter, to $2.2 billion.

"The report is slightly stronger than it looks," said Glenn Engel, an analyst for Goldman, Sachs & Co., noting the one-time charges. "On an operating basis, it was up 48 percent."

Adjusted quarterly operating income of $267.2 million was up 47.7 percent over $180.9 million in the previous year. Last year's reported net income of $187 million included a one-time gain from the sale of Apollo Travel Services and a one-time cost for fleet restructuring.

The airline's performance was boosted by a passenger load factor -- the percentage of seats filled with paying customers -- of 75.8 percent, an increase from last year of 2.4 percentage points. Its revenue derived from each seat rose 4.3 percent, while costs per seat mile dropped slightly.

Working against the company's results was an increase in its corporate income tax rate to 40.3 percent, from 19.3 percent last year.

US Airways Chairman Stephen M. Wolf called the earnings "stellar," particularly given the changes over the last year at the nation's sixth-largest airline.

The company launched the low-cost MetroJet operation in June, and is anticipating reduced capacity as it awaits delivery of new Airbus Industrie aircraft. US Airways also prepaid $324 million in long-term debt during the quarter and repurchased 7.86 million shares of common stock, an expense of $482 million.

BWI's second major customer, Southwest Airlines, also saw profit rise during the quarter, soaring 40.1 percent to $129.6 million, or 37 cents a diluted share. The Dallas-based carrier reported a 24 percent drop in fuel prices and 70 percent of its seats filled, an increase of 3.1 points.

"This level of profits enables us to sustain our growth while continuing to provide long-term job security and substantial profit-sharing" for Southwest employees, Chairman Herbert D. Kelleher said in a statement.

Southwest expanded routes and added service to Manchester, N.H., last year, but postponed plans to expand further because of delays in delivery of its new Boeing 737-700 aircraft. Its total revenue rose 9.8 percent for the quarter to $1.09 billion. The company plans to expand capacity by 13 percent in 1999.

US Airways shares dropped $1 yesterday to $54.8125.

Southwest shares were unchanged at $20.25.

Pub Date: 10/22/98

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