US Airways earnings plummet 53%

Weather, computer snags blamed for 1st-quarter slip


April 22, 1999|By Robert Little | Robert Little,SUN STAFF

First-quarter earnings for US Airways Group Inc. dropped 53.1 percent, due mostly to winter-weather flight cancellations and snags related to the airline's conversion to a new computer system, company officials reported yesterday.

US Airways, the sixth-largest U.S. carrier and the dominant airline at Baltimore-Washington International Airport, reported net income for the quarter of $46 million, or 57 cents a share, down from $98 million and 96 cents a share during the same quarter last year.

The results included a one-time gain of $9.9 million from the sale of US Airways' stake in Equant, a data-transmission service. Excluding that gain, the airline had earnings of 49 cents a share -- 4 cents above the estimate of analysts polled by the market research firm First Call Corp.

Operating revenue for the Arlington, Va.-based airline rose 0.4 percent to $2.1 billion for the three months that ended March 31, while operating expenses rose 6 percent to $2 billion.

Weather-related groundings that ate into the airline's profit had ceased by the quarter's end, said President and Chief Executive Officer Rakesh Gangwal, and the impact of the transition to a new computer system has lessened.

"As we look ahead to the next quarter and the balance of the year, we expect to see a much improved performance," Gangwal said in a prepared statement.

Most major U.S. airlines successfully raised fares in the first three months of the year, after several failed attempts in 1998. Analysts say that and an increase in traffic because of labor troubles at Texas-based AMR Corp.'s American Airlines last quarter contributed to better-than-expected profits for most carriers.

"With the fare increases of the last couple of months, a lot of junk fares got cleaned out, so now things are returning to normal," said Tom Longman, an analyst at Arnold S. Bleichroeder.

US Airways also reported a quarterly "load factor" -- the percentage of seats filled with paying passengers -- of 67.7 percent, down 1.3 percentage points from 1998, and a 2 percent increase in costs distributed among each seat per mile.

The increased cost was primarily due to the weather and computer issues, and came despite a 28 percent drop in fuel costs for the quarter.

Reuters wire service contributed to this article.

Pub Date: 4/22/99

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