US Airways labor turmoil leads to $115 million loss

Threat of strike hurts operations performance


April 20, 2000|By BLOOMBERG NEWS

ARLINGTON, Va. -- US Airways Group Inc. reported a bigger-than-expected loss for the first quarter yesterday, the result of travelers nervous about the possibility of a flight attendants' strike avoiding the No. 6 U.S. airline.

The carrier's loss from operations was $115 million, or $1.72 a share, compared with profit from operations of $36.1 million, or 49 cents, a year earlier. Analysts expected US Airways to lose $1.39 a share.

Revenue rose 1.3 percent to $2.1 billion from $2.07 billion a year earlier.

The third consecutive quarterly loss comes as the Arlington-based airline tries to recover from problems in labor, maintenance, staffing and computers that caused many flight cancellations and delays in 1999. While higher jet-fuel costs and the strike threat complicated the first quarter, investors said the carrier is showing some signs of progress.

"I'm surprised at how little the loss really is once you factor out the probable effect of the threatened work action," said Bill Lauer, chairman of US Airways shareholder Allegheny Capital Management Inc. US Airways shares closed up $2.0625, or 8.1 percent, to $27.625 after touching $28.5625.

The negative impacts due to weather-related flight disruptions, higher fuel costs and recent maintenance troubles were lighter than expected, Lauer said.

US Airways avoided a strike last month by reaching agreement with the Association of Flight Attendants on a five-year contract that would raise pay by 11 percent. The 10,000 flight attendants will vote on the contract this month.

The carrier said expenses for the quarter rose 12.8 percent over last year as its jet-fuel costs more than doubled. The airline's passenger traffic rose 1.1 percent, less than the 6.5 percent increase in seating and flights. At the same time, the carrier's average fares dropped about 1.7 percent.

After a charge of $103 million for an accounting change related to the sale of frequent-flier miles in past years, the airline's final loss was $218 million, or $3.27 a share.

In the year-earlier quarter, a $9.9 million gain from the sale of a stake in the European reservation company Equant NV resulted in net income of $46 million, or 56 cents a share.

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