3 big airlines post losses for third quarter

American, Northwest, Delta hurt by fuel costs

October 21, 2004|By BLOOMBERG NEWS

American Airlines, Delta Air Lines Inc. and Northwest Airlines Corp., three of the four largest U.S. airlines, posted third-quarter losses yesterday as fuel costs rose more than 50 percent.

AMR Corp., parent of American, the world's largest carrier, lost $214 million, or $1.33 a share; Delta, the third-largest U.S. carrier, lost $646 million, or $5.16 a share; and Northwest lost $38 million, or 54 cents a share.

"It's pathetic," said Ray Neidl, a Calyon Securities USA analyst in New York. "Oil prices at over $50 a barrel are precluding this industry from returning to profitability."

Despite fuel costs, the major carriers have not increased fares because of competition from low-cost carriers such as Southwest Airlines Co., which have lower labor costs. Hurricanes also cut revenue, carriers said. Fuel expenses rose 51 percent at AMR, 63 percent at Delta and 57 percent at Northwest.

Crude oil for November delivery rose $1.63, or 3.1 percent, to $54.92 a barrel on the New York Mercantile Exchange yesterday.

Every $1-a-barrel increase in oil prices is likely to cost the industry $100 million, Neidl said.

"The carriers at this point now have to cut other costs as sharply as possible and as quickly as possible," he said. "However, if oil prices stay high and ticket prices can't rise any more, then airlines will start to shrink and liquidate."

Continental Airlines Inc., the fifth-largest U.S. carrier, forecast yesterday significant losses for this year and next year, and might seek worker concessions soon, Chief Executive Officer Gordon Bethune said. Its third-quarter loss was $13 million.

UAL Corp.'s United Airlines, the second-largest carrier, and US Airways Group Inc. are under bankruptcy protection.

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