The US airline industry continues
to separate into those companies that in some small way can overcome today's record fuel prices and those that cannot.
Seven of the 11 Major passenger
airlines reported profits in the second quarter ended June 30. These carriers earned a combined $371 million, with 40% of that amount coming from perennial profit leader Southwest Airlines, which is heavily hedged.
ACE Aviation Holdings, parent of Air Canada, yesterday reported net income of C$168 million ($138.5 million) for the second quarter ended June 30, which included a dilution gain of C$190 million and a tax provision of C$28 million related to an Aeroplan transaction offset by a $29 million charge related to the extinguishment of its credit facility with GE Capital Corp.
This compares to a C$510 million net loss in the prior-year period, which included reorganization and restructuring items of C$426 million.
In what is seasonally its weakest quarter, LAN Airlines reported a $26.6 million profit for the three months ended June 30, down 15.6% compared to net income of $31.5 million in the 2004 period.
Operating income plunged 53.4% to $15.8 million versus $33.9 million last year. "LAN was impacted by record fuel prices--which led to $46.9 million in additional expanses," the carrier said. "However, the company overcame this incremental cost and posted its second-best result ever for the second quarter and 12th consecutive quarterly profit."
Mediated negotiations between Northwest Airlines and its Aircraft Mechanics Fraternal Assn.-represented employees broke down Wednesday after the carrier "refused to move beyond unacceptable demands," the union said.
"Northwest's continued refusal to engage in meaningful negotiations destroyed yesterday's session and left little hope for a consensual agreement needed to avert a strike," AMFA National Director O.V. Delle-Femine said. "There is no use scheduling another negotiating session unless both parties come prepared to negotiate."
Gol reported a 73.4 million reais ($31.2 million) net profit for the second quarter ended June 30, barely up on income of R$73.2 million in the year-ago period.
Operating income, however, dropped 8.4% to R$85 million from R$92.8 million. "Gol remains committed to its virtuous cycle of maintaining low costs, allowing us to offer the lowest fares and achieve the highest load factors in the Brazilian market, thereby driving industry-leading profitability," CEO Constantino de Oliveira Jr. said.
Ryanair shrugged off a doubling of its fuel bill to report a 31.2% profit rise to €69.9 million ($69.6 million) for the fiscal first quarter ended June 30 compared to net income of €53.1 million in the year-ago period.
Current-period results include a gain of €5.2 million (net of tax) from the settlement of an insurance claim covering six 737-200s damaged during an overhaul. Operating profit also increased, jumping 23.4% to €79.9 million from €64.7 million in the 2004 period, although operating margin dipped from 21.6% to 19.7%.
Primarily owing to an extraordinary loss on the sale of group-owned real property, ANA Group reported a 10.9% drop in net income to ¥2.16 billion ($19.3 million) for the fiscal first quarter ended June 30 from net income of ¥2.43 billion in the year-ago period.
Although it has shed billions in costs during its second restructuring, US Airways Group posted a $62 million net loss for the second quarter ended June 30, which included $26 million in one-time charges consisting of $19 million in professional fees, $6 million in damage and deficiency claims on rejected aircraft and $4 million of severance that was offset slightly by $3 million in interest on accumulated cash.
This compares to a net income of $34 million in the year-ago period. Excluding one-time items, net loss for the 2005 second quarter totaled $36 million.
United Airlines cabin staff, represented by the Assn. of Flight Attendants, went on the offensive yesterday with coordinated demonstrations at airports in the US, Europe and Asia, threatening to strike in protest over the termination of their pension plan.
"Current United management has held its employees and creditors hostage in Chapter 11 for nearly 1,000 days," union head Greg Davidowitch said. "We're hitting the streets around the globe to demonstrate our resolve. We want our pensions back, and we want this management team out."
Midwest Air Group reported an $8.2 million net loss for the second quarter ended June 30 compared to a $3.5 million net loss in the year-ago period.
The company attributed the results primarily to the increase in fuel prices and some unusual items. Operating loss also widened from $2.9 million to $8.2 million. Despite the red ink, Chairman and CEO Timothy Hoeksema said he believes the company is making significant progress to return to profitability.
Hefty special charges overshadowed an improved operating performance at United Airlines during the second quarter as parent UAL Corp. reported a loss of $1.43 billion for the three months ended June 30 net of $1.39 billion in one-time reorganization items.
In the year-ago period, UAL had a net loss of $247 million, a figure that included $144 million in reorganization items. Excluding one-time items in both periods, the company reduced its loss to $26 million from a deficit of $103 million in 2004.
Mesa Air Group reported net income of $17.1 million for its fiscal third quarter ended June 30, up 77.4% over income of $9.7 million in the year-ago period, which was net of $1.1 million in special charges.
Current-period results include net one-time investment gains of $0.7 million. "In spite of the difficult industry environment, we are pleased to have generated these results," Chairman and CEO Jonathan Ornstein said.
Republic Airways Holdings posted net income of $13.4 million for the second quarter ended June 30, up 85.2% over net income of $7.2 million in the prior-year period. Total operating revenues rose 35.8% to $188.8 million primarily as a result of a 40.7% increase in ASMs and a 26.5% jump in block hours. These numbers reflect the addition of 36 regional jets that were placed into service in June 2004, the company said.
Although Boeing recorded double-digit revenue growth in both its Integrated Defense Systems and Commercial Airplanes segments for the second quarter ended June 30, special items pushed net income down 6.8% to $566 million from $607 million in the year-ago period.
The collective market value of publicly traded airlines worldwide has more than doubled since 2009, but is still below pre-2008 financial crisis levels, according to a top industry stock analyst....More