UAL and US Airways 1Q losses smaller than expected
United Airlines and US Airways both reported much smaller quarterly losses on Tuesday, helped by returning business travelers and higher fares.
They were the last of the big airlines to report first-quarter results. All of the carriers, except Southwest, lost money. But most saw revenue improve in a way that suggests airlines are making a strong exit from last year's sharp travel downturn.
That was especially true at United parent UAL Corp. Its planes were fuller and it collected more money from passengers — 12.2 percent more for each mile they flew. Another passenger revenue measure rose 19 percent compared with the same quarter a year earlier.
"We are encouraged to see early signs of recovery in business and premium demand," UAL Chairman and CEO Glenn Tilton said on a conference call with analysts.
On international flights, so-called yields — what passengers pay to fly — rose nearly 20 percent in the premium cabins in the front of the plane.
Much of the improvement was because the airline results are being compared with the first quarter of 2009, when companies fought the recession by clamping down on corporate travel. Fares fell, meaning that those who did fly were paying less. Even so, United saw so-called unit revenue rise above where it was in 2008.
UAL Corp. lost $82 million for the quarter ended March 31, or 49 cents per share. Last year the loss was $382 million. Revenue rose 14.9 percent to $4.24 billion.
The quarter was good enough that both UAL and US Airways started seeing black ink instead of red. United, the nation's third-largest airline turned an operating profit of $69 million, not counting interest expenses and other items. US Airways predicted a second-quarter profit, not counting special items.
February storms hurt United revenue by about $40 million; the toll was $30 million at US Airways.
The Iceland volcano last week caused 325 cancellations at United, and will hurt second-quarter revenue by about $30 million to $35 million. Airlines lose the ticket revenue from canceled flights but save on expenses like fuel and landing charges. US Airways does not expect a major impact from the volcano.
US Airways Group Inc. lost $45 million for the quarter, or 28 cents per share. Revenue rose 7.9 percent to $2.65 billion. The net loss was less than half the size of its $103 million loss during the same period a year ago.
Revenue from corporate travel rose 34 percent compared to a year earlier. One key measure of passenger revenue rose 9.5 percent. Fares were up, with US Airways collecting 7.5 percent more per mile from each passenger, due to "an improving economy and the return of business traffic."
Overall capacity for the quarter fell 2.8 percent, partially due to weather-related cancellations. Capacity is expected to rise slightly for all of 2010.
So-called ancillary revenue, from add-ons including bag fees, rose by $25 million, to $118 million for the quarter.
Last week US Airways said it had broken off talks exploring a combination with United Airlines. United has also been in talks with Continental Airlines Inc.
UAL CEO Tilton said on a conference call that United executives "are thoughtfully considering our options" for industry consolidation. The statement was the closest the company has come to acknowledging the talks.
Tilton said the company wouldn't discuss the topic further "unless or until we have something to announce to all of you."
Parker said he would support a potential United-Continental merger because any consolidation is good for an industry that remains too fragmented.
He also said US Airways would prefer to be part of a merger itself. Even if the United-Continental deal happens, "we don't believe the door will be closed on future consolidation involving US Airways," he said.
Shares of US Airways, based in Tempe, Ariz., fell 15 cents, or 2.3 percent, to close at $6.33. Shares of UAL, based in Chicago, fell $1.85, or 8.3 percent, to close at $20.51. Shares of both companies were pulled down by declines in the broader market.
