NEW YORK (CNNfn) - Labor pains at U.S. Airways Group and Trans World Airlines gave analysts unpleasant surprises Wednesday as both posted greater losses than expected by the Street.
The larger carriers delivered good news to investors, though. UAL Corp., owner of the world's largest carrier, United Airlines, promised analysts that better-than-expected results are ahead in the fourth quarter after it missed third- quarter results by a penny a share.
AMR Corp., owner of number two carrier American Airlines, posted net income of $1.76 a share, diluted, which was 7 cents above First Call estimates, even if it was off from year ago results by more than a third.
US Air more than triples expected loss
US Airways (U), the nation's sixth-largest airline, was hit by higher fuel costs, flight cancellations attributed to labor problems, and disruptions from Hurricane Floyd. It reported a net loss of $85 million, or $1.19 a share diluted. Analysts surveyed by First Call had expected only a 35 cent loss. Before the September warning from the company, analysts had expected a profit of more than $1 a share. US Airways earned $142 million, or $1.51 a share, a year ago.
"These results are clearly unacceptable," said Rakesh Gangwal, the airline's president and CEO. But while he said there are some labor issues still ahead, he believes the worst of its labor problems are behind with the ratification of a new contract by the International Association of Machinists.
US Airways' revenue in the period was off 4.8 percent to $2.1 billion while fuel costs were 32 percent higher.
For the nine months, the company had net income of $278 million, or $3.65 a share, down 35.9 percent from the $428 million, or $4.50 a share, a year earlier. Year-to-date revenue was off 1.6 percent to $6.4 billion.
US Airways stock was down 1-7/16, or 5 percent, to 26-11/16 in mid-afternoon trading.
TWA also misses the mark
Trans World Airlines (TWA), the nation's eighth- largest carrier, also reported significantly lower- than-expected results in the quarter. Losses from operations were $36.2 million, or 61 cents a share fully diluted, before preferred dividends and $33 million in costs associated with contract ratification and a gain on sale of warrants of $16 million that together gave the company a overall net loss of $59.4 million, or 87 cents a share.
Analysts had expected only a 52-cent-a-share loss, excluding the charges and preferred dividends. A year ago, TWA lost $923,000, or 11 cents a share, in the same period.
Revenue rose 1.5 percent to $876.4 million, but apparently was hurt by business travelers shifting due to fear of a strike that didn't occur. Revenue passenger miles rose 9.2 percent, suggesting lower yields per passenger.
For the first nine months, TWA lost $58.8 million before extraordinary charges and preferred dividends, or $1.15 a share, compared with a loss of $30.3 million, or 80 cents a share, a year ago. Revenue was flat at $2.5 billion.
TWA's stock was down 5/16 to 3-3/8 in mid-afternoon trading.
Good news on horizon at UAL
Other airlines reporting this week have reported increased costs from fuel and Hurricane Floyd, but most were at or near analysts' expectations.
UAL (UAL) reported net income of $456 million, or $3.75 a share fully distributed, just below the $3.76 a share projected by First Call. Those results were off 11.6 percent from the $517 million, or $4.02 a share fully distributed, it earned a year ago.
UAL said year-to-year comparisons were hurt by Hurricane Floyd and benefits it gained a year ago from the strike at Northwest Airlines. Floyd cost it about $15 million in revenue. It said those events were an aberration and that it expects fourth-quarter earnings in the range of $1.60 to $1.90 a share, above the $1.59 estimate by First Call analysts.
Revenue rose 1.3 percent to $4.84 billion from $4.78 billion a year ago.
For the first nine months, UAL posted net income of $1.4 billion, or $8.16 a share before a gain on sale and a charge for early repayment of debt. After those items, earnings per share rose to $11.56 in the period. A year earlier, net income was $1.2 billion, or $8.93 a share. Revenue was flat for the nine months at $13.28 billion.
Despite the promise of better-than-expected results ahead, UAL stock was down 11/16 to 61-5/8 in mid-afternoon trading.
AMR flies high above estimate
AMR (AMR) posted net income of $279 million, or $1.76 a share diluted down 35.6 percent from the $433 million or $2.49 it made a year ago. But analysts estimates for the quarter had been only $1.69 a share for the Dallas-based carrier.
The company said comparison were hurt by increased business it saw during the record performance of a year ago, when it was helped by strikes at other carriers. It was also hurt by Floyd. Fuel costs rose 14 percent carrier, squeezing margins, but not as bad at some competitors who did not have American's fuel hedging.
Revenue at the carrier rose only 1.9 percent in the period to $4.7 billion.
For the first nine months of the year AMR had net income from continuing operations of $641 million, or $4.04 a share, which is off 37.7 percent from the $1.1 billion, or $6.34, it made in the same period last year. The carrier was hit by an pilots' union sickout in February which hurt operations.
Year-to-date passenger revenue at American Airlines is down 2.4 percent, although overall AMR revenue, including revenue from its Sabre reservation system, is up 0.3 percent to $14.6 billion.
AMR's stock was trading up 7/16 at 55-1/16 in mid-afternoon trading, soon after its results were released.