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Southwest lands 4Q profit
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January 17, 2002: 12:59 p.m. ET
Only major carrier likely to make money; Northwest, US Air post big 4Q losses.
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NEW YORK (CNN/Money) - Southwest Airlines likely became the only major airline to post a profit in the fourth quarter and the full year as it beat analysts' forecasts for the period.
Meanwhile two larger airlines, Northwest Airlines and U.S. Airways, posted more than $800 million in operating losses between them, with Northwest doing better than analysts' forecasts while U.S. Airways recorded a larger-than-expected loss.
But Southwest, the discount carrier which has consistently been the nation's most profitable airline in recent years, earned $32.4 million, or 4 cents a share, excluding special charges including direct federal assistance it received during the period.
While that is well off of the net income of $154.6 million, or 19 cents a share, it posted in the year-earlier period, it is better than the forecast of breakeven results from analysts surveyed by earnings tracker First Call.
Including special items, which in addition to the federal assistance included a change in the profit-sharing formula, the company earned net income of $63.5 million, or 8 cents a share, in the fourth quarter.
The company, the nation's seventh-largest carrier, did warn it is difficult to predict whether or not it will be profitable in the first quarter due to "uncertain economic conditions and the difficult airline industry revenue environment." First Call's forecast calls for it to earn 5 cents a share in the period.
Despite the warning, shares of Southwest (LUV: up $0.17 to $17.68, Research, Estimates) gained in Thursday trading while other U.S. airline stocks lost ground.
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Southwest, is the only major carrier that also did not announce staff cuts or deep cuts in capacity as overall demand for air travel dropped in the wake of the Sept. 11 terrorist attack.
Overall revenue at the carrier fell 15.7 percent to $1.2 billion. Much of that decline came from lower fares rather than a sharp drop in traffic. The miles flown by paying passengers declined less than 1 percent to 10.78 billion from 10.83 billion a year earlier, while the average amount paid by passengers per mile flown fell 15.2 percent to 11.12 cents from 13.12 cents a year earlier.
Northwest posts smaller loss than forecast
Northwest Airlines posted a loss of $256 million, or $3.02 a share, excluding special items. That's better than the First Call forecast for a loss per share of $3.18, but far worse than the net income of $31 million, or 34 cents a share, it posted a year earlier. Including special items, Northwest lost $216 million, or $2.55 a share, in the fourth quarter.
Revenue at the Minnesota-based carrier fell 26.6 percent to just under $2.0 billion. Unlike Southwest, Northwest was hit not only by lower fares but by a 20 percent drop in the miles flown by paying passengers.
US Air losses worse than expected
U.S. Airways posted a loss of $552 million, or $8.16 a share, excluding special items. That's not only far wider than the $89 million, or $1.33 a share, it lost on the same basis a year earlier, but it tops the First Call forecast for a loss of $7.54 a share in the most recent period. Including special items, its net loss increased to $1.0 billion, or $14.89 a share, up from $101 million, or $1.50 a share, a year earlier.
The company said it is crucial that it be able to resume normal operations at its hub at Reagan National Airport in Washington, D.C., and that it continues to work with the Air Line Pilots Association to try to have greater flexibility to use smaller regional jets in its operations. That airline had said even before the terrorist attack that it needed a change in labor contracts in order to restructure and remain an independent carrier.
The Arlington, Va.-based carrier saw revenue plunge 33.6 percent to $1.6 billion from $2.4 billion. The airline is one of carriers hit hardest by the terrorist attack due to the impact on the New York-Washington shuttle that had been a major profit center. Miles flown by paying passengers fell 26.9 percent to 8.9 billion, while average fares fell 15.3 percent. 
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