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The Honolulu Advertiser
Posted on: Friday, October 18, 2002

More airlines reporting losses

By James F. Peltz
Los Angeles Times

Three more airlines posted third-quarter losses, totaling $114 million, while low-fare leader Southwest Airlines again eked out a modest profit amid a grim travel slump. But even Southwest said yesterday it might suffer its first loss in a decade during the current quarter.

Minneapolis-based Northwest Airlines yesterday reported a quarterly loss of $46 million, or 55 cents a share. Continental and America West Holdings also posted losses.

Associated Press

Delta Air Lines further underlined the industry's gloomy state by saying it would shed up to 8,000 additional jobs, or about 10 percent of its work force, as the carrier scrambles to slash costs in the face of weak revenues.

Delta, with 76,000 employees as of Sept. 30, earlier this week posted a third-quarter loss of $326 million and already had planned to eliminate 1,500 flight attendant jobs.

Northwest Airlines reported a third-quarter loss of $46 million, or 55 cents a share; Continental Airlines lost $37 million, or 58 cents, and America West Holdings Corp. said it lost $31 million, or 92 cents a share.

Southwest — the only major carrier to stay out of debt since the Sept. 11 attacks — said third-quarter profit was $74.9 million, or 9 cents a share, down 50 percent from $151 million, or 19 cents, a year earlier. But the latest quarter included $48 million that was the last installment of Southwest's share of $5 billion given to the industry by a post-Sept. 11 federal bailout.

Southwest shares rose $1.18 to close at $14.48 on the New York Stock Exchange.

The airlines warned that conditions show no sign of improving, and Dallas-based Southwest said it couldn't predict whether it will turn another profit in the three months ending Dec. 31. The last time Southwest lost money was in the first quarter of 1991, during the Persian Gulf War.

Southwest and the other carriers also said a U.S. war with Iraq would deal a devastating blow to travel and their financial health. "It's going to be catastrophic for us" unless the U.S. government immediately arranged more aid for the carriers, said Continental Chairman Gordon Bethune.

Lackluster travel demand is preventing the airlines from hiking fares to narrow their losses. "The world is on sale today for the holiday period" surrounding this Thanksgiving and Christmas, said Tim Griffin, Northwest's executive vice president for marketing.

So the carriers are relying on cost cuts.

Delta plans to eliminate between 7,000 and 8,000 jobs — including management positions — and said it hopes most will occur with voluntary retirement programs. But if they're not enough, "involuntary furloughs will be necessary," Delta Chairman Leo Mullin said.

Southwest said it is still planning to grow. The airline, which mostly flies trips of under 1,000 miles, is starting another transcontinental flight, between San Jose, Calif., and Baltimore, on Jan. 12. Southwest added the flight after seeing its new Los Angeles-Baltimore service get off "to a tremendous start," said Gary Kelly, chief financial officer, in a call with analysts.