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Airlines Cut 4th-Quarter Losses 90%

January 17, 1994|From Reuters

NEW YORK — U.S. airlines lost money in the traditionally poor fourth quarter despite an unexpectedly steep drop in fuel prices, industry analysts say.

But carriers are expected to lose only about $275 million in the final quarter compared to $2.7 billion lost in the 1992 fourth quarter, proving that the troubled industry is slowly recovering, they said.

The expected fourth quarter losses will follow widespread profits posted by carriers in the third quarter. Airlines begin reporting earnings next week.

The industry often loses money in the fourth quarter, which is the year's weakest, due to higher costs that stem from inclement weather and limited vacation travel.

"The quarter is normally a loss unless it's an exceptionally good year," said David Swierenga, chief economist at the Air Transport Assn., a trade group.

Industry results will be skewed by the five-day flight attendants strike at American Airlines, the nation's largest carrier, which will cut revenues for its parent, AMR Corp., and boost those of others. "I think the quarter is going to be tough to evaluate because of the American strike," said Rose Ann Tortora of Donaldson, Lufkin & Jenrette Securities Corp.

AMR said last month that the strike will cut its fourth-quarter earnings by about $160 million.

But the strike at American will actually boost revenues at rivals United Airlines and Delta Air Lines, which picked up extra traffic from passengers left stranded by canceled flights.

"The traffic that moved onto other airlines will be an incremental plus to them," Swierenga said.

But only regional low-cost carrier Southwest Airlines Co. is expected to post a profit.

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