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EARNINGS

US Airways, United Beat the Estimates

April 23, 1998|From Times Wire Services

United Airlines' parent UAL Corp. and US Airways reported first-quarter earnings on Thursday that exceeded expectations, mostly due to the cheap fuel prices and high passenger traffic figures that other major U.S. carriers have enjoyed.

Trans World Airlines Inc. joined the ride by reporting that its first-quarter loss narrowed, meeting analysts' expectations.

"The domestic market was not only strong but it was strengthening as the quarter went on, and that bodes well for the second quarter," said Tom Schreier, airline analyst at CS First Boston.

Despite the effects of Asia's economic crisis and greater tax costs, UAL said first-quarter earnings rose 1% to $218 million, or $1.68 a share, from $215 million, or $1.61 a share, a year earlier. The results for the nation's largest airline beat the consensus Wall Street forecast of $1.55 a share.

US Airways said its earnings fell to $98.3 million, or 96 cents a diluted share, from $152.7 million, or $1.45 a share. But the results beat a consensus Wall Street forecast of 94 cents.

TWA said its loss from operations was $43.9 million, or 76 cents a share, smaller than the $73.2 million, or $1.49, in the year-earlier period. Revenue rose 0.4% to $765.4 million from $762.3 million.

The seventh-largest U.S. airline was expected to lose 75 cents a share in the quarter, based on a First Call Corp. survey of analysts.

The airline, which has been in Bankruptcy Court twice since 1992, is focused on raising profit by adding passengers to each flight and attracting higher-paying fliers while cutting costs. TWA also joins other U.S. airlines in benefiting from a strong national economy spurring demand for travel.

Besides continued demand in domestic travel, Wall Street analysts credited the industry's performance in the first quarter to rock-bottom fuel prices that were nearly 25% lower than 1997 levels and lower ticket-distribution expenses.

"Fundamentally, it was fuel price-related, and the fact that airlines were able to cut distribution expenses by other methods of selling tickets, including sales on the Internet," Salomon Smith Barney analyst Julius Maldutis said.

Wall Street analysts had revised their forecasts for airline earnings upward after unexpectedly strong results last week from AMR Corp. and Continental Airlines Inc.

Schreier said the industry's first-quarter results show that the impact of last year's strike by pilots at AMR's American Airlines was greater than expected.

"American outperformed dramatically because they were clearly hurt much more last year than any of us thought they were," Schreier said.

UAL stock fell 88 cents to close at $90.63, and US Airways dropped $1.13 to $78.38, both in consolidated trading on the New York Stock Exchange. TWA shares fell 6 cents to $10.44 on the American Stock Exchange.

*

Reuters and Bloomberg News were used in compiling this report.

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