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EARNINGS | ROUNDUP

Profit Up at 3 Airlines; UAL's Takes Off by 11%

July 23, 1998|From Times Wire Services

UAL Corp., the world's largest airline company, on Wednesday reported a surprisingly strong 11% jump in second-quarter earnings, boosted by lower fuel prices, surging U.S. demand and cost cuts that helped offset declining traffic in Asia.

Struggling Trans World Airlines Inc., meanwhile, posted a profit in the mid-range of analyst estimates, its largest quarterly profit since the second quarter of 1996, before the crash of its Flight 800 off Long Island, New York.

USAirways Group Inc., the sixth-largest U.S. carrier, said lower fuel costs also helped it exceed profit estimates for the quarter.

UAL, parent of United Airlines, reported net income of $418 million, or $3.24 a fully distributed share, up from from $376 million, or $2.82, a year earlier. Revenue increased 1.4% to $4.44 billion.

The company was expected to earn $3.20 a fully distributed share in the latest quarter, based on a survey of analysts by First Call.

The strong results from the largest U.S. carrier to the Far East showed that it could overcome falling demand amid the continuing economic turmoil there. The airline's exposure to Asia, where it generates more than 20% of its revenue, hurt its first-quarter earnings and has been a drag on its stock.

United, like other U.S. airlines, also got a boost from soaring domestic travel demand.

Unit costs fell 2.4% as the carrier moved large planes, which are hard to fill, out of Asia to regions including Europe where demand for travel is higher. In addition, the average price for jet fuel fell 14%.

US Airways, based in Arlington, Va., said profit from operations rose 46% to a record $374 million as revenue rose 3.8% to $2.3 billion and fuel expenses fell. The airline's per-share earnings of $1.95 per diluted share exceeded analyst estimates of $1.86.

The carrier said a tax change resulted in a 5.5% drop in net profit to $194.3 million.

TWA said it earned $24.8 million, or 28 cents a share, as the St. Louis-based airline attracted more high-paying business travelers, compared with a loss of $12 million, or 31 cents, a year earlier. Analyst estimates ranged from 25 cents to 30 cents. Revenue rose 4.6% to $883.5 million.

Like other airlines, TWA got a boost from the lowest fuel prices in almost a decade.

At a Glance

Other earnings, excluding one-time gains and charges unless noted:

OIL

* Amoco Corp. said its earnings dropped 36% to $395 million, or 41 cents a share, before a gain and a charge, as revenue fell 9.9% to $7.77 billion, on lower oil prices. The company said it will consider a new round of cost-cutting, including firings, in response to its latest results.

* Mobil Corp.'s profit fell 25% in the second quarter to $655 million, or 81 cents a diluted share, beating analyst forecasts by a penny, due to lower crude oil prices. The nation's second-largest oil company said its revenue fell 12% to $16.74 billion.

UTILITIES

* Duke Energy Corp., owner of large electric utilities in the Southeast and an extensive natural gas pipeline network, said second-quarter profit grew 30% to $274.4 million, or 76 cents a share, far exceeding estimates of 67 cents, because of higher power sales during last month's heat wave. Revenue climbed 29% to $4 billion.

* PacifiCorp said its second-quarter earnings fell 60% to $36 million, or 12 cents a share, partly because it bet wrong on the direction of electricity prices during a Midwest heat wave. The utility company's revenue rose 30% to $1.03 billion. The second-quarter profit included losses totaling $32 million, or 11 cents, for power trading during the June heat wave.

OTHER INDUSTRIES

* Allegiance Corp. said second-quarter net income rose 40% to $30.8 million, or 52 cents a diluted share, exceeding estimates of 48 cents, as revenue rose 4.5% to $1.12 billion. The supplier of medical products also said it will split its stock 2-for-1, raise its dividend and repurchase about 5% of its shares.

* Anheuser-Busch Cos., the world's largest brewer, said second-quarter earnings rose a higher-than-expected 2.6% to $391.2 million, or 80 cents a diluted share, beating estimates by 3 cents, as it continued to ship more beer in advance of a possible strike at its U.S. breweries. Revenue edged up 0.4% to $3 billion.

* Avon Products Inc. said its second-quarter net income advanced 17% to $111.4 million, or 84 cents a diluted share, beating estimates by 2 cents, as sales gained 2% to $1.25 billion. The direct seller of beauty products also said it will split its stock 2-for-1 and add $600 million to its share-buyback program. Double-digit sales growth in the Americas and Europe offset weaker sales in Asia, Avon said.

* Allegheny Teledyne Inc., maker of specialty metals, said second-quarter earnings were flat at $80.4 million, or 40 cents a share, meeting estimates, as sales fell less than 1% to $1.019 billion from $1.025 billion.

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