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Northwest, JetBlue beat forecasts

Losses in the fourth quarter are less than expected despite high fuel costs. Shares rise.

January 30, 2008|Joshua Freed | The Associated Press

MINNEAPOLIS — Northwest and JetBlue lost less money in the fourth quarter than expected, even in the face of high fuel prices, and JetBlue shares jumped more than 20% on the possibility of a passenger-sharing deal with Lufthansa.

It would have been a break-even quarter for Northwest Airlines Corp. if not for a loss on its stake in Pinnacle Airlines.

Discounter JetBlue Airways Corp. reported its first full-year profit in three years, and its shares soared on the news that it was negotiating with Deutsche Lufthansa over a "commercial agreement," which could include booking passengers on one another's planes. The German airline recently paid $300 million for 19% of JetBlue, giving the Forest Hills, N.Y., carrier much-needed cash but so far no code-sharing arrangements.

Despite speculation about his company's combining with Delta Air Lines Inc., Northwest Chief Executive Doug Steenland declined to talk about the possibility. He did say he expected antitrust regulators to sign off soon on Northwest's bid for nearly half of Milwaukee-based Midwest Airlines Inc.

Northwest shares rose 65 cents, or 3.6%, to $18.59. JetBlue was up $1 to $5.94.

Northwest, JetBlue and most other airlines now pay more for fuel than for labor or anything else. Jet fuel costs have jumped 49% in the last year, according to the Energy Department.

The high prices caused quarterly losses at all the major carriers except Continental Airlines Inc. -- which hasn't reported final numbers yet -- and Southwest Airlines Co., where profit doubled because of its fuel hedges.

In a sign of how drastically soaring fuel costs are affecting its bottom line, Northwest said its operating costs would have dropped $6 million not counting fuel. With fuel, they rose $123 million to $3 billion.

JetBlue said unit costs -- or what it pays to fly one seat one mile -- would likely remain flat or fall by 2% in the first quarter, not counting fuel. Including fuel expenses, unit costs will probably grow as much as 11%.

Northwest said it has hedged 15% of its first-quarter 2008 fuel, and 11% for the full year.

Eagan, Minn.-based Northwest reported a loss of $8 million, or 3 cents a share. The most recent figure includes a $14-million pretax loss related to Northwest's stake in Pinnacle Airlines.

During the same period last year, Northwest lost $267 million, or $3.06 a share, because of hefty bankruptcy expenses. It emerged from Chapter 11 in May.

Revenue increased to $3.1 billion, from $2.98 billion previously.

Analysts surveyed by Thomson Financial had been expecting a loss of 8 cents on revenue of $3.03 billion.

JetBlue said it lost $4 million, or 2 cents a share, in the fourth quarter. In the same period last year it made $17 million, or 10 cents a share. Revenue rose 16.6% to $739 million from $633 million.

Analysts polled by Thomson Financial had expected a loss of 5 cents on revenue of $731 million.

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