Boulder, Colo. (AP)--The cash infusion major carriers received as part of a multi-billion dollar federal bailout of the airline industry enabled Continental Airlines to report a net profit in the third quarter, although it was not enough to prevent America West from posting a larger-than-anticipated loss in the same period.
Investors responded by sending shares of Continental about 6 percent higher, while pushing America West's stock down roughly 5 percent.
Excluding the federal grants, Continental and America West reported operating losses of $97 million and $69 million, respectively, for the three months that ended Sept. 30.
Continental Airlines Inc.
Continental Airlines reported a $3 million net profit in the third quarter thanks to an emergency cash infusion from the federal government, although earnings plummeted 98 percent from a year ago.
The profit, which amounts to 5 cents a share, came despite dwindling passenger loads in the wake of the Sept. 11 terror attacks. Last year, the Houston-based carrier recorded a profit of $135 million, or $2.26 per share, for the quarter ended Sept. 30.
Excluding the impact of the $154 million after-tax grant from the federal government and an after-tax charge of $54 million relating to severance packages, Continental said its operating loss was $97 million, or $1.76 per share. The operating loss beat the consensus estimate of analysts surveyed by Thomson Financial/First Call, who anticipated a loss of $2.25 per share.
Shares of Continental, the nation's fifth-largest carrier, rose $1 cents to $17.65 Wednesday morning on the New York Stock Exchange.
Third-quarter revenue declined by 15 percent to $2.22 billion from $2.62 billion a year ago, the company said, due to a combination of reduced spending by business travelers, a two-day shutdown of the nation's aviation system after the attacks and the lingering dropoff in air travel since.
Responding to lower demand after the attacks, Continental announced it would lay off 12,000 employees and reduce capacity by 20 percent systemwide. The company expects 3,500 workers to accept voluntary leave and early retirement incentives.
``Continental has been able to work through this challenging time thanks to the loyalty of our customers and extraordinary efforts of all of our employees,'' said Larry Kellner, president of Continental. ``We're optimistic about our future opportunities.''
Continental ended the third quarter with $1.2 billion in cash. The company said it continues to lose between $4 million and $5 million a day and that it expects to receive an additional infusion of $215 million from the federal bailout, known as the Air Transportation Safety and System Stabilization Act.
For the first nine months of the year, Continental's revenue declined 3 percent to $7.23 billion from $7.47 billion a year ago. Net income for the period was $54 million, compared with a gain of $298 million last year.
America West Holdings Corp.
America West lost $31.7 million in the third quarter despite a cash infusion from the federal government after the Sept. 11 terror attacks, performing worse than analysts had expected.
The magnitude of the loss, which amounts to 94 cents per share, was blamed on the attacks, which caused already weak demand for air travel to deteriorate further.
Last year, the Phoenix-based carrier earned $1.3 million, or 4 cents per share, during the three months ended Sept. 30.
Excluding the impact of the roughly $38 million after-tax grant the company received as part of an airline industry bailout package, America West had an operating loss of $69.2 million, or $2.05 per share. Analysts surveyed by Thomson Financial/First Call were expecting an operating loss of $1.61.
Shares of America West, the nation's eighth-largest carrier, fell 9 cents to $1.90 Wednesday morning on the New York Stock Exchange.
Third-quarter revenues ffell 17 percent to $491.3 million from $590.5 million a year ago. The company said operating costs increased by 3 percent, despite a drop in jet fuel prices, because of the two-day suspension of service.
``America West's third quarter results were negatively impacted by the complete shutdown of our nation's airspace following the terrorist attacks of Sept. 11, and the subsequent sharp decline in consumer demand for air travel as a result of the attacks,'' said W. Douglas Parker, chairman, president and chief executive officer.
In response, the company reduced its flight schedule by 20 percent and eliminated 2,000 jobs.
From July 1 through Sept. 10, America West filled 78 percent of its seats. After the attacks, passenger loads dropped to about 53 percent, then slowly started to recover. The airline filled 71 percent of its seats during the last week of the quarter, which ended Oct. 27.
For the first nine months of the year, America West's revenue declined by 6 percent to $1.6 billion from $1.7 billion a year ago. The company reported a net loss of $87 million for the period, compared with a gain of $49 million last year.
Copyright (c) 2000 The Associated Press