US Airways' Q3 Loss Drops, but Delta's Rises

US Airways Group Inc. said yesterday that its third-quarter loss narrowed compared with a year earlier. Philadelphia's largest airline also said it expected the economic environment for travel to improve.

But Delta Air Lines Inc., the world's largest carrier, reported a wider third-quarter loss of $161 million, or 19 cents a share, compared with a loss of $50 million, or 13 cents a share, in the same period a year earlier.

Revenue for Delta, which merged with Northwest Airlines Corp. in October 2008, was $7.57 billion for the three months ended Sept. 30, compared with combined revenue for the two carriers in the same quarter a year earlier of $9.53 billion.

For airlines, certainty about better days remains elusive because ticket prices are being steeply discounted to fill planes and fuel prices are on the upswing again.

"While we now see encouraging revenue and booking trends, we remain cautious in these early stages of an uncertain recovery," said Richard Anderson, Delta's chief executive officer.

Doug Parker, US Airways' chairman and chief executive, was slightly more upbeat.

"Our third-quarter financial results reflect the soft but improving economic environment," Parker said, citing "the improving demand environment for both business and leisure travel." He noted on a later investor call: "I don't know that anyone can characterize us as being out of the woods."

US Airways, based in Tempe, Ariz., reported a loss of $80 million, or 60 cents a share, in the latest quarter compared with a loss of $866 million, or $8.46 a share, a year earlier.

Excluding fuel-hedging costs and other onetime charges, US Airways posted an operating profit of $23 million, compared with an operating loss of $261 million in the third quarter of 2008.

Although the company benefited from a fall in fuel costs compared with a year earlier, revenue fell 16.6 percent to $2.72 billion in this year's third quarter.

Seat capacity fell 3.6 percent in the third quarter. Revenue was hampered by aggressive fare sales and lower demand from high-end business travelers.

US Airways president Scott Kirby noted that bookings were up on the airline's Boston-New York-Philadelphia-Washington shuttle, used largely by business passengers. Shuttle traffic is expected to be down only 5 percent this month, compared with a 25 percent drop in the second quarter and a 16 percent decline in the third quarter. "There is strong evidence that business demand is, indeed, recovering," Kirby said.

Revenue from checked bags and other ancillary fees brought in about $110 million in the third quarter. US Airways estimates those a la carte fees will raise $400 million this year.

US Airways made $137.3 million from selling stock in the quarter and had $1.5 billion in unrestricted cash and investments as of Sept. 30.

Looking to 2010, with rising fuel prices, the airline does not expect to grow. "Domestically, we expect to be down 2 percent to 3 percent" next year, said chief financial officer Derek Kerr. "On the international front, we expect to reduce transatlantic capacity." Philadelphia is a hub and international gateway for US Airways, which transports two-thirds of passengers here on 400 daily flights.

"Our international growth will be the resumption of Mexico service that was reduced due to the H1N1 outbreak, and our new service to Rio de Janeiro," Kerr said.

The largest U.S. airlines reported losses in the third quarter, but smaller carriers - JetBlue Airways Corp., AirTran Holdings Inc., and Alaska Air Group Inc. - reported profits because of lower fuel costs and because they depend less on business and international travel, which have been down during the recession.

"There is evidence of improving travel demand, including from corporations," airline analyst Kevin Crissey of UBS AG said in a client note.