Three of the nation's biggest airline companies report surging profits for the quarter ended March 31, thanks to higher prices, expansion and, in some cases, the crippling strike against Eastern Airlines.
Delta Air Lines, Eastern's traditional rival, posted record net earnings of $85 million, or $1.73 cents a share for the period, which is the company's fiscal third quarter. In the same period last year, Atlanta-based Delta earned $56.1 million, or $1.15 a share."The key to the increased earnings was the 20 percent growth in passenger revenue," said Thomas J. Roeck, Delta's chief financial officer.
Wall Street analysts said higher prices aided the earnings boom more than the Eastern strike.
"Strong pricing will work wonders in this business, and that's where it all is," said Ed Starkman of PaineWebber. "It's surprising to us that traffic has held up as well as it has. Fares have gone up and will stay that way until the market signals that they're too high."
Without mentioning Eastern by name, Roeck said the strike resulted in increased business for Delta in March. But he said traffic rose even before the strike occurred, as a result of increased flying out of Delta's Salt Lake and Los Angeles hubs. Those routes were formerly the province of Western Airlines, which Delta acquired in 1986.
But Delta also absorbed a $39 million expense after accepting Eastern tickets that can't be reimbursed because the company is in Chapter 11 bankruptcy proceedings.
Ever since three unions struck Eastern March 4, the reduced number of total airplane seats has created a seller's market for airlines such as Delta, USAir, Piedmont, American and United. Prices have shot up.
USAir Group, parent company of USAir and Piedmont Airlines, said its consolidated first quarter net profits rose to $15.5 million, or 35 cents a share. In the same period last year, the company suffered a net loss of $18.8 million or 43 cents a share.
USAir Chairman Edwin Colodny acknowledged that both of his airlines, which are to be merged this fall, benefited from the Eastern walkout. But he said USAir's acquisition of San Diego-based Pacific Southwest Airlines gave the company a strong traffic boost as a result of long-haul flying between the East Coast and California.
UAL Corp., parent of Chicago-based United Airlines, which placed a huge order Wednesday for new aircraft from Boeing, posted profits from continuing operations of $65.4 million, or $3.03 a share, compared to $27.9 million, or 58 cents a share.
Overall, the company posted first quarter net earnings of $576.9 million, or $12.02 a share, as a result of the January sale of UAL's Westin Hotel Co.
UAL Chairman Stephen Wolf said United achieved most of its good fortune on its own, and without the help of the Eastern strike.