DALLAS High fuel costs that helped drive some marginal airlines into bankruptcy this spring are also taking a toll on two of the nation's healthiest carriers.
Continental Airlines Inc. slid to a first-quarter loss as fuel spending soared 53 percent, and Southwest Airlines Co. which hasn't lost money since 1991 saw its profit fall by two-thirds.
Both airlines say they will respond by slowing their once-ambitious growth plans, and they are raising fares.
"We've put in two fare increases in the past week, and we'll have to be looking for opportunities to do more," said Gary Kelly, chief executive of Southwest, which built its business on offering lower fares than competitors but now faces the same cost squeeze.
Stubbornly high fuel prices are likely to mean billions in losses this year at the nation's airlines. Already this year, five smaller carriers have shut down or announced plans to do so, and analysts are tossing around the B-word bankruptcy even in talking about the major airlines.
Southwest reported Thursday that its earnings tumbled to $34 million, or 5 cents per share, in the January-March period, from $93 million, or 12 cents per share, a year earlier. Revenue rose 15 percent, to $2.53 billion.
Southwest is better insulated from high fuel costs than other carriers because several years ago it agreed to pay for the right to buy fuel in future years at set prices, which turned out to be a bargain.
Still, Southwest spent $753 million on fuel, an increase of $189 million or 33.5 percent in just a year.
At Continental, fuel costs rose by $364 million from last year, pushing the Houston-based carrier to a loss of $80 million, or 81 cents per share. A year ago, the company earned $22 million, or 21 cents per share.
Continental also posted a healthy increase in revenue up 12.3 percent to $3.57 billion. But costs rose even faster, by 16.7 percent.
Both Southwest and Continental plan to limit growth to cope with high fuel costs and a slowing economy.
Southwest said it would go ahead with plans to add 29 new Boeing jets to its fleet this year but only 14 half its original plan in 2009.
Southwest's Kelly said his airline had cut its growth rate from 8 percent a year ago to about 2 percent in 2009. "We may not grow at all in 2009," he added.
Continental will take 14 older jets out of service beginning in September and reduce domestic capacity 5 percent after the peak summer travel season.