WASHINGTON – Substantial labor savings and other restructuring benefits could not stem the rush of red ink at bankrupt US Airways (search), which reported a wider first-quarter loss on Friday due to soaring fuel costs.
The carrier has lost $427 million since entering bankruptcy in September. Like its struggling rivals, it has been buried under record high fuel prices. US Airways spent $368 million for fuel in the first quarter, nearly 58 percent more than it spent in the same period a year ago.
"We continue to operate under extremely challenging conditions," said Bruce Lakefield, the airline's chief executive.
In addition to fuel, Lakefield cited aggressive competition from low-cost rivals that have pushed fares lower and depressed revenue.
"The cost reductions and operational efficiencies we have implemented have minimized the impact of the fuel and revenue environment," Lakefield said. "But we find ourselves in the same situation as most of the industry, where fuel costs cannot be fully recovered through traffic growth and incremental fare increases."
US Airways posted a quarterly net loss of $191 million, or $3.48 per share, compared with a loss of $177 million, or $3.28 per share, for the same period in 2004. The results were not a surprise to experts tracking a company that has been on the ropes for years. Analysts forecast a loss of $4.47 a share, according to Reuters Estimates.
Operating revenue for passenger services fell 4.4 percent to $1.44 billion, reflecting tough fare competition. Total revenue was off by nearly the same percentage to $1.62 billion even though mainline and affiliates carried 10 percent more passengers than were flown in the same period in 2004.
The first quarter is historically the slowest period for airlines. US Airways was helped by $75 million in bankruptcy financing.
While fuel expenses more than doubled, US Airways has successfully slashed costs during its second trip through Chapter 11 in the past two and a half years.
US Airways said its mainline unit costs, excluding fuel, fell 15.6 percent to 8.4 cents between January and March. Having wrung massive concessions from workers, the carrier spent nearly a quarter less on personnel in the period, $477 million, than it did last year.
But industry experts say US Airways, and other major domestic carriers weighed down by high fuel costs, must at least operate more productively while fares remain low.
"They've essentially gone after all the easily manageable issues. Now it's up to (US Airways) management to do the hard work and reform the business model," said Robert Mann, an independent consultant based in Port Washington, New York.