Airlines Blame Fuel Prices for Steep Losses

By James Bernstein, Newsday, Melville, N.Y.

Jul. 23–Despite an increase in the number of people flying this year, more airlines — including discounter JetBlue Airways Corp. of Forest Hills — yesterday reported steep losses in the latest quarter, blaming soaring fuel prices for the turbulence.

JetBlue said it lost $7 million in the second quarter, compared with profits of $21 million in the same period last year. Among major carriers, United Airlines yesterday posted the biggest loss: $2.73 billion. And US Airways Group said it lost $567 million in the quarter.

JetBlue said it does not expect to grow next year and will defer acquiring some new jets. The airline said it sees little letup in the storm clouds caused by rising fuel prices, which have affected nearly every carrier in an industry going through its most severe downward spiral in decades.

“Revenue gains are clearly not keeping pace with the extraordinary increase in the price of jet fuel,” JetBlue chief executive Dave Barger said in a statement.

As a result, Barger said, JetBlue — once among the highest fliers in the airline industry — will suspend its near-term growth plans beginning in September, after the summer travel season.

Barger said JetBlue expects its capacity — seats and planes — to be down about 10 percent year over year, “and we currently do not plan to grow in 2009,” he added.

But all was not totally bleak. JetBlue said operating revenues in the quarter totaled $859 million, a 17.7 percent increase over the $730 million in the second quarter of 2007.

JetBlue said it lost 3 cents a share, compared with a gain of 11 cents in the period last year.

But the airline beat analysts’ expectations of a loss of 7 cents per share in the second quarter.

Robert W. Mann Jr., an independent airline analyst and consultant in Port Washington, said JetBlue was able to beat per-share estimates because it had locked in more fuel costs than analysts had expected.

Mann said he expects JetBlue and other airlines to continue trimming costs, because Congress is not expected to approve any special rescue package for the industry this year.

US Airways, which has cut jobs and instituted charges for drinks and checked bags, said high fuel costs were at the heart of its problems. In the second quarter, US Airways spent $1.1 billion on fuel and related costs, an increase of 65 percent, the company said.

Despite its huge loss, the stock price of United Airlines parent UAL Corp. soared $3.42 or 69 percent for the day after it announced it would cut 7,000 more jobs and it reached a new credit-card agreement with JPMorgan Chase.

The job reductions represent about 13 percent of UAL employees and push the total to about 26,000 across the U.S. airline industry in recent months.

Last week American Airlines and Delta Air Lines each posted losses of more than $1 billion in the second quarter. Each blamed high fuel costs.

In its latest report, the U.S Transportation Department said the number of domestic and international passengers on airlines during the first four months of this year grew to 244.2 million, .04 percent higher than in the same period in 2007.

$7M

JetBlue reported losses in the second quarter (company made $21M profit in same time frame last year)

$2.73B

United Airlines’ reported loss in the second quarter

$567M

US Airways’ reported loss in the second quarter

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