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Fuel Costs Offset Gains for Midwest; Airline Reports $8.2 Million Loss

Posted on: Friday, 29 July 2005, 15:00 CDT

The corporate parent of Midwest Airlines Inc. in Oak Creek more than doubled its second quarter loss from a year ago, as higher fuel prices continue to burn up cash among the nation's airlines.

Midwest Air Group Inc. on Thursday reported a loss of $8.2 million, or 47 cents a share, compared with a loss of $3.5 million, or 20 cents, in the second quarter of 2004. The company's stock price closed at $2.87, down 24 cents, or around 8%, after the results were released.

The widening loss came even as Midwest Air, which also operates regional carrier Skyway Airlines Inc., increased revenue 23%, to $131.6 million from $106.9 million.

Midwest Air is making progress in its goal of returning to profitability, said Timothy Hoeksema, chairman and chief executive officer.

But, because of higher fuel prices, "We're still not quite there," Hoeksema said during a teleconference with analysts.

Jet fuel prices were 40% higher during the quarter, with a negative impact on the company's operating results of $11.7 million, or 67 cents a share. The company reduced the flow of red ink from the first quarter, when it posted a loss of 91 cents a share.

That happened mainly because Midwest Air is selling more tickets, recording a 31% increase in passengers during the second quarter over the same period in 2004. Hoeksema said the increase in passengers was driven by fare reductions and new flights added from both Milwaukee and Kansas City, where Midwest Air has made market share gains.

Also, Midwest Air is extending its marketing beyond its traditional Milwaukee and Kansas City bases, Hoeksema said. Advance bookings for travel in the third quarter are up, he said.

Meanwhile, with the company's shareholder equity at around $60 million, and its market capitalization at around $53 million, Midwest Air expects to receive a formal notice next week about its possible delisting from the New York Stock Exchange, Hoeksema said.

Under the exchange's new criteria, a company can face delisting if either its shareholder equity or market capitalization fall below $75 million.

After the delisting notice is received, Midwest Air will have 45 days to propose a plan to raise its shareholder equity and market capitalization above $75 million. The company then has 18 months to get above those thresholds, Hoeksema said.

If it is unable to comply, it could switch to the American Stock Exchange or the Nasdaq exchange, Hoeksema said.

Copyright 2005, Journal Sentinel Inc. All rights reserved. (Note: This notice does not apply to those news items already copyrighted and received through wire services or other media.)

Source: Milwaukee Journal Sentinel

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