Airline's 1st quarter loses less than expected
By Karren Mills
MINNEAPOLIS -- Northwest Airlines reported a first-quarter loss of $171 million Thursday, blaming the decline in business travel and the impact of reduced airfares. The Eagan-based carrier beat the low expectations of Wall Street analysts.
Northwest's loss of $2.01 per share for the first three months of 2002 was slightly better than the loss of $2.05 per share a year earlier, when the fourth-largest carrier also reported a net loss of $171 million. Last year's quarter included $48 million in nonrecurring charges.
Analysts surveyed by Thomson Financial/First Call expected a loss of $2.46, with estimates ranging from $2.00 to $2.90. Northwest shares fell 16 cents to close at $19.89 on the Nasdaq Stock Market.
Richard Anderson, Northwest's chief executive, said he was encouraged by a profit in March, due partly to the early Easter holiday, but said economic conditions remain unfavorable.
"We believe the best way to manage the airline in the near term is to remain fiscally disciplined by continuing to control costs and by adding capacity only when economically justified," Anderson said.
That could mean delaying delivery on some jets Northwest is scheduled to take delivery on in 2003, said Mickey Foret, executive vice president and chief financial officer.
"We're sort of rethinking the size that our operation should be in 2003, and as a result of that rethinking it's possible that some of the new aircraft deliveries might be postponed. We haven't determined how many yet or which ones," Foret said during a telephone conference call.
Northwest said last year that it would take delivery of 37 narrow-body planes in 2003: 12 Boeing 757s, six Airbus 320s and 19 Airbus 319s. However, some of those deliveries may have been advanced to this year, when Northwest expects to take delivery of 61 new planes.
Foret also said Northwest expects to save about $100 million annually as a result of its decision to stop paying base commissions to travel agents for tickets issued in the United States, Canada, Puerto Rico and the U.S. Virgin Islands. Those commissions ended March 10.
Northwest, along with most other major airlines, cut back operations by about 20 percent following the Sept. 11 terrorist attacks. Passenger capacity is now down only about 13 percent from a year earlier, but Northwest is flying with only 76 percent of the reduced number of seats filled.
Northwest expects its system capacity to be down 11 percent in the second quarter and 5 percent in the third quarter. "For the full year, we expect that our system flying will be down 5 to 6 percent," Forest said.
"We do expect to see a continued recovery," Foret said, with the recovery coming most slowly in the Asia-Pacific region.
The airline said revenue from higher-paying business travelers hasn't rebounded because of the slowed economy and the effects of Sept. 11 on air travel in general.