Jet Blue Reports Profit Falls 71%
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Jet Blue reported its profit fell as UAL Corp.’s United Airlines and US Airways Group Inc., the two largest American carriers operating in bankruptcy, posted third-quarter losses, all on higher jet-fuel costs.
United’s loss narrowed to $274 million, or $2.38 a share. US Airways’ loss widened to $232 million, or $4.22. Jet-Blue’s profit fell 71% to $8.42 million, or 8 cents a share, making it one of the few carriers that is still profitable.
“It doesn’t matter which airline you are and how profitable you have been, jet fuel is going to take all the wind out of your sails and all the money out of your bank,” said a partner at Washington-based consulting firm The Velocity Group, Michael Miller.
Spot prices for jet fuel, the carriers’ second-biggest cost after labor, rose 60% in the quarter. Major airlines have been unable to raise fares because of competition from carriers such as Southwest Airlines Co., which have lower labor costs. Fuel costs rose 79% at JetBlue, 57% at United, and 34% for US Airways, the companies said.
“The one bright spot is that JetBlue managed to make a profit,” Mr. Miller said. “If JetBlue is able to make money, that’s where other airlines should be looking in terms of a cost structure.”
Carriers such as US Airways and Jet-Blue canceled flights as four hurricanes hit America in the Southeast in August and September.
JetBlue scrapped 464 flights and lost business during the storms, and US Airways said the storms cost at least $20 million. United sales rose to $4.3 billion from $4 billion, US Airways’ climbed to $1.8 billion from $1.77 billion, and Jet-Blue’s increased to $323.2 million from $273.6 million.
United’s loss narrowed from $367 million, or $3.47 a share, a year ago, US Airways widened from $90 million, or $1.69, and JetBlue declined from $29 million, or 26 cents, a year earlier.
JetBlue, based in the Forest Hills section of Queens, was expected to earn 10 cents a share, the average estimate of analysts surveyed by Thomson Financial.
“It’s clear from this report that even JetBlue isn’t immune from the revenue pressures that are affecting the other carriers,” said Fitch Ratings analyst Bill Warlick. Discount carriers are bumping into each other, with JetBlue butting up against AirTran Holdings Inc., US Airways Group Inc., and America West Holdings Corp., he said.
Chicago-based United, the world’s second-largest airline, seeks to reduce costs to win financing that would help UAL exit a Chapter 11 bankruptcy proceeding that began in December 2002.
Arlington, Virginia-based US Airways, the seventh-largest American carrier, filed for protection from creditors on September 12 after failing to reach labor agreements with its unions to cut costs. US Airways emerged from Chapter 11 bankruptcy protection in April 2003.