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Fuel costs pummel airlines in 1st qtr; shrs tumble

Tue Apr 22, 2008 11:53pm IST
 
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By Kyle Peterson

CHICAGO (Reuters) - Record high fuel prices led three U.S. airlines to report hefty quarterly losses on Tuesday, with UAL Corp, parent of United Airlines, posting its largest loss since it completed a Chapter 11 restructuring two years ago, sending airline shares plunging.

AirTran Holdings, parent of AirTran Airways, reversed its year-ago profit while JetBlue Airways also reported a loss, although it was smaller than expected and below the loss it posted a year earlier.

Airline shares were broadly weaker on the day, with the Amex airline index down more than 11 percent, to its lowest level ever, after Nymex crude oil futures hit a record high of $119.74 a barrel.

UAL shares tumbled 40 percent to the lowest price since the February 2006 bankruptcy exit before bouncing back a bit.

Other airlines' stock also got whacked including: Continental Airlines, down 11.5 percent; American Airlines parent AMR Corp, down 11 percent; Northwest Airlines, down 14.6 percent; and US Airways, down 10.5 percent.

The entire industry was hamstrung in the first quarter by soaring fuel, despite carriers' best efforts to control costs and stir up new revenue streams.

The losses reported on Tuesday, which follow those reported last week by AMR and Continental, put additional pressure on carriers to merge as a way to cut costs and boost revenue.

Last week, Delta Air Lines and Northwest proposed a merger that would create the world's largest airline.   Continued...

Construction workers work at a site as the sun sets in Chandigarh in this December 2006 file photo. REUTERS/Ajay Verma
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