US Air, Alaska Air cite fuel costs for losses

By Kyle Peterson

CHICAGO (Reuters) - US Airways Group Inc (LCC.N: Quote, Profile, Research) and Alaska Air Group Inc (ALK.N: Quote, Profile, Research) posted quarterly losses on Thursday, citing surging fuel costs that have inflicted pain on the entire industry.

U.S. carriers have been uniformly punished by the rising price of oil, which counters their best efforts to hold down expenses and tap into new revenue streams.

Persistently high fuel costs have forced airlines to take more drastic action to ensure stability. Delta Air Lines Inc (DAL.N: Quote, Profile, Research) and Northwest Airlines Corp (NWA.N: Quote, Profile, Research) last week announced a merger that would create the world's largest carrier, and other airlines are said to be in play as well. US Airways has been reported to be in talks with UAL Corp (UAUA.O: Quote, Profile, Research), parent of United Airlines, but neither company has confirmed the reports.

"The large losses posted by U.S. airlines this quarter, the forecast for further losses and the recent liquidations and bankruptcies of a number of carriers indicate quite clearly that the U.S. airline industry is in financial turmoil," US Airways Chief Executive Doug Parker said in a statement.

Parker, a long-time proponent of industry consolidation, merged his former airline America West with then-bankrupt US Airways to form the new US Airways.

Airline shares rocketed higher with most major carriers posting double-digit percentage gains as the price of crude oil -- directly linked to the price of jet fuel -- tumbled more than $3 from a record high of $119.90 a barrel on Tuesday.

The Amex airline index rose 6.7 percent after notching a lifetime low on Wednesday. Despite the quarterly loss, US Airways led gains in the airline sector, climbing 97 cents or 15.5 percent to $7.22 on the New York Stock Exchange.

"I think it's more because oil is down over a buck," said Calyon Securities analyst Ray Neidl. US Airways' results, broadly in line with expectations, were having no impact on share prices, Neidl said.