Fuel Prices And Economy Killed Any Hope For Profits, Carriers
Say
As
if there were any doubt of how much high fuel prices and a terrible
economy hit airlines last year, consider the following: Continental
Airlines announced Thursday it lost $585 million in 2008, including
$234 million attributed to special items such as fuel hedges.
That figure was eclipsed, however, by the $803 million net loss
reported by US Airways.
Weakening economic conditions and highly volatile fuel prices
presented financial challenges for both airlines in the fourth
quarter. Continental recorded a fourth quarter net loss of $266
million, including special items; US Airways recorded fourth
quarter net losses of $541 million, largely due to fuel hedges that
became staggering liabilities as oil prices dropped below $40 per
barrel.
CEOs for both airlines attempted to put a positive spin on the
numbers, noting many expect 2009 to be a better year all
around.
"I want to thank my co-workers for working together to meet
tough operational and financial challenges during the year," said
Continental's Larry Kellner. "While there are continuing hard times
ahead, thanks to our team, we are well-positioned to maintain our
place as an industry leader."
Kellner backed up that assertion by noting consolidated (i.e,
both mainline and regional) yield for the fourth quarter increased
5.7 percent year-over-year, while revenue per available seat
mile (RASM) for the fourth quarter increased 4.8 percent
year-over-year.
Over at US Airways, CEO Doug Parker noted similar improvements
in that carrier's yield and RASM... and stressed the abysmal Q4 and
annual performances were hardly unique to US Airways.
"Like other airlines that have reported before us, our financial
results reflect the staggering increase in fuel prices that we
faced throughout most of 2008," he said. "In fact, had our 2008
fuel price including realized gains and losses on fuel hedging
instruments remained at 2007 levels, the Company’s fuel
expense would have been approximately $1.4 billion lower.
"The impact of high oil prices acted as a catalyst for airlines
to take unprecedented measures to bring the supply of seats back
into balance with passenger demand. We believe these actions have
significantly softened the blow from the economic downturn that we
as an industry now face."
Parker added US Airways has made "tremendous progress" on the
operational front, noting the carrier has made impressive strides
towards improving on-time performance.
"As we begin the new year, US Airways is well prepared for a
difficult global macroeconomic environment," he said. "We are
running a great operation, have restructured our business model
through the introduction of new fees, reduced capacity and
increased our liquidity. With the help of falling fuel prices, we
believe we are well positioned for the challenges ahead."