Northwest Airlines Corp. , the No. 4 U.S. carrier, Thursday said it nearly doubled its quarterly loss as high fuel prices, low fares and high labor costs pounded the airline industry.
The first-quarter net loss was $458 million, or $5.28 per share, compared with a loss of $230 million, or $2.67 per share, a year earlier.
Excluding a one-time item, Northwest, based in Eagan, Minnesota, posted a loss of $440 million, or $5.07 per share. On that basis, analysts' average forecast was a loss of $4.43 per share, according to Reuters Estimates.
The carrier said the one-time item related to an agreement to sell a Pinnacle Airlines Corp. note to Pinnacle. As a result of the sale, Northwest recognized a loss of $18 million.
"Frankly, we are disappointed with our first-quarter results. They are clearly unacceptable," said Chief Executive Doug Steenland on a conference call with analysts and reporters.
"Record high fuel prices and increasingly non-competitive wages and benefits impacted our expenses while excess capacity and competitors' pricing decisions affected our revenue adversely during the quarter," Steenland said.
"I think the uptick may just be that it's been beaten down in the last couple of days," said airline consultant Robert Mann, referring to a 15.7 percent decline in Northwest's share price from Monday's high to Thursday's low.
Mann further noted that Northwest's revenue came in a little stronger than expected. The carrier said its operating revenue was $2.8 billion in the first quarter, up from $2.6 billion a year earlier.
Northwest shares also benefited from news of proposed legislation that could allow airlines struggling financially to stretch out employee pension payments over 25 years to ease big liabilities and save millions in short-term contributions, wrote JP Morgan analyst Jamie Baker in a research note.
Northwest, along with the rest of the airline industry, has been hammered by soaring fuel prices and competition from low-cost carriers.
The airline has been attempting to cut costs. Last month it raised its annual labor cost-saving target to $1.1 billion from $950 million. The carrier also asked its unions to agree to a freeze on defined-benefit pension programs. It is seeking to introduce new defined-contribution pension plans.
Northwest also expects to increase its systemwide capacity, or the number of seats it puts up for sale, by 3 percent to 4 percent in the second quarter and by 2 percent to 3 percent for the entire year, Chief Financial Officer Bernie Han said.
The carrier ended the first quarter with a cash balance of $2.3 billion, of which $2.1 billion was unrestricted.
