US Airways, AirTran and JetBlue report steep losses
By Christopher Hinton, MarketWatch
Last update: 4:46 p.m. EDT Oct. 23, 2008

NEW YORK (MarketWatch) - Fuel costs and non-cash charges related to its hedging program helped push US Airways into a significant third-quarter loss.

The Tempe, Ariz., legacy carrier wasn't alone. Also reporting swings to quarterly losses Thursday were low-cost carriers JetBlue Airways Corp and AirTran Holdings.

The smallest of the six so-called legacy carriers, said it swung quarterly loss of $689 million, or $8.45 a share, from a gain of $177 million, or $1.87 a share, in the year-ago period.
Total operating revenues rose 7.4% to $3.26 billion from $2.13 billion, while passenger-unit revenue jumped 4.6% to 12.71 cents.

Excluding items, the airline said it would have lost $2.35 a share. Analysts polled by FactSet Research expected, on average, a loss of $2.30 a share.

Shares of US Airways plunged nearly 16% to close at $7.14, along with the broader sector as investors brace for a possible oil-production cut among OPEC members. The stock hit its lowest point on record at $1.45 when oil hit $147 a barrel in July.

US Airways' total fuel bill in the quarter rose 60% to $1.11 billion due to those record oil prices. Since then prices have crashed to below $70, resulting in significant mark downs for the airline's fuel hedging program that's meant to buffer higher oil prices.

It's a scenario felt across the industry as the world's oil and jet fuel market remain volatile. Over the last two weeks, Northwest Airlines Southwest Airlines Co.
all reported losses due to the sharp rise and then falloff in oil prices.

Still, falling oil prices and steep seat-capacity cuts are expected to benefit the industry next year, and US Airways said Thursday its expects 2009 a "much better" year for the company as well.

Further, the carrier said it secured an additional $950 million in financing.
AirTran and JetBlue also report quarterly losses on fuel

Along with US Airways, JetBlue and AirTran were also predicting clear skies ahead.
"The great industry guide-up continues, with AirTran and JetBlue adding their voices to the chorus of airlines this season painting a brighter view of the fourth quarter and beyond," said J.P. Morgan analyst Jamie Baker in a note to investors.

AirTran Holdings said it swung to a third-quarter loss of $107.1 million, or 91 cents a share, compared to a profit of $10.6 million, or 11 cents a share, in the year-ago period.
The Orlando, Fla., airline said revenue rose 11% to $673.3 million.
Analysts polled by FactSet expected, on average, a loss of 41 cents a share on sales of $671.1 million.

The company cited record-high fuel costs, which accounted for more than 50% of its expenses for the quarter, as a significant contributor to the loss.

Downgrading the company Thursday was Standard & Poor's Equity Research, saying the carrier's wider-than expected loss raises concern over its financial position. Further, the AirTran is more exposed to leisure and short-haul markets, which are likely to fare worse in a sustained downturn.

In an interview with MarketWatch, Chief Financial Officer Arne Haak said passenger numbers has slowed down a "little bit" for October, and for the first week of November. December so far looks "pretty good," he said.

Nonetheless, S&P cut its rating to hold from buy, with a 12-month price target of $4, down from $5.50. Shares of AirTran fell 7.2% to close at $3.20.

Meanwhile, JetBlue ( said it lost $4 million, or 2 cents a share, in the third-quarter. In the same period a year ago, the Forest Hills, N.Y., carrier earned $23 million, or 12 cents a share.
Operating revenue for the quarter totaled $902 million, up 17.9%.

Analysts polled by FactSet Research estimated, on average, a loss of 5 cents a share and sales of $896 million.

In the near term, JetBlue said it sees continued strength in bookings.

In an investor, note, J.P. Morgan upgraded the low-cost carrier to overweight from neutral.
"JetBlue remains one of the least-liked large jet operators, and has materially lagged the sector's recent sprint to the upside," the research firm said in a note. "In light of a significantly boosted 2009 outlook and continued liquidity improvements, we suggest investors focus on this laggard."
Shares of JetBlue bounced back with the broader market to end up 1 cent at $5.02.

Christopher Hinton is a reporter for MarketWatch based in New York.