Airlines blame continuing pain on sluggish US economy

US airlines have announced more aircraft deferrals and retirements as losses escalated in the third quarter. American Airlines led, reporting a net loss of $924 million, followed by Delta Air Lines with a $326 million loss. United Airlines and US Airways are also expected to report heavy losses, and more red ink is forecast for the fourth quarter.

American has deferred delivery of 34 Boeing aircraft over the next three years to reduce capital expenditure by $1.5 billion. It will reduce deliveries from 19 to 11 next year - nine 767-300s and two 777s - and take none in 2004 or 2005, when it had planned to accept 26 aircraft. Next year American will put an additional 42 aircraft - 28 Boeing MD-80s and 14 767-200s - into storage until at least 2005, to save $100 million over two years.

American's net loss of almost $1 billion compares with its $414 million loss for the same period last year and includes $449 million in charges to cover cost-cutting initiatives announced in August. These include the retirement of 74 Fokker 100s by 2005 and the elimination of 7,000 jobs by next March. The airline has lost almost $3 billion in the first nine months and foresees large losses in the next two quarters.

Delta has deferred all 29 mainline aircraft set for delivery over the next two years - five 737-800s in 2003 and 23 737-800s and one 777 in 2004 - to reduce capital expenditure by $1.3 billion. The carrier's 15 Boeing MD-11s will be grounded next year. Twelve will be replaced with 767-300ERs by the third quarter of 2003 and the rest will be replaced by 777s early in 2004. Delta also plans to cut another 7,000-8,000 jobs.

Southwest Airlines is bucking the trend, despite seeing its third quarter net profit halved to $75 million, and is accelerating the delivery of eight 737-700s. Five will be delivered in the fourth quarter, taking the total to 23 for the year, and three in 2003 for a total next year of 14. Southwest says it is "impossible to predict whether we will earn a profit in fourth quarter 2002".

America West, which held its third quarter net loss to $31 million, is to defer two of four Airbus deliveries planned for next year, accepting two A319s but pushing twoA320s into 2004. It will also return two A320s and two 737s to lessors next year. Northwest Airlines posted a $46 million net loss compared with a $19 million profit a year ago, and Continental Airlines slid to a $37 million net loss from a $46 million profit for the same period last year.

Airlines blamed the USeconomy, weak revenues, fuel prices andsecurity costs for the losses.

Source: Flight International