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Tuesday, 30 October, 2001, 17:39 GMT
US Airways posts huge loss
US Airways plane
US Airways' merger with United Airlines was blocked
US Airways has reported a huge increase in its losses, way ahead of the gloomiest analyst forecasts.

The airline ranks sixth in size among American airlines and relies heavily on the North American domestic market.

"These results should be proof enough to all relevant constituents that US Airways must be operationally restructured, otherwise its profitability will never be restored," said Merrill Lynch analyst Michael Linenberg.

The airline posted a staggering $11.42 a share loss for the July to September period, compared with 45 cents a share loss in the same three months of last year.

Failed merger

The airline's woes go back well before the 11 September assaults on the World Trade Center and the Pentagon.

In July, its attempted $4.3bn merger with larger rival United Airlines failed to clear anti-trust hurdles, forcing US Airways to reposition itself as a regional carrier shortly afterwards.

At that time, it warned its losses would continue because it had too many empty seats. To solve the problem, the new strategy included a switch to smaller planes.

But analysts were expecting US Airways to report a loss per share in the region of $3.94, according to Thomson Financial/First Call.

Even the most sceptical analysts predicted losses of only $5.45 per share, compared with the $11.42 a share deficit achieved.

US Airways widened its net loss to $766m, compared with $30m in the third quarter of 2000.

Jobs cut

Before unusual items, US Airways posted a loss for the latest quarter of $433m, or $6.45 a share.

It took a precautionary charge of $309m towards the cost of September's attacks.

Operating revenue fell 16.5% to $1.99bn from $2.38bn a year earlier.

Like other US airlines, US Airways cut jobs and schedules in the wake of the terrorist attacks.

It slashed 11,000 jobs and cut schedules by 23%.

Wall Street reacted to news of the huge increase in losses by marking down US Airways shares. The stock fell 12 cents to $4.55 within minutes of the news.

See also:

28 Oct 01 | Business
United Airlines boss quits
24 Oct 01 | Business
Massive loss for American Airlines
02 Jul 01 | Business
United-US Airways merger called off
10 Jan 01 | Business
American Airlines buys TWA
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