Heralding a "dramatic upturn," USAir Group Inc. yesterday reported back-to-back quarterly profits for the first time in six years.
The Arlington, Va.-based carrier, which handles half the 31,000 daily passengers at Baltimore-Washington International Airport, said it earned $43.1 million, or 35 cents a share, compared with a loss of $180.1 million, or $3.32 a share, in the same period a year ago.
Revenues were $1.87 billion, the highest for a third quarter in the airline's history, up from $1.75 billion in the same period last year. In its second quarter, traditionally the airline's best, USAir reported a $112.8 million profit.
"These results confirm the profit potential of the USAir franchise," USAir Chairman and Chief Executive Seth E. Schofield said yesterday. "Many of the pieces now are falling into place that will allow us to begin realizing our potential."
Airline officials pointed to the demise earlier this year of Continental Lite, which had forced USAir to lower its fares significantly along the East Coast. And they cited the carrier's continuing efforts to reduce its fleet and cut unprofitable routes.
In the past year, USAir has eliminated roughly 400 of its 5,100 daily flights, most of them shorter ones. At the same time, it has added more profitable trans-Atlantic and trans-continental service.
Whether USAir can sustain its latest financial results hinges not only on such changes in its operating strategy but also on cutting its costs, the highest in the airline industry. A collective effort to secure $500 million a year in cost-cutting agreements from its unions collapsed this summer. Over the next 15 months, the airline will be trying to reach separate agreements with each of its unions.
Two weeks ago, USAir unveiled yet another strategy for dealing with its long-term problems, announcing it was negotiating to be purchased by either American or United Airlines.
"In the long term, there is a difference between sustaining minimum necessary profitability and recognizing the full value of your franchise," Richard M. Weintraub, a spokesman for USAir, said yesterday.
While USAir's latest financial results may be heartening for United, the airline's real value lies in its extensive access to the lucrative East Coast market.
"If United goes after USAir, they won't do it because USAir is a profitable carrier," said Timothy F. Sieber, vice president for research of Aviation Systems Research, a Golden, Colo., aviation consulting firm.
"They're looking at assets, like slots at busy airports like LaGuardia [New York] and National [Washington] and USAir's entire route structure," he said.
USAir's latest upbeat financial results had been expected since it predicted several months ago that 1995 would be its first profitable year since 1988. For the first nine months of the year, USAir earned $59 million, or 6 cents a share, compared with a loss of $362.9 million, or $7.06 a share, a year ago. Revenues were $5.62 billion, up from $5.32 billion.
The airline's performance parallels the rest of the airline industry, which has been bouncing back strongly this year after six years of industrywide losses tallying $13 billion.
"This is reflective of an industry that is doing extremely well," Mr. Sieber said. "But two quarters don't make a trend."
A renewed surge in competition from discount airlines, such as Southwest, or a rise in fuel oil prices could reverse the gains for USAir and other carriers, he said.