The airline reported a slim operating profit of dollars 13.7m (pounds 9.2m) for the final months of 1993, compared with an operating loss of dollars 46m during the same period the year before. But the profit became a loss of dollars 116m, or dollars 2.29 a share, after several one-off charges, including a dollars 60.2m item to cover employee wage concessions and the write-down of some of its airport facilities.
The results, which the company called 'unsatisfactory,' were a good deal worse than Wall Street's expectations. Their release was quickly followed by word that the airline would join the rest of the industry in matching domestic fare discounts of up to 35 per cent announced early yesterday by a rival, TWA.
The fare war appears to quash recent hopes of a strong recovery among the American carriers, whose collective 1993 results will probably show billion-dollar losses for the fourth consecutive year. Only last month, analysts were expressing confidence that the worst might be over for the industry, with TWA and Continental emerging from bankruptcy protection and prices stabilising.
Most predicted a financial break-even this year, with a return to strong profits next year. 'Hope springs eternal,' said Julius Maldutis, head of airlines equity research with Salomon Brothers in New York.
USAir's loss for the year, dollars 393m after accounting and other charges, roughly corresponds to the investment BA made in the sixth-ranked US carrier a year ago. BA had earlier announced plans to invest almost double that amount, but was forced to limit its stake in USAir to 24.6 per cent by American regulators worried about foreign influence over the airline.
The US Transportation Secretary, Federico Pena, announced his support earlier this month for a liberalisation of foreign ownership rules that would allow BA to raise its stake.
BA's stake would rise to about 44 per cent from its current level if it were to follow through on its original deal.
Mr Pena proposed the looser rules as part of a wider plan to revitalise the struggling US industry, but the measure will have to receive the approval of the US Congress. While US politicians welcome foreign owners as a new source of capital for the industry, BA's rivals have insisted that this liberalisation be tied to a further opening of Heathrow to their aircraft.
Executives of the leading US carriers, who lobbied successfully against BA's original investment, say passage of the plan depends largely on successful negotiation of a new bilateral airline agreement with Britain.
Those talks, which were to resume on 19 January, have been postponed indefinitely.Reuse content