US airline results defy worst fears

AIRLINES in the US have continued to post what one executive called 'wholly unacceptable' results for the second quarter, although Wall Street welcomed them as being better than many had feared.

American Airlines managed to show a profit of dollars 47m for the period compared with a loss of dollars 183m the year before, while USAir - British Airways' transatlantic partner - reported a smaller-than-expected loss of dollars 5.83m, down from dollars 131.08m, and even managed an operating profit of dollars 66.2m.

Shares of both airlines rose sharply despite the results, which suggest a solid recovery is still some way off for the industry. As recently as April some analysts predicted a significant improvement in passenger traffic this spring and USAir went so far as to predict a profit for the second quarter.

Seth Scofield, USAir's chief executive, said he was 'disappointed that our earlier expectations did not materialise due to sluggish economic conditions'. But he said he was encouraged by industry trends and predicted 'continued year-over-year improvement' in USAir's results.

Results at American, the largest US carrier, were actually below estimates, but included a dollars 79m charge to retire its ageing fleet of DC-10 aircraft. American's chief executive, Robert Crandall, said the airline's revenues and costs 'remain clearly out of balance'.

He added that the company had begun implementing its controversial 'transition plan', which will redeploy resources towards its non-airline divisions.