Northwest Reduces Its 2Q Loss, AirTran's Profits Sink!

Northwest came in with a loss of $225 million which was less than what the consensus was on Wall Street, however, CEO Doug Steenland said that labor costs at the airline are a very urgent matter, considering how most of its legacy rivals have been able to slash labor costs by double digit percentages. In addition, the airline is having difficulty grappling with high fuel costs as many of the jets it operates are DC-9 aircraft which are fairly inefficient aircraft, even with more modern engines that were put into the aircraft in 1995. It's estimated that Northwest is losing money at the rate of $4 million a day and has been since the beginning of the year. Northwest has got good people, loyal customers, especially with a terrific frequent flier program, and if they can get pensions and other labor costs under control, they should be headed for success.

AirTran on the other hand reported a net income of $11.3 million with a decent, but not terrific average load factor of 75.7%. The airline fell short of beating 2Q profits 2004 which amounted to $16.8 million. AirTran also did a great job of controlling its costs, with its non-fuel unit costs declining 5.3%. The airline is positioned well for the third and fourth quarters where we might see a break-even Q3 but a terrific Q4 unless fuel prices grow to $70 or $80 since about half of AirTran flights involve the Florida market which is very heavy during the winter months. A good quarter considering the circumstances, and a great airline poised for growth.