Northwest, American, United Attempt to Raise Leisure Fares

Several major airlines tried again Thursday to nudge leisure fares higher to generate badly needed revenue, and one hobbled carrier--US Airways Group--said it plans to apply for a federally guaranteed loan.

Southwest Airlines, meanwhile, said its low costs again overcame the air travel slump and enabled the discount airline to eke out a first-quarter profit of $21 million. The rest of the industry is expected to rack up first-quarter losses totaling $2 billion.

The fare increases varied among carriers. AMR Corp.’s American Airlines, the industry’s largest player, raised leisure fares systemwide by up to $20 per round trip. Its move came after Northwest Airlines and UAL Corp.’s United Airlines lifted discounted leisure fares by similar amounts, but only on selected routes.

The industry will be watching closely to see whether other carriers match American and adopt the higher prices systemwide.

Northwest’s willingness to raise some fares was notable because the fourth-largest U.S. carrier often balks at following others’ price hikes. Its refusal to match one started by Continental Airlines last week ultimately torpedoed that increase because its stance prompted others to roll back the higher fares.

US Airways, a predominantly East Coast carrier and one of the hardest-hit in the aftermath of Sept. 11, disclosed its plans to seek a loan guarantee as it reported a $269-million first-quarter loss.

Only one other major airline, America West, has tapped the loan program, which was part of the $15-billion bailout enacted after the attacks. The deadline for applications is June 28. US Airways declined to say how much it plans to borrow.

Northwest also reported a first-quarter loss of $171 million, or $2.01 per diluted share, which was better than Wall Street expected.

But Northwest and US Airways, like most other big airlines, continue to be pummeled by the weak U.S. economy, reduced passenger traffic and an overabundance of cheap fares that aren’t generating enough revenue to cover costs.

Southwest, the leading provider of discount seats, said its first-quarter profit equaled 3 cents per diluted share. That matched forecasts of analysts surveyed by Thomson Financial/First Call, but was 82% below the $121 million, or 15 cents a share, Southwest earned a year earlier.

The airline’s first-quarter revenue fell 12% to $1.26 billion from $1.43 billion.

“We’re obviously pleased to avoid a loss,” Gary Kelly, Southwest’s chief financial officer, said in a conference call. “Hopefully when we get into the June-July time period, we’ll see some improvement in traffic and revenues as the economic recovery continues.”

Dallas-based Southwest said it expects earnings to steadily improve this year, but warned that its second-quarter profit also would fall well below the $176 million the carrier earned in the second quarter of 2001.

US Airways said its first-quarter loss equaled $3.97 a share. A year earlier, the airline lost $171 million, or $2.55 a share, and its first-quarter revenue fell to $1.71 billion from $2.24 billion.

US Airways’ stock fell 28 cents to $5.92 a share and Southwest lost 45 cents to $18.55 a share on the New York Stock Exchange. Northwest dropped 16 cents to $19.89 a share on Nasdaq.