Texas Air Loses $109.3 Million In Quarter, Reflecting Eastern Strike
DALLAS (AP) _ Texas Air Corp. on Monday posted a $109.3 million second-quarter loss, as strikebound subsidiary Eastern Airlines suffered a $129.3 million loss that outweighed a profit by sister carrier Continental Airlines.
Houston-based Texas Air said the $109.3 million loss narrowed from a loss of $255.9 million in the same quarter last year. Second-quarter revenue dropped to $1.4 billion from $2.1 billion, reflecting the virtual shutdown in Eastern’s operations starting in early March.
For the first half of this year, Texas Air reported a loss of $364.9 million on revenue of $3.3 billion, compared with a loss of $380.1 million on revenue of $4.3 billion in the same period last year.
The news depressed the price of Texas Air stock, which dropped 12.5 cents a share to $16.25 in heavy trading on the American Stock Exchange.
Miami-based Eastern, which Texas Air bought in 1986, has been under Chapter 11 bankruptcy protection from creditors since March 9, five days after Machinists union members, pilots and flight attendants went on strike. Since then, efforts to sell the airline have fallen through and Texas Air has proposed plans to resurrect Eastern as a much smaller carrier.
Texas Air said Eastern lost $129.3 million on revenue of $89.6 million during the quarter ended June 30, despite a $250 million gain from the sale of its Northeast shuttle to developer Donald Trump. The Eastern loss does not include a charge of $11.3 million payable to preferred shareholders.
In the same quarter last year, Eastern lost $89.8 million on revenue of $1 billion before a $14.2 million charge for preferred-stock dividends.
Eastern also incurred costs of $17.2 million in the latest quarter because of its reorganization, Texas Air said.
In the first half of this year, Eastern lost $384.5 million on revenue of $710.2 million, compared with a loss of $120.8 million on revenue of $2 billion in the first six months of 1988. Both losses do not include payments for preferred dividends.
Separately Monday, Eastern said it has received permission from federal bankruptcy court to pay dividends in kind on three of its preferred stock issues. The dividends will be paid with new shares of the same series of stock.
″We are steadily building our operations and, notably, our customer base,″ Eastern President Phil Bakes said. ″We are more confident each day that Eastern will be well positioned to enter the next decade as a revitalized, financially healthy major airline.
″We anticipate emerging from bankruptcy by the end of 1989,″ he said.
Eastern filed a reorganization plan on July 21 which anticipates paying off all debts, including refunding customers the price of tickets that weren’t used because of the strike. The airline said it has exceeded its early goals for passenger traffic.
Continental, Texas Air’s other major subsidiary, posted a profit of $32.1 million on revenue of $1.3 billion during the second quarter. That compares with a net loss of $150.9 million in the same quarter last year on revenue of $1.1 billion. Last year’s result included a $131 million accounting charge against income.
In the first half, Continental, which itself emerged from bankruptcy in 1986, had net income of $15.6 million on $2.5 billion in revenue. That compared with last year’s $231.5 million loss on $2.2 billion in revenue.