Five things I learned while reading second-quarter earnings reports:
1) Airlines can still make money, even with $58-a-barrel oil.
The largest U.S. airlines have lost a combined $33.2 billion since 2000. But there were two bright spots last week.
American and Continental each reported improved earnings, citing higher passenger loads and better controls on costs.
Both airlines profited by slashing jobs, wages and benefits, but even with these bloody gains, they are still losing money.
American reported a $104 million loss for the first six months of the year. And Continental has lost $86 million so far.
Discount carriers JetBlue, Alaska Air and America West – which are part of the problem for major carriers – posted profits, despite high oil prices.
One more spike in fuel costs may send Delta Air Lines – the nation’s third-largest carrier – into bankruptcy.
“There are some things beyond our control,” chief executive Gerald Grinstein told investors last week as Delta reported narrowed losses for the quarter. (I’m sure glad his pilots don’t use that expression.)
As for United, its plan to get out of bankruptcy is due next month. Of course, the airline already has said it won’t be profitable until next year.
Maybe United’s lawyers should start drafting a second Chapter 11 filing, just in case the court allows the airline to emerge from its first.
2) Money-losing companies like to look on the bright side.
Broomfield-based Level 3 Communications last week reported its 28th quarterly loss in 29 quarters. Its net loss widened to $188 million, and its sales slipped to $910 million, compared with $918 million a year ago.
“We exceeded our revenue projections this quarter,” said CEO James Crowe.
Besides, there’s always next quarter.
“For the latter half of 2005, we expect to see continued growth in our core transport and wholesale IP services,” Crowe said.
The stock remains at Level $2.
3) Americans don’t want American cars unless there’s an employee discount.
General Motors has boosted sales with its employee discounts for people who don’t actually work for the company. But last week, GM reported its third consecutive losing quarter. GM lost $286 million, compared with a $1.4 billion profit last year.
Ford Motor Co., which reported a 19 percent decline in second-quarter earnings last week, is also offering employee discounts. So is DaimlerChrysler.
Employee discounts for nonemployees almost sound illegal. But it’s nice to get the same breaks autoworkers get without persistent worries of impending layoffs.
4) There is no good way to be shot.
Stun-gun maker Taser International, based in Scottsdale, Ariz., reported steep declines in sales and profits. The company has been fighting complaints that its product – a supposedly nonlethal weapon that zaps people with 50,000 volts – has accidentally killed people.
The American Civil Liberties Union and Amnesty International have blamed Tasers for more than 120 deaths in the U.S. and Canada since June 2001.
Taser officials deny these reports and note that there are thousands of people who’ve been shot with Tasers who might otherwise have been shot with guns.
Meanwhile, business is booming at Smith & Wesson Corp. The 153-year-old company has said it expects an 11 percent increase in firearms sales this year.
5) The Internet bust was too easily forgotten.
Google stock reached a new high of nearly $318 a share last week. The search engine went public last August at $85 a share. Google said it quadrupled its profits in the second quarter and has doubled its revenues since last year. Even still, Google trades at about 125 times earnings. By contrast, its competitor Yahoo trades for about 50 times earnings.
Google is gobbling up Yahoo’s business. But Yahoo said it earned a whopping $755 million in the second quarter.
How? By selling Google stock. Yahoo reported that about $563 million of its earnings came from dumping Google.
So, you see. You really can make millions from the Internet.
Al Lewis’ column appears Sunday, Tuesday and Friday. Respond to Al at , 303-820-1967 or alewis@denverpost.com.
