The Wall Street Journal-20080130-Northwest- JetBlue Post Losses

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Northwest, JetBlue Post Losses

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Two more U.S. airlines reported fourth-quarter net losses but said they see no slowdown in passenger traffic, either for business or leisure travel, despite a shaky U.S. economy.

Battling record high jet-fuel costs, almost all U.S. airlines have reported losses for the final quarter of 2007, while posting a profit for the full year. Northwest Airlines Corp. narrowed its fourth- quarter loss as higher revenue helped offset jet-fuel expenses. Also coping with big fuel bills, low-cost carrier JetBlue Airways Corp. swung to a loss in the quarter, but the results still came in ahead of analysts' expectations.

Northwest Chief Executive Doug Steenland predicted that, given the weak dollar, more foreign airlines may invest in U.S. carriers. German airline Deutsche Lufthansa AG recently took a 19% stake in JetBlue.

U.S. laws permit a maximum 49% foreign ownership in U.S. carriers, with 25% maximum control of voting shares.

Results at Northwest, which emerged from bankruptcy protection in May, include a $14 million pretax loss related to the sale of the company's remaining equity interest in Pinnacle Airlines. Excluding the charge, the Eagan, Minn., airline said it achieved a break-even quarter, despite skyrocketing fuel prices. The airline expects to pay more for fuel this year, but expects continued benefits from upgrading its aircraft fleet with newer planes.

Separately, AirTran Holdings Inc., parent of low-cost carrier Airtran Airways, reported a narrower fourth-quarter loss but a profitable full year. In an interview, Chief Financial Officer Stan Gadek said AirTran isn't interested in a deal, having been rebuffed last year by Midwest Air Group. But the Orlando, Fla., carrier could gain if consolidation results in less seat capacity, as many industry- watchers expect.

He noted AirTran is the second-largest carrier in Atlanta, behind Delta. With new Open Skies government rules to allow European carriers to fly to more U.S. cities, "I think they will seek out U.S. partners," the executive said. AirTran hasn't held discussions with foreign airlines, he added.

JetBlue said it reduced its estimate for capacity growth this year to a range of 5% to 8%, from an earlier forecast of 6% to 9% capacity growth. The Forest Hills, N.Y., airline continues to expand service to the Caribbean, and said government-led capacity cuts to reduce congestion at New York's John F. Kennedy International Airport are helping JetBlue's operations to run more smoothly. Low-cost JetBlue, which turned the corner to a full-year profit in 2007, following two years of losses, said it is reaping the benefit of fast growth in previous years. Passenger revenue is expected to rise on "market maturation," Chief Executive Dave Barger told analysts during a conference call. The airline is doing a better job with revenue management, and is betting on a bigger contribution from non-passenger businesses, such as its LiveTV subsidiary, for onboard entertainment andWeb connections.

Continental Airlines Inc. reported it will use LiveTV on its domestic fleet beginning in January of 2009. Financial details weren't disclosed. JetBlue expects to add more U.S. airline customers for the service as broadband connection becomes "ubiquitous" on U.S. airlines, Mr. Barger said. In 4 p.m. Nasdaq Stock Market trading, JetBlue's shares were up $1, or 20%, to $5.94. Northwest shares rose 65 cents, or 3.6%, to $18.59, while AirTran shares rose 38 cents, or 4.5%, to $8.84 on the New York Stock Exchange.

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Donna Kardos contributed to this article.