American Airlines and Continental Airlines turned profits in the second quarter in spite of sky-high fuel prices, benefiting from increased...

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American Airlines and Continental Airlines turned profits in the second quarter in spite of sky-high fuel prices, benefiting from increased passenger demand, higher fares and reduced labor expenses.

American earned $58 million in the April-June period, while Continental posted a $100 million profit. Both carriers’ results exceeded analysts’ expectations.

The positive news does not mean the long-suffering sector is on the verge of an upswing, however. Analysts expect domestic airlines to collectively lose some $5 billion in 2005, in part because the price of jet fuel is double what it was two years ago.

“They may have won the battle this quarter, but it’ll be a long war before they get back into good financial shape,” said Robert Mann, a Port Washington, N.Y.-based airline consultant.

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Executives at American and Continental stressed that more cost-cutting will be needed to stay competitive with low-cost rivals such as Southwest Airlines, which last week recorded its 57th consecutive quarter of profitability, with earnings of $159 million.

American’s profit was equivalent to 30 cents per share, a significant improvement from last year’s net income of 3 cents per share, or $6 million. It beat the 15-cent-per-share estimate of analysts surveyed by Thomson Financial and was the company’s first net profit that did not include special items since the fourth quarter of 2000.

Continental Airlines’ net income equaled $1.26 per share, reversing a year-ago loss of $28 million, or 43 cents per share. Continental said its adjusted income was $53 million, or 69 cents per share, in the latest quarter.

The company’s adjusted profit was well ahead of the average estimate of 20 cents per share from analysts surveyed by Thomson Financial.

Continental shares rose 20 cents to close at $15.90 yesterday. Shares of American rose 24 cents to close at $14.47.

Eastman Kodak

More jobs to be cut

as losses continue

Eastman Kodak said yesterday it is cutting as many as 10,000 more jobs as the company that turned picture-taking into a hobby for the masses navigates a tough transition from film to digital photography.

Kodak missed Wall Street forecasts by a wide margin, largely because of a steeper-than-expected slide in film sales — even in emerging markets such as China. It lost $146 million, or 51 cents a share, in the April-June quarter, compared to a profit of $136 million, or 46 cents, a year ago.

On top of 12,000 to 15,000 layoffs targeted 18 months ago, Kodak is reducing its payroll by almost a quarter from where it stood in 2004, when a string of recent acquisitions is taken into account.

Excluding restructuring and research charges, plus $19 million in asset impairments from an investment in China’s Lucky Film, Kodak posted earnings from continuing operations of 53 cents a share. Analysts surveyed by Thomson Financial had forecast earnings of 80 cents a share.

Kodak stock fell 64 cents to $28.10 in trading yesterday.

eBay

Quarterly profit

exceeds forecasts

eBay’s second-quarter profit eclipsed analyst expectations as the online auction leader brushed aside worries that it may be losing its competitive edge.

The company said yesterday that it earned $291.6 million, or 21 cents per share, for the three months ended in June, a 53 percent increase from $190.4 million, or 14 cents per share at the same time last year.

If not for accounting charges unrelated to its ongoing operations, eBay said it would have earned 22 cents per share. That topped the mean analyst estimate of 18 cents per share, according to Thomson Financial.

eBay released the results after the market closed Wednesday. The company’s shares declined 50 cents to finish at $34.87 yesterday, then soared $4.97 in extended trading.

“There has been a lot debate about eBay — it certainly has been the most controversial of the large Internet stocks,” said American Technology Research analyst David Edwards. “Obviously, some pressure has been lifted with this report.”

Reflecting management’s optimism, eBay raised its outlook for the rest of the year. The company forecast 2005 revenue of $4.3 billion to $4.4 billion, including as much as $1.05 billion in the current quarter.

Excluding accounting items unrelated to it ongoing business, eBay expects 2005 earnings of 82 cents or 83 cents per share, above the current analyst estimate of 79 cents.

United Technologies

2nd-quarter profit

rises 19 percent

Diversified manufacturing company United Technologies said yesterday its second-quarter profit rose 19 percent, aided by improved performance in most of its businesses and favorable tax and interest income changes from previous audits.

The maker of Pratt & Whitney aircraft engines, Carrier air conditioners, Otis elevators and Sikorsky military helicopters said earnings grew to $971 million, or 95 cents per share, from $817 million, or 81 cents per share, in the prior-year period.

Excluding gains and a restructuring charge, the company would have posted profit of 86 cents per share in the latest quarter. Revenue rose 16 percent to $11.15 billion from $9.62 billion last year.

The results beat analysts’ expectations for profit of 85 cents per share on sales of $10.92 billion.

For the full year, United Technologies now forecasts earnings per share growth of 14 percent to 16 percent, seeing profit in the range of $3 to $3.07.

Analysts are looking for 2005 earnings per share of $3.06, on average.

Shares of United Technologies, one of the Dow Jones industrial stocks, rose 9 cents to close at $51.94 yesterday.