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MidEx Posts a Profit for 2Q


Well-known member
Nov 25, 2001
Total Time
I thought we could use a little more "good" news.



Wednesday July 17, 8:30 am Eastern Time
Press Release
SOURCE: Midwest Express Holdings, Inc.
Midwest Express Holdings Reports Second Quarter Results
MILWAUKEE, July 17 /PRNewswire-FirstCall/ --

Second Quarter 2002 Summary
Operating revenue decreased 14% to $116.0 million.
Operating income improved to $1.9 million from a $4.7 million loss. In
2001, second quarter results included an $8.8 million impairment


Diluted earnings per share improved to $0.07 from a $0.23 loss. The impairment charge negatively impacted earnings per share by $0.40 in second quarter 2001.
Fuel price decreases improved earnings per share by $0.15.
Midwest Express Holdings, Inc. (NYSE: MEH - News) today reported financial results for its Midwest Express and Astral Aviation (dba Skyway Airlines, The Midwest Express Connection) operations.

For the second quarter ending June 30, 2002, operating revenue decreased 14.4% to $116.0 million from $135.5 million. Operating income increased to $1.9 million from a $4.7 million loss, while net income improved to $0.9 million from a $3.2 million net loss in the same quarter a year ago. Diluted earnings per share improved to $0.07 from a $0.23 loss in the second quarter of 2001. Second quarter 2001 results included an $8.8 million (pre- tax) impairment charge related to company-owned aircraft, negatively impacting earnings per share by $0.40.

Year to date, operating revenue decreased 13.5% to $220.0 million. Operating results decreased from a $14.9 million loss to a $30.7 million loss, while net income improved to $4.8 million from a $9.8 million net loss in the first six months last year. Diluted earnings per share improved to $0.34 from a $0.71 loss in the first half of 2001. 2002 year-to-date results include a $29.9 million (pre-tax) impairment charge related to the early retirement of the airline's DC-9 fleet, as well as other income of $39.5 million (pre-tax) associated with an arbitration settlement with Fairchild Dornier GmbH over the cancellation of the 428JET program. 2001 year-to-date results reflect the $8.8 million (pre-tax) impairment charge.

While encouraged that the airline holding company reported a profit for the quarter, chairman and chief executive officer Timothy E. Hoeksema said the results reflect the "ongoing challenges" faced by the airline industry. "Not only has overall demand for travel fallen since September 11, but yields remain depressed as a result of the weak economy, low fares in place to stimulate travel and changes in industry pricing structures." He added that the company has shifted a number of Midwest Express routes to smaller Skyway aircraft to more efficiently handle the decreased passenger levels, and that higher charter sales in the quarter helped offset reduced mail and cargo volume. Both airlines also benefited from fewer flight cancellations due to the availability of spare aircraft; Midwest Express canceled 135 fewer flights (1.3% vs. 2.2%) and Skyway 105 fewer (1.9% vs. 2.6%) in the second quarter than a year earlier.

At Midwest Express Airlines, revenue per scheduled service available seat mile decreased 15.9% in the second quarter -- the result of reduced revenues caused by both lower load factor and declining revenue yield. Load factor decreased 3.4 percentage points due to the decline in travel demand and a gradual increase in capacity at the airline. Yields were negatively impacted by a decrease in business travelers, lower industrywide fares and increased competition in several markets.

Cost per available seat mile (unit costs) at Midwest Express Airlines decreased 13.0% in the quarter excluding the 2001 impairment charge, or 11.5% excluding the impairment charge and fuel. Unit costs declined due to lower fuel prices and companywide cost-reduction efforts, but were adversely impacted by lower aircraft utilization and a $1.2 million increase in insurance costs.

Midwest Express Airlines' per-gallon fuel costs decreased 14.9% in the quarter from a year earlier. Into-plane fuel prices were $0.14 less per gallon, resulting in a $3.0 million favorable price variance and improving per share earnings by $0.13. The company hedged 25% of its second quarter fuel volume, resulting in reduced costs of $0.3 million.

At Skyway Airlines, revenue per scheduled service available seat mile decreased 17.0%. Load factor decreased 3.8 percentage points, and revenue yield fell 10.5% due to the reduction in business travel, longer flight lengths with lower yields, and lower fares implemented to stimulate travel. Cost per available seat mile decreased 14.5% (14.4% excluding fuel) due to an increase in lower-cost regional jet operations, longer flight lengths and lower fuel prices. Into-plane fuel prices averaged $0.14 per gallon less in the second quarter, generating a favorable $0.4 million price variance.

At the end of the quarter, Midwest Express Holdings had $66.1 million in unrestricted cash, up from $48.0 million at the end of the first quarter. The company completed a private equity financing that generated $20.5 million (net of costs), and received a $1.7 million second payment from the Air Transportation Safety and System Stabilization Act. Cash required for progress payments for future aircraft deliveries was $9.6 million. Capital spending was $1.4 million in the quarter and $2.6 million year to date, and is expected to total $12 million in 2002.

Highlights of the second quarter included:

OAG honored Midwest Express Airlines as "Best Economy/Coach Class" Airline in the world at its 20th annual Airline of the Year Awards competition.
Midwest Express Airlines amended and accelerated its Boeing 717 order, placing a firm order for 25 aircraft and purchase rights for an additional 25 aircraft. Delivery of the aircraft will begin in February 2003 and continue into 2005 at a rate of one aircraft every month.
Midwest Express Airlines and Skyway Airlines announced that beginning in January 2003 they are adopting simplified names -- Midwest Airlines and Midwest Connect -- and introducing a new corporate symbol.
Capacity and service additions continued at both airlines. Midwest Express Airlines increased its daily Milwaukee-Atlanta service, and resumed nonstop service between Omaha and Newark, N.J., between Des Moines, Iowa and Washington National, and between Des Moines and Kansas City, Mo. Skyway Airlines launched service between Milwaukee and Rhinelander, Wis. By June, the airlines had returned to close to pre- September 11 levels of service.
Midwest Express Airlines was named the official airline of the 2002 Major League Baseball All-Star Game, played in Milwaukee on July 9.
Midwest Express Airlines contracted with the Kansas City Royals Major League Baseball team to provide team charter services through 2004.
Midwest Express Airlines confirmed it would maintain its existing travel agent commission structure, despite the elimination of commissions by many larger carriers.
Astral Aviation's maintenance program received the Federal Aviation Administration's highest honor for the fifth consecutive year. The Certificate of Excellence Diamond Award recognizes exemplary maintenance practices.

In the third quarter and beyond:
-- Midwest Express revised its Frequent Flyer program to allow passengers
more flexibility in how they use their miles to book award travel --
including the elimination of blackout dates and the introduction of two
levels of award tickets for domestic travel. The airline also changed
its domestic award levels; members have until September 30, 2002 to
request awards at the existing levels.
-- On November 1, Midwest Express will resume its popular nonstop service
from Milwaukee to three Florida cities -- Ft. Lauderdale, Ft. Myers and
Tampa -- 45 days earlier than in past years. The airline will also
increase service between Milwaukee and Orlando, Fla. to three roundtrip
flights each weekday.

"Although we've increased capacity gradually over the past four months to return to nearly pre-September 11 levels, we did not realize enough demand to fill the added seats," concluded Hoeksema. "And existing demand -- both business and leisure -- is at substantially lower fares. The poor revenue environment, combined with gradually increasing fuel prices, will make the second half of the year even more difficult." Going forward, he said Midwest Express and Skyway remain committed to providing superb customer service, and will continue to work to reduce costs and better adapt to the changing revenue environment.

Company management and industry analysts will discuss second quarter results at 2 p.m. Central time Wednesday, July 17. The discussion can be accessed live and for the following 30 days by visiting www.midwestexpress.com .

Midwest Express Airlines features nonstop jet service to major destinations throughout the United States. Astral Aviation, Inc. -- its wholly owned subsidiary -- operates Skyway Airlines, The Midwest Express Connection, which offers connections to Midwest Express as well as point-to- point service between select markets on regional jet and turboprop aircraft. Together, the airlines fly to 50 cities. More information is available at www.midwestexpress.com .


Well-known member
Dec 19, 2001
Total Time
Does Midex use Arthur Anderson? How did we make money this quarter with our yields so low and load factor worse than last year? Are you as suspicious as I am?


Well-known member
Nov 25, 2001
Total Time
Don't know about Arthur Anderson....

I'm not sure.

I think the transfer of the flying to Skyway (fuel efficient a/c, lower employee wages) is/was the key. The article stated Midwest Express Holding made money, not necessarily MidEx.

Take care.