Airborne says terrorist attacks hurt earnings

Express parcel delivery company Airborne Inc., said its third-quarter earnings will be lower than expected primarily due to the aftershocks of the terrorist attacks on September 11. Airborne, the holding company for Airborne Express, said it expects to lose $13 to $15 million in the third quarter as a result of the airline industry shutdown following the attacks. "Prior to September 11, we were making

Express parcel delivery company Airborne Inc., said its third-quarter earnings will be lower than expected primarily due to the aftershocks of the terrorist attacks on September 11. Airborne, the holding company for Airborne Express, said it expects to lose $13 to $15 million in the third quarter as a result of the airline industry shutdown following the attacks.

"Prior to September 11, we were making progress in returning to operating profitability and expected substantial improvement over second-quarter operating results due primarily to the success of our cost-containment efforts," said Carl Donaway, Airborne’s president & COO. "The two-day closure of the national air network following the attacks significantly affected our operations, resulting in lost revenue and added cost."

During the week of the attacks, Seattle-based Airborne said volume declined significantly as customers reduced shipping activity and the company grounded its aircraft in compliance with FAA regulations. The company maintained its operations through an expanded linehaul trucking operation utilizing its nationwide ground sort and hub infrastructure. Grounding its air cargo aircraft, however, was costly, the company said.

Airborne Express CFO Lanny Michael said the estimates represent the additional costs incurred to maintain service and lost revenue due to fewer shipments since the attack. It does not include any impact of funds available from the Federal government through the Airline Stabilization Act, he said.

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