Bear Stearns Cuts America West to Underperform

Analyst David Strine says weaker-than-expected revenue and high oil prices should lead to significant losses

Bear Stearns downgraded America West Holdings (AWA ) to underperform from peer perform.

Analyst David Strine says weaker-than-expected unit revenue performance and persistently high oil prices should drive significant losses in the second-half of 2004. In the long run, he says he's worried about the slowing pace of unit-cost declines, and America West's inability to generate a unit-revenue premium in its largest markets, despite its more diverse product offering, such as offering business class, than other low-cost carriers.

Strine slasheed the 25 cents third-quarter earnings per share estimate to a 60-cent loss, and widened the 50-cent fourth-quarter loss to a 95-cent loss due to his lower RASM growth estimates and higher fuel costs. His 55 cents 2005 earnings per share estimate goes to a 30-cent loss.

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