BAX GLOBALÆS OPERATING LOSS GROWS
BAX Global, the integrated air freight subsidiary of The Pittston Co., reported a $13.5 million operating loss in the second quarter, due mainly to softer demand and rising operating costs in the United States.
BAX operates a fleet of aircraft in the U.S. but acts as a forwarder in international markets. Higher aircraft operating costs overshadowed continued solid performance overseas.
BAX said the “decline in operating performance in its domestic operations was primarily the result of softer than expected demand, higher service costs for its fleet of aircraft, higher infrastructure costs put in place to deliver consistent year-round service and increases in fuel costs which were not fully covered by fuel surcharges and hedges.”
BAX’s worldwide revenue increased 5 percent to $516.4 million in the quarter. Americas revenue grew 5 percent primarily due to increases in export volume and domestic yields. However, those benefits were offset by 2 percent decline in domestic volume. International revenue grew 6 percent due to hi-tech industry business growth in the Pacific Rim region.
Year-to-date, BAX recorded a $16.4 million operating loss on $1.0 billion in sales.
BAX management, which recently was reshuffled, has initiated a cost-cutting program that includes reductions in station operating expenses, sales costs and corporate overhead, Pittston said. BAX has also removed five planes from a fleet of 43 freighters.
“Coming off the strong increase in volume in 1999’s third and fourth quarters, spending on transportation, operations and overhead was increased to support a level of volume which has not been captured,” said Michael T. Dan, Pittston's chairman, president and chief executive officer. “The program announced today is an important step in streamlining our domestic operations to offer the quality services our customers depend upon while moving toward the type of financial performance our shareholders expect.”