BAX sees first profit since 2000
By WILLIAM ARMBRUSTER – JOC ONLINE
BAX Global recorded its first operating profit in two years during the fourth quarter of 2001 despite a 17% drop in revenue, thanks to cost-cutting efforts and a change in its business model, the company’s president said Monday. BAX had operating income of $2.1 million on revenue of $457.3 million, compared with an operating loss of $13 million on revenue of $551.1 million in the final three months of 2000. It also incurred a restructuring charge of $57 million in the 2000 quarter.
“Some things we introduced in 1999 didn’t come to fruition until late last year,” said Joey Carnes, president of the Irvine, Calif.-based global logistics provider. “We’ve made improvements every month in our operating model.” That model now includes extensive reliance on domestic ground service. It reflects BAX’s transition from a company traditionally identified as a domestic heavyfreight air carrier to a mode-neutral service provider. The company, which acts as a freight forwarder internationally, still operates 18 aircraft in its domestic fleet, but that’s down sharply from several years ago. Revenue in the Americas dropped 20 while international revenue fell 12 reflecting weak economic conditions, said The Pittston Co., BAX’s parent. For the year as a whole, BAX had an operating loss of $24.6 million, down from a loss of $42.1 million, excluding the fourth quarter 2000 restructuring charge. Last year’s revenue was $936.7 million, down from $986.2 million. Carnes said he does not expect a recovery until the third quarter. BAX is getting some additional business from existing customers, but no overall recovery in shipping volumes. If the economy recovers, BAX will be able to expand its air service but would not do so until market can support the 18 planes it has now. “We’re going to stress service and not chase volume. If the service requirement is there at a price point that supports the additional service commitment, we have the flexibility to add it, which we would certainly consider doing,” Carnes said. BAX’s cost-cutting efforts include its move this September into new headquarters with approximately 100,000-square-feet of space compared to about 143,000-square-feet at its present office.
One of its future goals is to expand its international ocean forwarding business, Carnes said.
