Covenant records higher 1Q net loss

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Covenant Transportation Group Inc. on Tuesday, April 26, announced freight revenue for the quarter ended March 31 of $124.4 million, a decrease of 3.8 percent compared with the first quarter of 2010; operating income of $0.3 million and an operating ratio of 99.8 percent compared with operating income of $1.8 million and an operating ratio of 98.6 percent; and a net loss of $2.5 million compared with a net loss of $2.2 million.

“We were encouraged by an approximately 5.1 percent increase in average freight revenue per total mile, which we attribute to improvements in our freight mix and customer recognition of the combination of service and capacity that the Covenant Transportation Group companies offer,” said David Parker, chairman, president and chief executive officer of the Chattanooga, Tenn.-based company.

Parker said the rate increase almost offset the impact of weaker utilization and increasing costs of fuel, driver pay and insurance claims during the 2011 quarter. “The poor utilization as compared to the first quarter of 2010 was primarily the result of two factors – more severe winter weather across the country than we have had in several years, and abnormally weak West Coast freight demand,” he said. “Our number of loads from the West Coast states declined over 17 percent from the prior-year quarter. However, we have seen the West Coast freight demand steadily improve over the last few weeks.”

Parker said the company’s existing annual tractor fleet plan for 2011 includes the addition and disposal of about 950 tractors, “of which we took delivery of approximately 175 tractors in the first quarter. With a relatively young average fleet age of 21 months at March 31, we believe there is significant flexibility to manage our fleet, and we plan to regularly evaluate our tractor replacement cycle and new tractor purchase requirements.”