Covenant Transportation Group paid almost $5 million more for fuel in the second quarter of 2008 than it did a year ago, officials said Wednesday.

“The sharp rise in fuel prices continued to be one of our largest challenges, although we made meaningful progress controlling net fuel expense compared with the first quarter of 2008,” said David Parker, Covenant president and chief executive.

During a conference call with analysts Wednesday, Senior Executive Vice President Joey Hogan said Covenant acted to reduce fuel costs, but the results of those measures have not been fully realized.

“The largest impact on our expenses continued to be the soaring cost of diesel fuel,” Mr. Hogan said. “We continue to focus on being more fuel efficient through decreased idle time, less non-revenue or out-of-route miles and improving our surcharge programs with our customers.”

According to the U.S. Department of Energy, the nationwide average cost of diesel fuel was $4.36 a gallon for the second quarter of 2008.

Mr. Hogan said that amounts to an increase of $1.58 a gallon from the same time last year.

The Chattanooga-based trucking company announced on Tuesday it reduced its losses by $9 million in the quarter ending June 30.

Covenant reported losses of $2.3 million or 17 cents per basic and diluted share compared to a loss of $11.3 million or 80 cents per basic and diluted share for the second quarter 2007.

Covenant stocks closed at $4.91 a share on Wednesday, up 48 cents, or 10.84 percent, from Tuesday’s closing price.

The company’s revenue in the most recent quarter was $208.7 million, a 17.6 percent gain from $177.4 million in the same quarter a year ago.

Covenant also said freight revenue, which excludes fuel surcharges, went up by 6.2 percent to $160.5 million in the latest quarter from $151 million in the second quarter of 2007.

“We are never happy with losing money during a quarter, but we are beginning to see in our financial results meaningful, positive progress in our turnaround plan,” Mr. Hogan said. “We are very pleased with our continued efforts to reduce costs in the company.”

Comments