CNF Inc. said its first-quarter earnings rose 35% because of property sales and federal aid it received for losses related to the Sept. 11 terrorist attacks. However, CEO Greg Quesnel warned that second-quarter shipments could be weak.

"We think we've seen the bottom of the recession," said Quesnel. "March was a relatively good month, as both Menlo Worldwide and Con-Way had improved results from February. But overall, the upturn so far is weak."

The company said net income increased to $18.3 million from $13.5 million a year earlier. However, Con-Way's profit before taxes and interest fell 8.2% to $33.7 million.

Menlo Worldwide, the unit formed from combining Emery's remaining air-cargo services and Menlo Logistics, had a $3.3-million profit, compared with a loss of $3 million.

The first quarter included a net after-tax benefit of $14.0 million from unusual items, which included sales of excess property, a payment under the Air Transportation Safety and System Stabilization Act and proceeds from the early termination of a contract.

CNF closed its Emery Worldwide Airlines air-cargo unit and renegotiated leases after Emery grounded its planes last August.

Quesnel said Con-Way LTL tonnage grew in the first quarter for the first time in a year and a half