Highlights of the US Airways Group, Inc. (the Company) First Quarter 2007
Results:
* The Company reported a first quarter 2007 net profit of $66 million, or
$0.70 per diluted share.
* Excluding special items, the Company reported a first quarter 2007 net
profit of $34 million, or $0.37 per diluted share.
* The Company accrued approximately $4 million, or 10 percent of its first
quarter 2007 pretax income excluding special items, for its annual employee
profit sharing program.
* The Company had $3.3 billion in total cash and investments, of which $2.5
billion was unrestricted, on March 31, 2007
TEMPE, Ariz., April 26 /PRNewswire-FirstCall/ -- US Airways Group, Inc.
(NYSE: LCC) today reported its first quarter 2007 results. Net profit for
the first quarter was $66 million, or $0.70 per diluted share, compared to
a net profit before cumulative effect of change in accounting principle of
$64 million, or $0.75 per diluted share for the same period last year.
Excluding net credits from special items of $32 million, the Company
reported a net profit of $34 million, or $0.37 per diluted share. This
compares to a net profit, before cumulative effect of change in accounting
principle of $5 million, or $0.05 per diluted share in the first quarter of
2006, which excludes net credits from special items of $59 million. See the
accompanying notes in the Financial Tables section of this press release
for a reconciliation of Generally Accepted Accounting Principles (GAAP)
financial information to non-GAAP financial information.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050223/LAW097LOGO )
Chairman and CEO Doug Parker stated, "We are pleased to report a first
quarter profit and an improvement in year-over-year earnings. This is
particularly noteworthy given the first quarter was extremely difficult for
us operationally. We were affected by two major storms that temporarily
closed our Philadelphia hub and severely impacted our Northeast operations.
Service disruptions also occurred during the quarter when we converted our
two reservation systems to a single system.
"Our 36,000 employees are to be commended for their outstanding
efforts, particularly our employees who work with customers at our airports
and reservation call centers. Our team did a remarkable job of taking care
of our customers during a challenging conversion. We still have work to do
to ensure our people have the tools they need to provide the type of
service our customers deserve and expect, but we are making great progress
thanks to our hard-working team.
"Separately today, we announced a series of customer service
initiatives designed to further improve our customer service. Bolstering
our airport staffing, implementing improved kiosk technology at our
airports and relaxing restrictions for our most loyal customers are just a
few of the steps we are taking to build a better airline.
"Looking forward, the recent rise in fuel prices is once again having a
material effect on our outlook. Our current estimate for 2007 fuel price
results in an additional $300 million of expense versus our 2007 operating
budget. Despite this significant cost increase, we continue to project a
profitable second quarter and full-year 2007," concluded Parker.
Revenue and Cost Comparisons
Mainline passenger revenue per available seat mile (PRASM) was 10.27
cents, up 3.4 percent over the same period last year. Express PRASM was
17.66 cents, up 5.7 percent over the first quarter 2006. Total mainline and
Express PRASM for US Airways Group was 11.43 cents, up 3.3 percent compared
to the first quarter 2006.
Chief Financial Officer Derek Kerr stated, "Fuel continues to be our
single largest operating expense. Our first quarter average mainline fuel
price including taxes and realized losses on fuel hedging instruments
(economic fuel price) was $2.01 per gallon, up 4.4 percent over the first
quarter 2006."
Operating cost per available seat mile (CASM) at US Airways Group was
11.89 cents, up 3.9 percent versus the same period last year. Mainline CASM
for the quarter was 10.76 cents, up 3.7 percent, on an increase in capacity
of 1.8 percent versus the first quarter of 2006. Excluding fuel, unrealized
and realized gains/losses on fuel hedging instruments, and merger related
transition expenses, mainline CASM was 7.88 cents, up 2.0 percent from the
same period last year. The increase is due primarily to the operational
difficulties that occurred in the quarter.
Liquidity
As of March 31, 2007, the Company had $3.3 billion in total cash and
investments, of which $2.5 billion was unrestricted. In April 2007, the
Company's restricted cash requirements were reduced by approximately $200
million under an agreement with one of the Company's credit card
processors.
In addition, during the quarter the Company refinanced $1.6 billion of
existing secured and unsecured debt. The refinancing improves liquidity
over the next seven years by reducing principal payments and lowers the
Company's near-term interest expense. The new loan currently bears interest
at LIBOR plus 2.5 percent and reduced the blended interest margin by over
100 basis points.
First Quarter Special Items
During its first quarter, the Company recognized $32 million of net
credits from special items, which included a $90 million non-cash credit
for unrealized net gains associated with the change in fair value of the
Company's outstanding fuel hedge contracts, $39 million of merger-related
transition expenses and an $18 million write off of debt issuance costs in
connection with the refinancing of $1.25 billion of GE debt. In addition,
the Company had $1 million of special non-cash expense in its income taxes
for the quarter.
Integration Update
Operations
* Announced that the airline's new combined flight operations control
center will be located in Pittsburgh. The company plans to build a new
60,000 square foot center, which is scheduled to open in 2009. The
airline's 600 scheduling, planning and other operation critical
employees will be located at this new facility.
* Combined the airline's maintenance inventory computer systems for the
Boeing 767 and Airbus A330 fleets.
Marketing
* Migrated two reservations systems onto one platform (SHARES), which
provides a single system for reservation and airport customer service
agents. This enabled the Company to simplify ticketing processes,
remove redundant systems and provide a consistent product to its
customers. The Company continues to implement enhancements to the
SHARES product based on feedback from customers and frontline
employees.
* Continued fare reduction program lowering fares from Charlottesville,
Va., Harrisburg, Pa., and Huntsville, Ala. In all, the new US Airways
has lowered fares in approximately 1,100 markets since its merger in
September 2005.
Analyst Conference Call/Webcast Details
US Airways will conduct a live audio webcast of its earnings call today
at 1 p.m. EDT, which will be available to the public on a listen-only basis
at http://www.usairways.com under the About US > > Investor Relations tab. An
archive of the call/webcast will be available in the Public/Investor
Relations portion of the Web site through May 26, 2007.
The airline will also update its investor relations guidance on its Web
site (http://www.usairways.com). Information that could be updated includes cost
per available seat mile (CASM) excluding fuel and transition expenses, fuel
prices and hedging positions, other revenues, estimated interest
expense/income and merger related transition expense guidance. The investor
relations update page also includes the airline's capacity, fleet plan for
2007 and estimated capital spending for 2007.
About US Airways
US Airways is the fifth largest domestic airline employing nearly
36,000 aviation professionals worldwide. US Airways, US Airways Shuttle and
US Airways Express operate approximately 3,800 flights per day and serve
more than 230 communities in the U.S., Canada, Europe, the Caribbean and
Latin America. The new US Airways -- the product of a merger between
America West and US Airways in September 2005 -- is a member of the Star
Alliance network, which offers our customers 16,000 daily flights to 855
destinations in 155 countries worldwide. This press release and additional
information on US Airways can be found at http://www.usairways.com. (LCCF)
Forward Looking Statements
Certain of the statements contained herein should be considered
"forward- looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements may be
identified by words such as "may," "will," "expect," "intend," "indicate,"
"anticipate," "believe," "forecast," "estimate," "plan," "guidance,"
"outlook," "could," "should," "continue" and similar terms used in
connection with statements regarding the outlook of US Airways Group, Inc.
(the "Company"). Such statements include, but are not limited to,
statements about expected fuel costs, the revenue and pricing environment,
the Company's expected financial performance and operations, future
financing plans and needs, overall economic conditions and the benefits of
the business combination transaction involving America West Holdings
Corporation and US Airways Group, including future financial and operating
results and the combined companies' plans, objectives, expectations and
intentions. Other forward-looking statements that do not relate solely to
historical facts include, without limitation, statements that discuss the
possible future effects of current known trends or uncertainties or which
indicate that the future effects of known trends or uncertainties cannot be
predicted, guaranteed or assured. Such statements are based upon the
current beliefs and expectations of the Company's management and are
subject to significant risks and uncertainties that could cause the
Company's actual results and financial position to differ materially from
the Company's expectations. Such risks and uncertainties include, but are
not limited to, the following: the impact of high fuel costs, significant
disruptions in the supply of aircraft fuel and further significant
increases to fuel prices; our high level of fixed obligations and our
ability to obtain and maintain financing for operations and other purposes;
our ability to achieve the synergies anticipated as a result of the merger
and to achieve those synergies in a timely manner; our ability to integrate
the management, operations and labor groups of US Airways Group and America
West Holdings; labor costs and relations with unionized employees generally
and the impact and outcome of labor negotiations; the impact of global
instability, including the current instability in the Middle East, the
continuing impact of the military presence in Iraq and Afghanistan and the
terrorist attacks of September 11, 2001 and the potential impact of future
hostilities, terrorist attacks, infectious disease outbreaks or other
global events that affect travel behavior; reliance on automated systems
and the impact of any failure or disruption of these systems; the impact of
future significant operating losses; changes in prevailing interest rates;
our ability to obtain and maintain commercially reasonable terms with
vendors and service providers and our reliance on those vendors and service
providers; security-related and insurance costs; changes in government
legislation and regulation; our ability to use pre-merger NOLs and certain
other tax attributes; competitive practices in the industry, including
significant fare restructuring activities, capacity reductions and in court
or out of court restructuring by major airlines; continued existence of
prepetition liabilities; interruptions or disruptions in service at one or
more of our hub airports; weather conditions; our ability to obtain and
maintain any necessary financing for operations and other purposes; our
ability to maintain adequate liquidity; our ability to maintain contracts
that are critical to our operations; our ability to operate pursuant to the
terms of our financing facilities (particularly the financial covenants);
our ability to attract and retain customers; the cyclical nature of the
airline industry; our ability to attract and retain qualified personnel;
economic conditions; and other risks and uncertainties listed from time to
time in our reports to the Securities and Exchange Commission. There may be
other factors not identified above of which the Company is not currently
aware that may affect matters discussed in the forward-looking statements,
and may also cause actual results to differ materially from those
discussed. All forward-looking statements are based on information
currently available to the Company. The Company assumes no obligation to
publicly update or revise any forward-looking statement to reflect actual
results, changes in assumptions or changes in other factors affecting such
estimates. Additional factors that may affect the future results of the
Company are set forth in the section entitled "Risk Factors" in the
Company's Quarterly Report on Form 10-Q for the period ended March 31,
2007, which is available at http://www.usairways.com.
Financial Tables to Follow
US Airways Group, Inc.
Condensed Consolidated Statements of Operations
(in millions except share and per share amounts)
(unaudited)
3 Months Ended 3 Months Ended Percent
March 31, 2007 March 31, 2006 Change
Operating revenues:
Mainline passenger $1,906 $1,811 5.3
Express passenger 609 611 (0.3)
Cargo 37 37 --
Other 180 173 5.0
Total operating revenues 2,732 2,632 3.8
Operating expenses:
Aircraft fuel and related
taxes 550 555 (0.8)
Loss (gain) on fuel hedging
instruments, net:
Realized 36 (2) nm
Unrealized (90) (26) nm
Salaries and related costs 527 503 4.8
Express expenses:
Fuel 153 172 (10.8)
Other 467 443 5.2
Aircraft rent 180 185 (2.6)
Aircraft maintenance 165 138 20.0
Other rent and landing fees 128 140 (9.1)
Selling expenses 106 107 (1.0)
Special items, net 39 (44) nm
Depreciation and amortization 44 45 (2.6)
Other 311 291 7.7
Total operating expenses 2,616 2,507 4.4
Operating income 116 125 (7.4)
Nonoperating income (expenses):
Interest income 40 26 58.1
Interest expense, net (71) (75) (5.1)
Other, net (16) (12) 35.0
Nonoperating expenses, net (47) (61) (24.1)
Income before income taxes and
cumulative effect of change
in accounting principle 69 64 8.4
Income tax provision 3 -- nm
Income before cumulative effect
of change in accounting
principle 66 64 3.4
Cumulative effect of change
in accounting principle -- 1 nm
Net income $66 $65 1.8
Earnings per share before
cumulative effect of change
in accounting principle:
Basic $0.73 $0.79
Diluted $0.70 $0.75
Earnings per share:
Basic $0.73 $0.80
Diluted $0.70 $0.76
Shares used for computation
(in thousands):
Basic 91,363 81,679
Diluted 96,223 93,362
US Airways Group, Inc.
Operating Statistics
3 Months Ended 3 Months Ended Percent
March 31, 2007 March 31, 2006 Change
Mainline
Revenue passenger miles
(in millions) 14,418 13,956 3.3
Available seat miles (ASM)
(in millions) 18,556 18,230 1.8
Passenger load factor
(percent) 77.7 76.6 1.1 pts
Yield (cents) 13.22 12.97 1.9
Passenger revenue per
ASM (cents) 10.27 9.93 3.4
Passenger enplanements
(in thousands) 13,980 13,591 2.9
Aircraft (end of period) 356 367 (3.0)
Block Hours 334,957 327,579 2.3
Average stage length (miles) 912 901 1.2
Average passenger journey
(miles) 1,461 1,423 2.7
Fuel consumption
(gallons in millions) 291.9 287.5 1.5
Average fuel price
(dollars per gallon)
with related taxes 1.88 1.93 (2.3)
Average fuel price including
related taxes and realized
gains (losses) on fuel
hedging instruments,
net (dollars) 2.01 1.92 4.4
Full-time equivalent
employees (end of period) 34,385 32,083 7.2
Operating cost per ASM
(cents) 10.76 10.37 3.7
Operating cost per ASM
excluding special items
(cents) 11.03 10.76 2.6
Operating cost per ASM
excluding special items,
fuel and realized gains
(losses) on fuel hedging
instruments, net (cents) 7.88 7.72 2.0
Express*
Revenue passenger miles
(in millions) 2,383 2,431 (2.0)
Available seat miles
(in millions) 3,448 3,659 (5.8)
Passenger load factor
(percent) 69.1 66.4 2.7 pts
Passenger revenue per
ASM (cents) 17.66 16.71 5.7
Passenger enplanements
(in thousands) 5,955 5,908 0.8
Operating cost per ASM
(cents) 17.98 16.82 6.9
TOTAL - Mainline & Express
Revenue passenger miles
(in millions) 16,802 16,387 2.5
Available seat miles
(in millions) 22,004 21,889 0.5
Passenger load factor
(percent) 76.4 74.9 1.5 pts
Passenger revenue per ASM
(cents) 11.43 11.06 3.3
Total revenue per ASM
(cents) 12.42 12.02 3.3
Passenger enplanements
(in thousands) 19,935 19,499 2.2
Operating cost per ASM
(cents) 11.89 11.45 3.9
* Express includes US Airways Group's wholly owned regional airline
subsidiaries, Piedmont Airlines and PSA Airlines, US Airways'
MidAtlantic regional jet division, through May 27, 2006, as well as
operating and financial results from capacity purchase agreements with
Mesa Airlines, Chautauqua Airlines, Air Wisconsin Airlines and Republic
Airlines.
Reconciliation of GAAP Financial Information to Non-GAAP Financial
Information and Operating Cost per ASM Excluding Special Items,
Aircraft Fuel, Realized (Gains) Losses on Fuel Hedging Instruments,
Net - Mainline only
US Airways Group, Inc. (the "Company") is providing disclosure of the
reconciliation of reported non-GAAP financial measures to their comparable
financial measures on a GAAP basis. The Company believes that the
non-GAAP financial measures provide investors the ability to measure
financial performance excluding special items which is more indicative of
the Company's ongoing performance and is more comparable to measures
reported by other major airlines. The Company believes that the
presentation of mainline CASM excluding fuel and gains or losses on fuel
hedging instruments is useful to investors as both the cost and
availability of fuel are subject to many economic and political factors
beyond the Company's control.
3 Months Ended 3 Months Ended
March 31, 2007 March 31, 2006
(in millions, except share
and per share amounts)
Reconciliation of Income before
Cumulative Effect of Change in
Accounting Principle Excluding
Special Items for
US Airways Group, Inc.
Income before cumulative effect
of change in accounting principle
as reported $66 $64
Special items:
Unrealized gains on fuel hedging
instruments, net (1) (90) (26)
Non-cash tax provision from
utilization of pre-acquisition
NOL (2) 1 --
Special items, net (3) 39 (44)
Other special charges (4) 18 11
Income before cumulative effect of
change in accounting principle,
as adjusted for special items $34 $5
Shares used for computation
(in thousands):
Basic 91,363 81,679
Diluted (5) 93,173 83,542
Income per share before cumulative
effect of change in accounting
principle, as adjusted for
special items:
Basic $0.37 $0.06
Diluted $0.37 $0.05
3 Months Ended 3 Months Ended
March 31, 2007 March 31, 2006
Reconciliation of Operating Cost
per ASM Excluding Special Items,
Fuel, Realized Gains (Losses) on
Fuel Hedging Instruments,
Net - Mainline only
US Airways Group, Inc.
(in millions)
Total operating expenses $2,616 $2,507
Less Express expenses:
Fuel (153) (172)
Other (467) (443)
Total mainline operating expenses 1,996 1,892
Special items:
Unrealized gains on fuel hedging
instruments, net (1) 90 26
Special items, net (3) (39) 44
Mainline operating expenses,
excluding special items 2,047 1,962
Aircraft fuel (550) (555)
Realized gains (losses) on fuel
hedging instruments, net (36) 2
Mainline operating expenses,
excluding special items,
fuel and realized gains (losses)
on fuel hedging instruments, net $1,461 $1,409
(in cents)
Mainline operating expenses per ASM 10.76 10.37
Special items per ASM
Unrealized gains on fuel hedging
instruments, net (1) 0.49 0.14
Special items, net (3) (0.21) 0.24
Mainline operating expenses per ASM,
excluding special items 11.03 10.76
Aircraft fuel (2.96) (3.04)
Realized gains (losses) on fuel
hedging instruments, net (0.19) 0.01
Mainline operating expenses per ASM,
excluding special items, fuel and
realized gains (losses) on
fuel hedging instruments, net 7.88 7.72
Note: Amounts may not recalculate due to rounding.
FOOTNOTES:
1) The three months ended March 31, 2007 and 2006 include a $90 million
and $26 million unrealized gain, respectively, resulting from
mark-to-market accounting for changes in the fair value of the
Company's fuel hedging instruments.
2) For the three months ended March 31, 2007, the Company utilized
$1 million of NOL acquired from US Airways, the valuation allowance
associated with these acquired NOL was recognized as a reduction of
goodwill rather than a reduction in tax expense. As a result,
US Airways had a non-cash expense for income taxes of $1 million in the
three months ended March 31, 2007.
3) The 2007 first quarter includes $39 million of merger related
transition expenses. The 2006 first quarter includes a $90 million
gain associated with the return of equipment deposits upon forgiveness
of a loan, offset by $46 million of merger related transition expenses.
4) The 2007 first quarter includes $18 million write-off of debt issuance
costs in connection with the refinancing of the $1.25 billion GE debt.
The 2006 first quarter includes $6 million of prepayment penalties and
a $5 million write-off of debt issuance costs in connection with the
refinancing of the ATSB and GECC loans.
5) The 2007 diluted EPS computation excludes 3,050,148 incremental shares
from assumed conversion of the 7.0% senior convertible notes because of
the antidilutive effect on EPS. The 2006 diluted EPS computation
excludes 5,959,784 and 3,860,289 incremental shares from assumed
conversion of the 7.0% senior convertible notes and the 7.5%
convertible senior notes, respectively, because of the antidilutive
effect on EPS.
US Airways Group, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
March 31, 2007 December 31, 2006
Assets
Current assets
Cash, cash equivalents and
short-term investments 2,526 2,365
Restricted cash 2 1
Accounts receivable, net 479 388
Materials and supplies, net 224 223
Prepaid expenses and other 477 377
Total current assets 3,708 3,354
Property and equipment
Flight equipment 2,103 2,051
Ground property and equipment 622 598
Less accumulated depreciation
and amortization (625) (583)
2,100 2,066
Equipment purchase deposits 53 48
Total property and equipment 2,153 2,114
Other assets
Goodwill 628 629
Other intangibles, net 548 554
Restricted cash 736 666
Other assets 222 259
Total other assets 2,134 2,108
Total assets $7,995 $7,576
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of debt and
capital leases 100 95
Accounts payable 411 454
Air traffic liability 1,255 847
Accrued compensation and vacation 155 262
Accrued taxes 218 181
Other accrued expenses 922 873
Total current liabilities 3,061 2,712
Noncurrent liabilities and deferred
credits
Long-term debt and capital leases,
net of current maturities 2,901 2,907
Deferred gains and credits 201 205
Employment benefit liabilities
and other 783 782
Total noncurrent liabilities
and deferred credits 3,885 3,894
Stockholders' equity
Common stock 1 1
Additional paid-in capital 1,514 1,501
Accumulated deficit (456) (522)
Treasury stock (13) (13)
Other comprehensive income 3 3
Total stockholders' equity 1,049 970
Total liabilities and
stockholders' equity $7,995 $7,576
SOURCE US Airways Group, Inc.
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Related links:
http://www.usairways.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/20050223/LAW097LOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Elise Eberwein of US Airways Group, Inc.,
+1-480-693-5574, or US Airways Media Relations, +1-480-693-5729
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