US Airways Group, Inc. Reports First Quarter Financial Results

The Company reported a net loss excluding special items for the first quarter 2010 of $89 million, or ($0.55) per share, which compares favorably to the first quarter 2009 net loss excluding special items of $260 million, or ($2.28) per share. The Company’s year-over-year improvement was driven by higher passenger yields and a recovering economy.

US Airways Group, Inc. (NYSE: LCC) today reported its first quarter financial results. Net loss for the first quarter was $89 million, or ($0.55) per share, which excludes special items totaling a net credit of $44 million. Net loss excluding special items for the first quarter 2009 was $260 million, or ($2.28) per share. On a GAAP basis, the Company reported a net loss of $45 million for its first quarter 2010, or ($0.28) per share, compared to a net loss of $103 million, or ($0.90) per share, for the same period in 2009.

“We are very pleased with our improvement in financial performance as evidenced by our first quarter results. Our rate of improvement continues to outpace the industry and, on an absolute basis, our pre-tax margin (excluding special items) is among the best of the major network carriers.”

See the accompanying notes in the Financial Tables section of this press release for a reconciliation of GAAP financial information to non-GAAP financial information.

US Airways Group, Inc. Chairman and CEO Doug Parker stated, “We are very pleased with our improvement in financial performance as evidenced by our first quarter results. Our rate of improvement continues to outpace the industry and, on an absolute basis, our pre-tax margin (excluding special items) is among the best of the major network carriers.

“The improvement would have been even more pronounced except for extreme winter storms along the East Coast during the quarter, which impacted US Airways more than many of our competitors. We are grateful to our 30,000 fellow employees who did an exceptional job of taking care of our customers during a very difficult operational quarter.

“Looking forward, we believe we are well positioned for success in a dynamic and improving industry environment. The steps we have taken to improve our airline – focusing our flying on areas of competitive strength, increasing ancillary revenue generation, establishing industry leading operating reliability and keeping our costs in check – have clearly made a difference and are now complemented by a much improved industry revenue environment. We anticipate a profitable second quarter and expect our revenue momentum and cost discipline to continue,” concluded Parker.

Revenue and Cost Comparisons

Total revenues in the first quarter were up 7.9 percent despite a $30 million negative impact to revenue during February as a result of the severe winter storms on the East Coast. This improvement was driven by higher passenger yields resulting from an improving economy and the return of business traffic. Total revenue per available seat mile was 13.35 cents, up 11.1 percent versus the same period last year. Total passenger revenue per available seat mile (PRASM) in the first quarter was 11.58 cents, up 9.5 percent versus the first quarter 2009, driven by an 8.0 percent increase in mainline PRASM and a 14.9 percent increase in Express PRASM.

Total operating expenses in the first quarter were up 7.3 percent over the same period last year due principally to a 40.6 percent increase in mainline and Express fuel expense. Mainline cost per available seat mile (CASM) in the first quarter was 12.13 cents, up 9.8 percent versus the same period last year. Excluding fuel and special items, mainline CASM was 8.88 cents, up 2.9 percent from the same period last year, on a 2.4 percent decline in mainline ASMs. Express CASM excluding fuel was 14.62 cents, up 4.9 percent on a 5.1 percent decline in ASMs.

Liquidity

The Company’s unrestricted cash and investments balance increased by $100 million to $1.6 billion versus Dec. 31, 2009. As of March 31, 2010, the Company had approximately $2.0 billion in total cash and investments, of which $0.4 billion was restricted.

In addition, during the first quarter, the Company took delivery of two A320 and two A330 aircraft. The Company does not have any future scheduled aircraft deliveries until the third quarter 2011.

Special Items

The Company recognized special items totaling a credit of $44 million in its first quarter. These special items included: $5 million in aircraft costs as a result of the Company’s previously announced capacity reductions and $49 million of net realized gains related to the sale of certain investments in auction rate securities.

During the first quarter, the Company monetized approximately $131 million (book value) of its auction rate securities. In addition, in April, the Company monetized an additional $11 million and continues to look at other opportunities to reduce its exposure to these financial instruments. After these transactions, the Company currently holds approximately $59 million (book value) in auction rate securities.

Other First Quarter Notable Accomplishments

Strategic Initiatives

  • Announced with Delta Air Lines the proposed divestiture of 12 percent of the takeoff and landing slots involved in the previously announced slot transaction. This divestiture is contingent upon regulatory approval and the subsequent closing of the originally proposed Delta-US Airways transaction. Under the proposed divestiture transaction, AirTran Airlines, Inc., Spirit Airlines, Inc. and WestJet Airlines, Ltd. will each receive five pairs of takeoff and landing slots at LaGuardia and JetBlue Airways Corporation will receive five pairs of Washington National slots. Delta would then operate an additional 110 slot pairs at LaGuardia and US Airways would operate an additional 37 slot pairs at Washington National as well as gain access to the Sao Paulo and Tokyo route authorities.

New Destinations and Flights


  • Launched year-round service from Charlotte, N.C. to Melbourne, Fla.

  • Announced the resumption of nonstop service between Baton Rouge, La., and Charlotte, N.C., which will begin on June 24.

  • Introduced four new routes from the East Coast to Mexico and Canada

    • From Charlotte, N.C.

      • On May 31, begin daily, year-round service to Ottawa.

      • On June 5, begin year-round service to Puerto Vallarta and Los Cabos, Mexico.


    • From Philadelphia

      • On June 1, begin daily, year-round service to Halifax, Nova Scotia.

Marketing and Other Customer Initiatives

  • Began on January 12 a new bilateral codeshare agreement with El Salvador-based TACA Airlines, opening up new Central American offerings for US Airways customers at Managua, Nicaragua; San Salvador, El Salvador; Guatemala City, Guatemala; and Lima, Peru.

  • Began on April 3 a new bilateral codeshare agreement with Brussels Airlines, which provides connecting options to more than 20 new destinations in Europe and Africa, including points in Gambia, Senegal, Cameroon and Kenya.

  • Launched a new wireless Internet product, Gogo(R) Inflight Internet, on five of its Airbus A321 aircraft. Gogo, which is provided by Aircell, allows passengers to use their laptops or Wi-Fi enabled mobile devices to surf the Web, email friends and family, log into corporate Virtual Private Networks (VPN) and access online entertainment options. By June 1, all 51 A321s in US Airways' fleet will be Gogo-equipped.

US Airways Group, Inc.
Condensed Consolidated Statements of Operations
(In millions, except share and per share amounts)
(Unaudited)

3 Months Ended


March 31,


Percent
2010 2009 Change
Operating revenues:
Mainline passenger $ 1,698 $ 1,611 5.4
Express passenger 601 551 9.1
Cargo 33 24 37.1
Other 319 269 18.0
Total operating revenues 2,651 2,455 7.9
Operating expenses:
Aircraft fuel and related taxes 534 378 41.2
Loss (gain) on fuel hedging instruments, net:
Realized - 197 nm
Unrealized - (170 ) nm
Salaries and related costs 556 551 0.9
Express expenses:
Fuel 170 123 38.5
Other 480 481 (0.4 )
Aircraft rent 171 178 (3.8 )
Aircraft maintenance 157 174 (10.0 )
Other rent and landing fees 134 131 2.8
Selling expenses 95 92 2.3
Special items, net 5 6 (22.8 )
Depreciation and amortization 61 60 1.5
Other 298 279 6.9
Total operating expenses 2,661 2,480 7.3
Operating loss (10 ) (25 ) (60.7 )
Nonoperating income (expense):
Interest income 5 6 (14.2 )
Interest expense, net (82 ) (71 ) 15.9
Other, net 42 (13 ) nm
Total nonoperating expense, net (35 ) (78 ) (54.9 )
Loss before income taxes (45 ) (103 ) (56.3 )
Income tax provision - - -
Net loss $ (45 ) $ (103 ) (56.2 )
Loss per common share:
Basic $ (0.28 ) $ (0.90 )
Diluted $ (0.28 ) $ (0.90 )
Shares used for computation (in thousands):
Basic 161,115 114,121
Diluted 161,115 114,121



US Airways Group, Inc.
Operating Statistics
3 Months Ended

March 31,


Percent
2010 2009 Change

Mainline


Revenue passenger miles (millions) 13,053 13,309 (1.9 )
Available seat miles (ASM) (millions) 16,579 16,979 (2.4 )
Passenger load factor (percent) 78.7 78.4 0.3 pts
Yield (cents) 13.01 12.10 7.5
Passenger revenue per ASM (cents) 10.24 9.49 8.0
Passenger enplanements (thousands) 11,985 12,409 (3.4 )
Departures (thousands) 108 117 (7.5 )
Aircraft at end of period 347 347 -
Block hours (thousands) 286 304 (5.9 )
Average stage length (miles) 959 934 2.6
Average passenger journey (miles) 1,599 1,527 4.8
Fuel consumption (gallons in millions) 247 258 (4.3 )
Average aircraft fuel price including related taxes (dollars per gallon) 2.17 1.47 47.6
Average aircraft fuel price including related taxes and realized loss
on fuel hedging instruments, net (dollars per gallon) 2.17 2.23 (2.9 )
Full-time equivalent employees at end of period 30,439 32,245 (5.6 )
Operating cost per ASM (cents) 12.13 11.05 9.8
Operating cost per ASM excluding special items (cents) 12.10 12.02 0.7
Operating cost per ASM excluding special items and fuel (cents) 8.88 8.63 2.9

Express*


Revenue passenger miles (millions)



Source: US Airways / Nevistas


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