US Airways Group reports a 1Q net profit of $55 million

US Airways Group, Inc. (US Airways) (Phoenix) today reported its first quarter 2013 financial results. For the first quarter 2013, net profit excluding net special items was a record $55 million, or $0.31 per diluted share. Net loss excluding net special items for the first quarter 2012 was $22 million, or ($0.13) per share.

On a GAAP basis, the Company reported a net profit of $44 million for its first quarter 2013, or $0.26 per diluted share, compared to a net profit of $48 million, or $0.28 per diluted share, for the same period in 2012. 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 extremely pleased to produce these record first quarter results. Our 32,000 hard-working team members continue to run a safe and reliable airline for our customers. These outstanding results are the product of their efforts and provide a solid foundation as we plan for combining with American Airlines.

“Looking forward, our integration planning work with American is going well and we continue to expect that the merger will close in the third quarter of this year. The entire US Airways team is looking forward to working with our colleagues at American to build the premier global airline.”

Revenue and Cost Comparisons

A strong demand environment and record passenger load factors led to record revenue performance. Total revenues in the first quarter were $3.4 billion, up 3.5 percent versus the first quarter 2012 on a 1.3 percent increase in total available seat miles (ASMs). Total revenue per ASM was a record 15.78 cents, up 2.2 percent versus the same period last year, driven by a 2.4 point increase in passenger load factor.

Total operating expenses in the first quarter were $3.3 billion, up 2.2 percent over the same period last year. Mainline cost per available seat mile (CASM) was 13.82 cents, up 1.8 percent on a 1.4 percent increase in mainline ASMs. Excluding special items, fuel and profit sharing, mainline CASM was 8.77 cents, up 0.7 percent versus the same period last year. Express CASM excluding special items and fuel was 15.12 cents, down 1.3 percent on a 0.8 percent increase in ASMs.

Liquidity

As of March 31, 2013, the Company had $2.9 billion in total cash and investments, of which $352 million was restricted, up from $2.7 billion, of which $336 million was restricted on December 31, 2012.

On April 10, the Company launched and priced an offering of 2013-1 Class A and Class B enhanced equipment trust certificates (EETCs) in the aggregate face amount of approximately $820 million. The proceeds from the offering will be used to finance its purchase of 18 Airbus aircraft scheduled to be delivered from September 2013 to June 2014. The transaction is expected to close on April 24, 2013.

As a result of the above mentioned EETC transaction, the Company has secured financing commitments for all of its aircraft deliveries to June 2014.

US Airways’ Chief Financial Officer Derek Kerr stated, “We are extremely pleased with the results of our recent EETC financing transaction. Thanks to our strong financial and operational performance, along with our strategic positioning, we were able to obtain the lowest fixed rate financing on an EETC issued by a major airline since 2003.”

Special Items

The Company recognized approximately $11 million of net special charges in the first quarter. Operating special charges totaled $41 million and primarily included costs related to the merger and the ratification of the US Airways flight attendant collective bargaining agreement. In addition, the Company recognized a $30 million non operating special credit in connection with an award received in an arbitration related to previous investments in auction rate securities.

Merger with American

On February 14, US Airways announced that it had reached a definitive merger agreement with AMR Corporation to create the new American Airlines. The new American will have a robust global network, a strong financial foundation, and is expected to generate more than $1 billion in annual synergies by 2015. The Companies presently expect the transaction to close in the third quarter.

Notable Accomplishments

Marketing and Customer Enhancements

  • Began new daily, non-stop service between its largest hub in Charlotte, N.C. and London’s preferred business airport, Heathrow. The daily flight will supplement the airline’s existing daily service between its international gateway in Philadelphia and Heathrow, and replaces its service between Charlotte and London’s Gatwick airport.
  • Introduced two new choices to DineFresh, its premium meal option for customers flying in Economy to Europe, the Middle East and South America. Since the program’s inception in August 2012, US Airways remains the only U.S.-based carrier to deliver a premium meal option for customers traveling internationally to or from the United States in Economy.
  • Announced new non-stop, daily year-round service from its international gateway in Philadelphia to Salt Lake City on June 8. The new service will give customers in Salt Lake City one-stop access to destinations throughout the East Coast, Europe, the Middle East and the Caribbean.

People

  • The airline’s employees earned approximately $6 million in profit sharing for the first quarter results and an additional $4 million in operational incentive payouts through February.
  • Honored 64 employees for their more than 45 years of service with US Airways (pilots were honored for 40 years) at the airline’s service anniversary dinner.
  • Selected 51 employees to receive the fourth quarter Chairman’s Award, US Airways’ most prestigious honor.
  • Awarded ten employees $10,000 each for providing exceptional service to customers through the airline’s “Above & Beyond” program. The “Above & Beyond” program recognizes employees who provide exceptional service to the airline’s customers and fellow employees. Since launching the program in 2006, the airline has received more than 300,000 A&B coupons and has awarded nearly $7.3 million to more than 9,000 employees.
  • Announced that its 6,800 flight attendants, represented by the Association of Flight Attendants – CWA (AFA), ratified a new contract that provides immediate pay increases and includes support for the merger of US Airways and American Airlines.
  • Announced that its pilots represented by the Air Line Pilots Association (ALPA), at both wholly owned Express carriers, PSA Airlines and Piedmont Airlines, have voted to ratify new five-year collective bargaining agreements.

Other Notable Accomplishments

  • Announced that the Company has received FAA certification on its wide-body Airbus A330 aircraft for SafeRoute®, a cornerstone navigation computer software system for the FAA’s NextGen airspace redesign program.
  • Announced that the US Airways Education Foundation will award $270,000 in grants this year to nonprofit organizations in the airline’s hub cities of Charlotte, N.C., Philadelphia, Phoenix and Washington, D.C.  Grants will be awarded to children’s educational programs aimed to increase academic achievement for those they serve. Since 1992, the US Airways Education Foundation has awarded nearly $4.9 million in scholarships and grants.
  • Announced that its Community Foundation awarded a total of $125,000 in grants to Arizona Opera and Ballet Arizona to assist in facilities renovation.

Copyright Photo: Jan Petzold/AirlinersGallery.com. Airbus A319-112 N742PS (msn 1275) in the PSA retrojet scheme climbs away from Charlotte.

US Airways: AG Slide Show