US Airways Group, Inc. (NYSE: LCC) today reported its third quarter 2013 financial results. For the third quarter 2013, pretax profit excluding net special items was a record $367 million, a $174 million, or 90%, year-over-year improvement.
On a GAAP basis, the Company reported a third quarter pretax profit of $336 million, up from $246 million in 2012. The GAAP net profit for the third quarter 2013 was $216 million, or $1.04 per diluted share versus a GAAP net profit of $245 million, or $1.24 per diluted share, for the same period in 2012. The Company’s 2013 third quarter results include a provision for income tax of $120 million, comprised principally of non-cash federal income tax expense, while the 2012 provision for income tax was only $1 million.
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’ Chairman and CEO Doug Parker said, “We are extremely pleased to report a record pretax profit in the third quarter. These tremendous results are a testament to our 32,000 team members and their dedication to our millions of customers. “These outstanding results are occurring as our teams continue intensive integration planning work in preparation for our merger with American Airlines. Our hardworking team members, along with their colleagues at American, remain committed to building a combined airline that can compete in the global marketplace. We are eager to present our case and are grateful for the enthusiasm and support our merger continues to receive.”
Total revenues in the third quarter were a record $3.9 billion, up 9.1 percent versus the third quarter 2012 on a 4.1 percent increase in total available seat miles (ASMs). Total revenue per ASM was a record 15.97 cents, up 4.9 percent versus the same period last year driven by a 4.4 percent increase in passenger yield and a record load factor of 85.5 percent. Total operating expenses in the third quarter were $3.4 billion, up 5.0 percent over the same period last year on a 4.1 percent increase in ASMs. Mainline cost per available seat mile (CASM) was 12.94 cents, up 1.9 percent. Excluding special items, fuel and profit sharing, mainline CASM was 8.08 cents, up 1.7 percent versus the same period last year. Express CASM excluding special items and fuel was 14.36 cents, up 2.8 percent on a 0.4 percent decrease in ASMs.
During the third quarter, the Company repaid in full the prepaid miles loan issued in connection with its Barclays affinity credit card program at its face amount of $200 million. As of September 30, 2013, the Company had $3.9 billion in total cash and investments, of which $350 million was restricted. This is up $1.1 billion from the Company’s third quarter 2012 total cash and investments balance of $2.8 billion, of which $347 million was restricted.
The Company recognized approximately $31 million of net special items before taxes in the third quarter. Mainline operating special items totaled $40 million and consisted primarily of merger related costs. Express operating special items consisted of a $14 million credit resulting from a favorable arbitration ruling related to a vendor contract. The Company also recognized approximately $5 million in nonoperating special items primarily related to non-cash write offs of debt discount associated with conversions of our 7.25% convertible senior notes. The net tax effect of these special items was approximately $6 million.
- As part of the Company’s fleet renewal program, the Company took delivery of five new A321 aircraft and one new A330-200 aircraft. These aircraft replaced 737-400 aircraft.
- Standard & Poor’s (S&P) raised the Company’s credit rating by one notch from “B-” to “B.” S&P cited the Company’s improved financial results and strong cash position as part of its upgrade.
- As part of the Company’s operational incentive program, employees have earned approximately $10 million in year-to-date operational incentive payouts.
- Pilots at PSA Airlines, a wholly-owned subsidiary of US Airways, represented by the Air Line Pilots Association (ALPA), ratified a Letter of Agreement that amends their existing collective bargaining agreement originally reached with the airline on March 27, 2013.
- Introduced US Airways’ Track Your Bag, a free service allowing customers with a smartphone, tablet or laptop connected to the internet access to real-time information on the status of their checked luggage. Customers can check when their luggage is loaded and offloaded on their flight.
- Announced agreement with Bags VIP delivery service that allows customers to schedule luggage delivery directly to their home, hotel or business. Travelers can schedule and pay for Bags VIP delivery up to one hour prior to their scheduled departure by visiting maketraveleasier.com/usairways.
- US Airways’ Education Foundation awarded $270,000 in educational grants to 21 nonprofit organizations in the airline’s hub cities of Charlotte, N.C., Philadelphia, Phoenix and Washington, D.C. as part of its 2013 Community Education Grant Program.
- In partnership with the American Cancer Society’s Making Strides Against Breast Cancer (MSABC), the Company has launched its second annual “BE PINK” campaign. As part of the campaign, thousands of employees have purchased and are wearing pink uniform items in October, which is National Breast Cancer Awareness Month. Proceeds from the sale of uniform items are donated to the American Cancer Society. In addition, employees will show their support of breast cancer programs through the sponsorship of MSABC walks in the airline’s hub cities of Charlotte, N.C., Philadelphia, Phoenix and Washington, D.C.
- As part of the Company’s “Hope Takes Flight” campaign, which benefits United Way, US Airways’ employees raised more than $1.4 million. Money raised will go to support the communities in which US Airways’ employees live and work.
US Airways will conduct a live audio webcast of its earnings call today at 12:30 p.m. ET, which will be available to the public on a listen-only basis at www.usairways.com under the Company Info >>Investor Relations tab. An archive of the call/webcast will be available in the Investor Relations portion of the website.
The Company will provide its investor relations guidance on its website (www.usairways.com) immediately following its 12:30 p.m. ET conference call. The Company typically provides guidance related to cost per available seat mile (CASM) excluding special charges, fuel and profit sharing, fuel prices, other revenues and estimated interest expense/income on its investor relations update page on its web site. This update will also include the airline’s capacity, fleet plan and estimated capital spending for the remainder of 2013.
US Airways, along with US Airways Shuttle and US Airways Express, operates more than 3,200 flights per day and serves 203 communities in the U.S., Canada, Mexico, Europe, the Middle East, the Caribbean, and Central and South America. The airline employs more than 32,000 aviation professionals worldwide, operates the world’s largest fleet of Airbus aircraft and is a member of the Star Alliance network, which offers its customers more than 21,900 daily flights to 1,328 airports in 195 countries. Together with its US Airways Express partners, the airline serves approximately 80 million passengers each year and operates hubs in Charlotte, N.C., Philadelphia, Phoenix and Washington, D.C. Aviation Week and Overhaul & Maintenance magazine presented US Airways with the 2012 Aviation Maintenance, Repair and Overhaul (MRO) of the Year Award for demonstrating outstanding achievement and innovation in the area of technical operations. Military Times Edge magazine named US Airways as a Best for Vets employer for the past three years. US Airways was, for the third year in a row, the only airline included as one of the 50 best companies to work for in the U.S. by LATINA Style magazine’s 50 Report. The airline also earned a 100 percent rating on the Human Rights Campaign Corporate Equality index for six consecutive years. The Corporate Equality index is a leading indicator of companies’ attitudes and policies toward lesbian, gay, bisexual and transgender employees and customers. For more company information visit usairways.com, follow on Twitter @USAirways or at Facebook.com/USAirways. (LCCF)
Cautionary Statement Regarding Forward-Looking Statements This document includes 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,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “forecast” and other similar words. These forward-looking statements are based on AMR’s and US Airways’ current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. The following factors, among others, could cause actual results and financial position and timing of certain events to differ materially from those described in the forward-looking statements: the lawsuit filed by the Antitrust Division of the U.S. Department of Justice and certain states seeking to enjoin the planned merger of AMR and US Airways on antitrust grounds and the intention of AMR and US Airways to contest such lawsuit vigorously; the challenges and costs of the proposed transaction, including integrating operations and achieving anticipated synergies; the price of, market for and potential market price volatility of common stock of the ultimate parent entity following the closing of the proposed transaction; significant liquidity requirements and substantial levels of indebtedness of the combined company following the closing; potential limitations on the use of certain tax attributes following the closing; failure of the proposed transaction to be completed; and other economic, business, competitive, and/or regulatory factors affecting the business of the combined company after the closing and the businesses of US Airways and AMR generally, including those set forth in the filings of US Airways and AMR with the SEC, especially in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of their respective annual reports on Form 10-K and quarterly reports on Form 10-Q, their current reports on Form 8-K and other SEC filings, including the registration statement and the proxy statement/prospectus related to the proposed transaction. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements. Neither AMR nor US Airways assumes any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements except as required by law.
|US Airways Group, Inc.|
|Condensed Consolidated Statements of Operations|
|(In millions, except share and per share amounts)|
|3 Months Ended September 30,||Percent||9 Months Ended September 30,||Percent|
|Mainline passenger||$ 2,601||$ 2,319||12.2||$ 7,364||$ 6,881||7.0|
|Total operating revenues||3,855||3,533||9.1||11,100||10,553||5.2|
|Aircraft fuel and related taxes||915||893||2.4||2,648||2,659||(0.4)|
|Salaries and related costs||681||609||11.7||2,018||1,888||6.9|
|Other rent and landing fees||166||148||12.5||467||419||11.3|
|Special items, net||40||14||nm||103||25||nm|
|Depreciation and amortization||73||60||22.7||210||182||15.2|
|Total operating expenses||5.0||2.7|
|Nonoperating income (expense):|
|Interest expense, net||(88)||(89)||(0.8)||(263)||(256)||2.5|
|Total nonoperating expense, net||nm||nm|
|Income before income taxes||336||246||36.4||734||601||22.1|
|Income tax provision||nm||nm|
|Net income||$ 216||$ 245||(11.9)||$ 547||$ 600||(8.8)|
|Earnings per common share:|
|Basic||$ 1.12||$ 1.51||$ 3.10||$ 3.70|
|Diluted||$ 1.04||$ 1.24||$ 2.69||$ 3.06|
|Shares used for computation (in thousands):|
|Note: Percent change may not recalculate due to rounding.|
|US Airways Group, Inc.|
|3 Months Ended September 30,||9 Months Ended September 30,|
|Revenue passenger miles (millions)||17,809||16,860||5.6||%||50,068||47,564||5.3||%|
|Available seat miles (ASM) (millions)||20,513||19,560||4.9||%||58,667||56,665||3.5||%|
|Passenger load factor (percent)||86.8||86.2||0.6||pts||85.3||83.9||1.4||pts|
|Passenger revenue per ASM (cents)||12.68||11.85||7.0||%||12.55||12.14||3.4||%|
|Passenger enplanements (thousands)||14,543||13,739||5.9||%||42,781||40,927||4.5||%|
|Aircraft at end of period||344||338||1.8||%||344||338||1.8||%|
|Block hours (thousands)||320||310||3.4||%||944||922||2.5||%|
|Average stage length (miles)||1,050||1,051||(0.1)||%||1,021||1,010||1.2||%|
|Average passenger journey (miles)||1,821||1,829||(0.4)||%||1,724||1,726||(0.1)||%|
|Fuel consumption (gallons in millions)||304||291||4.3||%||868||841||3.2||%|
|Average aircraft fuel price including related taxes (dollars per gallon)||3.01||3.06||(1.8)||%||3.05||3.16||(3.5)||%|
|Full-time equivalent employees at end of period|