US Airways Group, Inc. Reports Fourth Quarter and Full Year 2005 Results23 February 2006
The new US Airways Group, Inc. (NYSE: LCC) today reported a fourth quarter 2005 net loss of $261 million or $3.26 per diluted share. This compares to a net loss of $69 million or $4.66 per diluted share for the same period last year. The Company's fourth quarter 2005 results include a $69 million unrealized loss related to the airline's fuel hedges; $36 million of special charges, which primarily includes merger related transition expenses; and $18 million in charges partially related to the remarketing and warrant repurchase associated with America West's prior Airline Transportation Stabilization Board (ATSB) loan. Excluding these items, the Company reported a fourth quarter 2005 net loss of $138 million or $1.72 per diluted share versus a net loss excluding special items of $58 million or $3.89 per diluted share in the fourth quarter of 2004. The increase in the year-over-year net loss excluding special items is due to the fact that the 2004 results include only America West's data. Standalone fourth quarter net losses excluding special items at both America West and US Airways improved versus the fourth quarter 2004. 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 )
US Airways Group Chairman, CEO and President Doug Parker stated, "We are making tremendous progress with our integration in all areas. Our 35,000 employees are doing a great job as evidenced by US Airways achieving the number one ranking among major airlines in on-time performance for the fourth quarter 2005. Our revenue and cost synergies are tracking ahead of our pre-merger model projections and our customers are experiencing the benefit of our broader network and reasonable fares.
"Our quarterly financial results reflect the continued difficult industry environment but also show some encouraging trends. Both US Airways' and America West's standalone results, excluding special charges, are much improved versus last year despite a nearly $200 million increase in expenses due to higher fuel prices. We are particularly pleased with the strong double-digit improvement in unit revenues experienced at both airlines.
"Looking forward, we continue to believe that excluding one-time merger- related transition costs, the new US Airways will be profitable in 2006 -- even at today's projected fuel prices."
Revenue and Cost Comparisons
The revenue environment during the fourth quarter 2005 improved significantly over the same period in 2004. On a standalone basis, total revenue per available seat mile (RASM) for America West increased 17.5 percent during the fourth quarter 2005 compared to the same period last year, and increased 15.7 percent for US Airways compared to the same period last year. Mainline yields during the fourth quarter 2005 for America West increased 15.7 percent as compared to the same period last year, while US Airways saw a 14.1 percent increase in mainline yields when compared to the same period last year.
Continued high fuel prices led to material cost increases for the new US Airways Group. Had fuel prices remained constant versus the fourth quarter 2004, US Airways Group's fourth quarter 2005 fuel expenses would have been $197 million lower. On a standalone basis, America West's mainline operating costs per available seat mile (CASM) increased 25.2 percent to 10.48 cents for the fourth quarter 2005, driven by a 32.5 percent increase in the net price of fuel from $1.41 to $1.87. Excluding fuel and special items, America West's CASM was 6.44 cents, an increase of 5.1 percent over the same period last year. US Airways standalone mainline CASM during the fourth quarter 2005 increased 11.4 percent to 11.83 cents, primarily driven by a 60.3 percent increase in fuel price from $1.31 to $2.10. Excluding fuel and special items, US Airways standalone mainline CASM decreased 0.8 percent to 8.38 cents from the same period last year despite a 13.2 percent decline in mainline available seat miles.
America West Airlines' and US Airways' Standalone Results
On a standalone basis, America West Airlines' net loss for its fourth quarter 2005 was $139 million. Excluding special items, America West's fourth quarter 2005 net loss was $31 million, an improvement from the fourth quarter 2004 when the airline recognized a $57 million loss, excluding special items.
On a standalone basis for US Airways, the airline's net loss for its fourth quarter 2005 was $120 million. Excluding special items, which were primarily merger-related transition costs, US Airways fourth quarter 2005 net loss was $105 million. This compares to a net loss of $218 million for the same period in the prior year.
Liquidity
As of Dec. 31, 2005, the Company had $2.4 billion in total cash and investments, of which $1.6 billion was unrestricted.
Integration Update
Since the two airlines merged at the end of September 2005, operational accomplishments include:
* Achieved the top ranking in on-time performance among all major
airlines as reported by the Department of Transportation (DOT) for
the fourth quarter 2005
* Consolidated operations at 30 overlap airports (seven airports remain
to be integrated)
* Signed an amended agreement with Embraer for 25 firm and 32 additional
firm (with up to 50 options) for Embraer 170/190 family aircraft
* Achieved ETOPS certification for Boeing 757 aircraft operated by
America West, which allowed the airline to begin new service to Hawaii
* Added 52 new pieces of ground equipment and additional personnel at
our Philadelphia hub, which helped the airline run an enormously
improved 2005 holiday operation as compared to 2004
In the area of finance, the combined airline has:
* Repurchased warrants associated with America West Holdings' ATSB loan
from the US government for $116 million; the US Airways and America
West loans were sold by the lender by order of the ATSB to 13 fixed
income investors, which repaid in full the original consolidated loan
amount of $1.4 billion
* Combined all insurance programs for the new airline, which will save
an additional $41 million annually
In the marketing area, the combined airline has:
* Established Dividend Miles as the new Company's frequent flyer
program, and created mechanisms for reciprocal benefits, accrual and
redemption
* Completed all Star Alliance joining requirements
* Introduced a new affinity card with Barclays bank
* Announced three new European destinations, Lisbon, Milan and
Stockholm, which will begin service this summer
* Reduced numerous fares in several east coast markets, including
Philadelphia, Charlotte, Pittsburgh and New York/LaGuardia
US Airways Group's labor integration team has achieved the following since the merger closed:
* Recalled 55 furloughed US Airways pilots and announced several new
hire flight attendant classes, which will include recalling furloughed
US Airways flight attendants
* Began the process to bring some of the currently outsourced
reservations work back in house by increasing hiring in Winston-Salem,
North Carolina and Reno, Nevada
* Reached a Transition Agreement with the airline's pilots and flight
attendants
* Reached a Transition Agreement with a new labor alliance between the
Communication Workers Association and the International Brotherhood of
Teamsters, which represents the airline's customer service employees
* Received single carrier certification by the National Mediation Board
(NMB), which will further the process of getting to single
representation for the combined airline's mechanics and fleet service
workers
In the area of cultural integration, the combined airline continues to make progress and has achieved the following milestones:
* Paid out three consecutive monthly bonuses to employees for achieving
on-time performance goals in October, November and December (totaling
$5 million)
* Implemented new internal communication programs designed to ensure
senior management visibility among all areas of the combined airline's
operation
* Unveiled one of four heritage planes that will feature throwback
liveries of the four major airlines that comprise the new US Airways
(Allegheny, America West, Piedmont and PSA)
* Began an aggressive leadership development training program that will
ultimately touch all leaders at US Airways Group
Change in Accounting Principle for Maintenance Costs
The Company has implemented a change in accounting principle related to the way it accounts for its maintenance work on major airframe, engine and certain component overhauls. While US Airways historically charged maintenance and repair costs to operating expenses as they were incurred, America West has historically used the deferral method to account for its maintenance work. Under the deferral method, certain maintenance costs were recorded as capitalized assets and subsequently amortized over the periods benefited. Effective Oct. 1, 2005, America West retroactively changed its accounting policy from the deferral method to the expense as incurred method as if that change occurred on Jan. 1, 2005. This resulted in a one-time charge of $202 million, as well as a $46 million increase in maintenance expense, for the full year 2005 for the new US Airways. In addition, as a result of having made this change in the fourth quarter, the sum of the Company's 2005 reported quarters will not equal annual results. The Company will recast the quarterly data for the first three quarters in its 2005 Annual Report.
Analyst Conference Call/Webcast Details
US Airways will conduct a live audio webcast of its earnings call today at 11:00 a.m. EST, which will be available to the public on a listen-only basis at http://www.usairways.com and http://www.americawest.com under the Public/Investor Relations tab. An archive of the call/webcast will be available in the Public/Investor Relations portion of both Web sites through March 21, 2006.
For additional information regarding the airline's current cost per available seat mile (CASM) guidance, fuel hedging positions and estimated capital expenditures for 2006, please visit the investor relations update, which is located at http://www.usairways.com and http://www.americawest.com under the Public/Investor Relations tab. The investor relations update page also includes the airline's fleet plan for 2006 and merger related transition expense guidance.
About US Airways
The new US Airways is the fifth largest domestic airline employing nearly 35,000 aviation professionals. US Airways, US Airways Shuttle and US Airways Express operate approximately 3,700 flights per day and serve more than 230 communities in the U.S., Canada, Europe, the Caribbean and Latin America. This press release and additional information on US Airways can be found at http://www.usairways.com or http://www.americawest.com. (LCCF)
US Airways is a member of the Star Alliance, which was established in 1997 as the first truly global airline alliance to offer customers worldwide reach and a smooth travel experience. Star Alliance was voted Best Airline Alliance by Skytrax in 2003 and 2005. The members are Air Canada, Air New Zealand, ANA, Asiana Airlines, Austrian, bmi, LOT Polish Airlines, Lufthansa, Scandinavian Airlines, Singapore Airlines, Spanair, TAP Portugal, THAI, United, US Airways and VARIG Brazilian Airlines. South African Airways and SWISS will be integrated during the first half of 2006. Regional member carriers Adria Airways (Slovenia), Blue1 (Finland) and Croatia Airlines enhance the global network. Overall, Star Alliance offers more than 15,000 daily flights to 790 destinations in 138 countries.
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," "anticipate," "believe," "estimate," "plan," "could," "should," and "continue" and similar terms used in connection with statements regarding the outlook of US Airways Group, Inc. (the Company), expected fuel costs, the revenue and pricing environment, and expected financial performance. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving America West Holdings and US Airways Group, including future financial and operating results, the combined companies' plans, objectives, expectations and intentions and other statements that are not historical facts. 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 these statements. Such risks and uncertainties include, but are not limited to, the following: the ability of the Company to obtain and maintain any necessary financing for operations and other purposes (including compliance with financial covenants); the ability of the Company to maintain adequate liquidity; the impact of changes in fuel prices; the impact of economic conditions; changes in prevailing interest rates; the ability to attract and retain qualified personnel; the ability of the Company to attract and retain customers; the ability of the Company to obtain and maintain commercially reasonable terms with vendors and service providers; the cyclical nature of the airline industry; competitive practices in the industry, including significant fare restructuring activities by major airlines; labor costs; security-related and insurance costs; weather conditions; government legislation and regulation; relations with unionized employees generally and the impact and outcome of the labor negotiations; the impact of global instability including the potential impact of current and future hostilities, terrorist attacks, infectious disease outbreaks or other global events; the impact of the resolution of remaining claims in US Airways Group's Chapter 11 proceedings; the ability of the Company to fund and execute its business plan following the Chapter 11 proceedings and the merger; and other risks and uncertainties listed from time to time in the companies' reports to the SEC. 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. The Company assumes no obligation to publicly update any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law. 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 quarter ended September 30, 2005 and in the filings of the Company with the SEC, which are available at http://www.usairways.com and http://www.americawest.com.
US Airways Group, Inc.
Condensed Consolidated Statements of Operations
(in millions except share and per share amounts)
(unaudited)
3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
Operating revenues
Mainline passenger $1,757 $550 $3,695 $2,203
Express passenger 584 93 976 353
Cargo 33 8 58 28
Other 202 46 348 164
Total operating revenues 2,576 697 5,077 2,748
Operating expenses
Aircraft fuel and related taxes 603 174 1,214 590
Loss (gain) on fuel hedging
instruments, net:
Realized (20) (15) (71) (26)
Unrealized 69 27 (4) 2
Salaries and related costs 504 164 1,045 657
Express expenses 656 110 1,073 374
Aircraft rent 182 77 429 304
Aircraft maintenance 148 49 344 206
Other rent and landing fees 133 41 267 168
Selling expenses 102 36 231 153
Special charges (credit), net 36 (17) 121 (16)
Depreciation and amortization 49 14 88 54
Other 306 88 557 302
Total operating expenses 2,768 748 5,294 2,768
Operating loss (192) (51) (217) (20)
Nonoperating income (expenses)
Interest income 22 3 30 8
Interest expense, net (87) (21) (147) (80)
Other, net (4) -- (1) 3
Total nonoperating expenses, net (69) (18) (118) (69)
Loss before income taxes (261) (69) (335) (89)
Income tax expense (benefit) -- -- -- --
Loss before cumulative effect of
change in accounting principle (261) (69) (335) (89)
Cumulative effect of change in
accounting principle -- -- 202 --
Net loss $(261) $(69) $(537) $(89)
Loss per share before cumulative
effect of change in accounting
principle:
Basic $(3.26) $(4.66) $(10.64) $(5.99)
Diluted $(3.26) $(4.66) $(10.64) $(5.99)
Loss per share:
Basic $(3.26) $(4.66) $(17.05) $(5.99)
Diluted $(3.26) $(4.66) $(17.05) $(5.99)
Shares used for computation (in
thousands):
Basic 80,263 14,907 31,517 14,861
Diluted 80,263 14,907 31,517 14,861
** Basic and diluted shares for 2004 were calculated by multiplying the
originally reported number of shares by 0.4125 for the quarter and
year-to-date. The originally reported shares (in thousands) were 36,137
and 36,026 for the 2004 quarter, and year-to-date respectively.
US Airways Group, Inc.
Operating Statistics
3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
Mainline:
Revenue passenger miles
(in millions) 14,136 5,885 32,909 23,333
Available seat miles (ASM)
(in millions) 18,861 7,602 42,321 30,153
Passenger load factor (percent) 74.9 77.4 77.8 77.4
Yield (cents) 12.43 9.34 11.23 9.44
Passenger revenue per ASM (cents) 9.32 7.23 8.73 7.31
Passenger enplanements
(in thousands) 13,917 5,336 31,031 21,132
Aircraft (end of period) 373 138 373 138
Operating cost per ASM (cents) 11.20 8.39 9.97 7.94
Operating cost per ASM excluding
special items (cents) 10.60 8.11 9.65 7.95
Operating cost per ASM excluding
special items, fuel and
realized gains on fuel hedging
instruments, net (cents) 7.51 6.02 6.95 6.08
Operating cost per ASM excluding
special items, fuel,
realized gains on fuel hedging
instruments, net and including
impact of change in accounting
principle (cents) 7.51 6.15 6.95 6.23
Express
Revenue passenger miles
(in millions) 2,514 694 5,080 2,451
Available seat miles (in millions) 3,809 946 7,398 3,368
Passenger load factor (percent) 66.0 73.4 68.7 72.8
Passenger revenue per ASM (cents) 15.32 9.78 13.19 10.47
Operating cost per ASM (cents) 17.23 11.60 14.51 11.10
TOTAL - Mainline & Express
Revenue passenger miles
(in millions) 16,650 6,579 37,989 25,784
Available seat miles (in millions) 22,670 8,548 49,719 33,521
Passenger load factor (percent) 73.4 77.0 76.4 76.9
Passenger revenue per ASM (cents) 10.33 7.51 9.40 7.62
Operating cost per ASM (cents) 12.21 8.75 10.65 8.26
Reconciliation of GAAP Financial Information to Non-GAAP Financial
Information and Operating Cost per ASM Excluding Special Items, Aircraft
Fuel and related taxes, Realized Gains on Fuel Hedging instruments, Net
and Including Impact of Change in Accounting Principle -- 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 3 Months 12 Months 12 Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
(in millions except per share amounts)
Reconciliation of Loss before
Cumulative Effect of Change in
Accounting Principle Excluding
Special items for US Airways Group,
Inc.
Loss before cumulative effect of
change in accounting principle used
to calculate basic and diluted loss
per share:
Loss before cumulative effect of
change in accounting principle as
reported $(261) $(69) $(335) $(89)
Special items - America West
Airlines, Inc. Consolidated:
Unrealized loss (gains) on fuel
hedging instruments, net (1) 69 27 (4) 2
Special charges (credits), net (2) 21 (17) 106 (16)
Other special items (3) 18 11 30 12
Impact of change in accounting
principle (5) -- (10) -- (43)
Special items - US Airways, Inc.:
Special charges, net (4) 15 -- 15 --
Loss before cumulative effect of
change in accounting principle, as
adjusted for special items $(138) $(58) $(188) $(134)
Basic and Diluted Loss Per Share
before Cumulative Effect of Change
in Accounting Principle for US
Airways Group, Inc. $(3.26) $(4.66) $(10.64) $(5.99)
Special items - America West
Airlines, Inc. Consolidated:
Unrealized loss (gains) on fuel
hedging instruments, net (1) 0.87 1.84 (0.12) 0.16
Special charges (credits), net (2) 0.26 (1.10) 3.37 (1.04)
Other special items (3) 0.22 0.72 0.92 0.82
Impact of change in accounting
principle (5) -- (0.69) -- (2.89)
Special items - US Airways, Inc.:
Special charges, net (4) 0.19 -- 0.48 --
Basic and diluted loss per share
before cumulative effect of
change in accounting principle,
as adjusted for special items $(1.72) $(3.89) $(5.99) $(8.94)
Basic and diluted shares (in
thousands) 80,263 14,907 31,517 14,861
Reconciliation of Loss before
Cumulative Effect of Change in
Accounting Principle Excluding
Special items for America West
Airlines, Inc. Consolidated
Loss before cumulative effect of
change in accounting principle as
reported $(139) $(68) $(195) $(85)
Special items:
Unrealized loss (gains) on fuel
hedging instruments, net (1) 69 27 (4) 2
Special charges (credits), net (2) 21 (17) 106 (16)
Other special items (3) 18 11 30 12
Impact of change in accounting
principle (5) -- (10) -- (43)
Loss before cumulative effect of
change in accounting principle, as
adjusted for special items $(31) $(57) $(63) $(130)
Reconciliation of Loss before
Cumulative Effect of Change in
Accounting Principle Excluding
Special items for US Airways, Inc.
Loss before cumulative effect of
change in accounting principle as
reported $(120) $(218) $160 $(578)
Special items:
Special charges, net (4) 15 -- 15 --
Loss before cumulative effect of
change in accounting principle, as
adjusted for special items $(105) $(218) $175 $(578)
3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
(in millions except per share amounts)
Reconciliation of Operating
Cost per ASM Excluding Special
Items, Fuel, Realized Gains on
Fuel Hedging instruments, Net
and Including Impact of Change
in Accounting Principle --
Mainline only
US Airways Group, Inc.
Total operating expenses $2,768 $748 $5,294 $2,768
Less: Express expenses (656) (110) (1,073) (374)
Total mainline operating expenses 2,112 638 4,221 2,394
Special items - America West
Airlines, Inc. Consolidated:
Unrealized loss (gains) on fuel
hedging instruments, net (1) (69) (27) 4 (2)
Special charges (credits),
net (2) (21) 17 (106) 16
Other special items (3) (7) (11) (19) (11)
Special items - US Airways, Inc.:
Special charges, net (4) (15) -- (15) --
Operating expenses, excluding
special items 2,000 617 4,085 2,397
Aircraft fuel and related taxes (603) (174) (1,214) (590)
Realized gains on fuel hedging
instruments, net 20 15 71 26
Operating expenses, excluding
special items, aircraft fuel and
realized gains on fuel hedging
instruments, net 1,417 458 2,942 1,833
Impact of change in accounting
principle (5) -- 10 -- 43
Operating expenses, excluding
special items, aircraft fuel and
related taxes, realized gains on
fuel hedging instruments, net and
including impact of change in
accounting principle $1,417 $468 $2,942 $1,876
Mainline Operating expenses
per ASM $11.20 $8.39 $9.97 $7.94
Special items per ASM --
America West, Inc. consolidated:
Unrealized loss (gains) on
fuel hedging instruments,
net (1) (0.37) (0.36) 0.01 (0.01)
Special charges (credits),
net (2) (0.11) 0.22 (0.25) 0.06
Other special items (3) (0.04) (0.14) (0.04) (0.04)
Special items per ASM --
US Airways, Inc.:
Special charges, net (4) (0.08) -- (0.04) --
Operating expenses per ASM,
excluding special items 10.60 8.11 9.65 7.95
Aircraft fuel and related taxes (3.20) (2.29) (2.87) (1.96)
Realized gains on fuel hedging
instruments, net 0.11 0.20 0.17 0.09
Operating expenses per ASM,
excluding special items, aircraft
fuel and realized gains on fuel
hedging instruments, net 7.51 6.02 6.95 6.08
Impact of change in accounting
principle (5) -- 0.13 -- 0.15
Mainline operating expenses per ASM
excluding special items, aircraft
fuel and related taxes, realized
gains on fuel hedging instruments,
net and including impact of change
in accounting principle $7.51 $6.15 $6.95 $6.23
America West Airlines Inc.,
Consolidated
Total operating expenses $944 $746 $3,374 $2,763
Less: Express expenses (150) (110) (545) (374)
Total mainline operating expenses 794 636 2,829 2,389
Special items:
Unrealized loss (gains) on fuel
hedging instruments, net (1) (69) (27) 4 (2)
Special charges (credits),
net (2) (21) 17 (106) 16
Other special items (3) (7) (11) (19) (11)
Operating expenses, excluding
special items 697 615 2,708 2,392
Aircraft fuel and related taxes (228) (174) (812) (590)
Realized gains on fuel hedging
instruments, net 20 15 71 26
Operating expenses, excluding
special items, aircraft fuel and
realized gains on fuel hedging
instruments, net 489 456 1,967 1,828
Impact of change in accounting
principle (5) -- 10 -- 43
Operating expenses, excluding
special items, aircraft fuel and
related taxes, realized gains on
fuel hedging instruments, net and
including impact of change in
accounting principle $489 $466 $1,967 $1,871
Mainline Operating expenses
per ASM $10.48 $8.37 $9.28 $7.92
Special items per ASM:
Unrealized loss (gains) on
fuel hedging instruments,
net (1) (0.91) (0.36) 0.01 (0.01)
Special charges (credits),
net (2) (0.29) 0.22 (0.35) 0.06
Other special items (3) (0.10) (0.14) (0.06) (0.04)
Operating expenses per ASM,
excluding special items 9.18 8.09 8.88 7.93
Aircraft fuel and related taxes (3.00) (2.29) (2.66) (1.96)
Realized gains on fuel hedging
instruments, net 0.26 0.20 0.23 0.09
Operating expenses per ASM,
excluding special items, aircraft
fuel and realized gains on fuel
hedging instruments, net 6.44 6.00 6.45 6.06
Impact of Change in Accounting
Principle (5) -- 0.13 -- 0.15
Mainline operating expenses
per ASM excluding special items,
aircraft fuel and related taxes,
realized gains on fuel hedging
instruments, net and including
impact of change in accounting
principle $6.44 $6.13 $6.45 $6.21
US Airways, Inc.
Total operating expenses $1,827 $1,782 $7,425 $7,421
Less: Express expenses (490) (402) (1,861) (1,572)
Total mainline operating expenses 1,337 1,380 5,564 5,849
Special items:
Special charges, net (4) (15) -- (15) --
Operating expenses, excluding
special items 1,322 1,380 5,549 5,849
Aircraft fuel and related taxes (375) (282) (1,486) (991)
Operating expenses, excluding
special items and aircraft fuel
and related taxes $947 $1,098 $4,063 $4,858
Mainline operating expenses
per ASM (excluding Express
expenses) $11.83 $10.62 $10.80 $10.99
Special items per ASM:
Special charges, net (4) (0.13) -- (0.03) --
Operating expenses per ASM,
excluding special items 11.70 10.62 10.77 10.99
Aircraft fuel and related taxes (3.32) (2.17) (2.88) (1.86)
Operating expenses per ASM
excluding special items,
aircraft fuel and realized
taxes $8.38 $8.45 $7.89 $9.13
Note: Amounts may not recalculate due to rounding.
3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
(in millions except per share amounts)
Reconciliation of Aircraft
Maintenance expense to Deferral
Method for 4q05 and full year 2005
US Airways Group, Inc.
Aircraft maintenance expense,
as reported $148 $344
Net adjustment to reflect 4Q05
under deferral method (6) (12) (46)
Aircraft maintenance as
adjusted -- deferral method 136 298
Net loss before cumulative effect,
as reported (261) (335)
Net adjustment to reflect 4Q05
under deferral method (6) 12 46
Net loss before cumulative effect
as adjusted - deferral method $(249) $(289)
Per share net loss before
cumulative effect, as reported $(3.26) $(10.64)
Per share net adjustment to
reflect 4Q05 under deferral
method (6) 0.15 1.46
Per share net loss before
cumulative effect, as adjusted
-- deferral method $(3.11) $(9.18)
America West Airlines Inc.,
Consolidated
Aircraft maintenance expense,
as reported $67 $259
Net adjustment to reflect 4Q05
under deferral method (6) (12) (46)
Aircraft maintenance expense, as
adjusted - deferral method 55 213
Net loss before cumulative
effect, as reported (139) (195)
Net adjustment to reflect 4Q05
under deferral method (6) 12 46
Net loss before cumulative
effect as adjusted - deferral
method $(127) $(149)
FOOTNOTES:
1) The 2005 three-month and twelve-month periods include a $69 million
unrealized loss and a $4 million unrealized gain, respectively, and
the 2004 three-month and twelve-month periods include $27 million and
$2 million of unrealized losses, respectively, resulting from
mark-to-market accounting for changes in the fair value of AWA's fuel
hedging instruments.
2) The 2005 three-month period includes $13 million of merger related
transition expenses, $7 million related to power by the hour program
penalties associated with the return of certain leased aircraft and
$1 million of severance for terminated employees resulting from the
merger. The 2005 twelve-month period includes the before-mentioned
items and a $50 million restructuring fee along with $7 million in
capitalized interest in connection with the Airbus MOU executed between
Airbus, US Airways Group and AWA, for certain aircraft firm orders.
US Airways Group and America West Holdings were required to pay
non-refundable restructuring fees, which were paid by means of set-off
against existing equipment deposits of US Airways Group and AWA held by
Airbus. In addition, a $27 million loss was incurred related to the
sale-leaseback of six 737-300 aircraft and two 757 aircraft during the
third quarter and $1 million of special charges related to the final
Boeing 737-200 aircraft which was removed from service in January 2005.
The 2004 three-month period primarily includes a $16.3 million credit
associated to the termination of the V2500 Power by the Hour agreement.
The 2004 twelve-month period includes the before-mentioned item and a
credit of $0.6 million related to the revision of the estimated costs
associated with the sale-leaseback of certain aircraft recorded in the
first quarter of 2002.
3) The 2005 three-month period includes $8 million related to the
write-off of the unamortized value of the ATSB warrants, upon their
repurchase in the fourth quarter, $4 million related to the
acceleration of depreciation expense for certain leasehold
improvements, $3 million out-of-period expense related to a retroactive
TSA assessment, $2 million write-off of debt issue costs in connection
with the conversion of the 7.25% senior notes and $1 million write-off
of debt issue costs for the Debis portion of the ATSB loan. The 2005
twelve-month period includes the before-mentioned items excluding the
out-of-period $3 million TSA assessment, an $8 million aggregate loss
on the sale-leaseback of two new Airbus A320 aircraft acquired during
the first and second quarters and $7 million net charges related to the
early return of ten aircraft in connection with the GE MOU. The 2004
three-month period includes a $6 million charge arising from resolution
of pending litigation and a $5 million loss on the sale-leaseback of
two new Airbus aircraft. The 2004 twelve-month period includes the
before-mentioned items and $1 million write-off of debt issue costs in
connection with the refinancing of the IBJ term loan during the third
quarter.
4) In connection with the merger, US Airways, Inc. incurred $15 million of
merger related transition expenses in the fourth quarter of 2005.
5) In the fourth quarter 2005 period, America West retroactively changed
from the deferral method of accounting for maintenance costs to the
expense as incurred method. To properly reflect use of the expense as
incurred method in the fourth quarter and full year of 2004, the
Company would have recorded additional maintenance expense of
$10 million and $43 million, respectively.
6) As discussed in Note 5 above, in the fourth quarter 2005 period,
America West changed from the deferral method of accounting for
maintenance costs to the expense as incurred method. As part of that
change, America West recorded an adjustment necessary to true-up
aircraft maintenance expense. To properly reflect 2005 under the
deferral method, the effect of that true-up adjustment must be
reversed.
America West Airlines, Inc.
Consolidated Statements of Operations
(in millions)
(unaudited)
3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
Operating revenues
Mainline passenger $634 $550 $2,521 $2,203
Express passenger 141 93 512 353
Cargo 9 8 33 28
Other 49 45 188 163
Total operating revenues 833 696 3,254 2,747
Operating expenses
Aircraft fuel and
related taxes 228 174 812 590
Loss (gain) on fuel hedging
instruments, net:
Realized (20) (15) (71) (26)
Unrealized 69 27 (4) 2
Salaries and related costs 175 163 701 655
Express expenses
Fuel 53 34 182 102
Other 97 76 363 272
Aircraft rent 84 77 327 304
Aircraft maintenance 67 49 259 206
Other rent and landing fees 46 41 176 168
Selling expenses 35 36 161 153
Special charges (credits),
net 21 (17) 106 (16)
Depreciation and
amortization 16 14 53 54
Other 73 87 309 299
Total operating expenses 944 746 3,374 2,763
Operating loss (111) (50) (120) (16)
Nonoperating income (expenses)
Interest income 13 4 25 14
Interest expense, net (32) (22) (94) (86)
Other, net (9) -- (6) 3
Total nonoperating
expenses, net (28) (18) (75) (69)
Loss before income taxes (139) (68) (195) (85)
Income taxes -- -- -- --
Loss before cumulative effect
of change in accounting
principle (139) (68) (195) (85)
Cumulative effect of change in
accounting principle -- -- 202 --
Net loss $(139) $(68) $(397) $(85)
America West Airlines, Inc.
Operating Statistics
3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Percent Dec. 31, Dec. 31, Percent
2005 2004 Change 2005 2004 Change
Mainline:
Revenue passenger
miles (in millions) 5,870 5,885 (0.3) 24,260 23,333 4.0
Available seat miles
(ASM) (in millions) 7,571 7,602 (0.4) 30,503 30,153 1.2
Passenger load factor
(percent) 77.5 77.4 0.1pt 79.5 77.4 2.1pts
Yield (cents) 10.81 9.34 15.7 10.39 9.44 10.1
Passenger revenue
per ASM (cents) 8.38 7.23 15.9 8.27 7.31 13.1
Passenger
enplanements
(in thousands) 5,404 5,336 1.3 22,130 21,132 4.7
Aircraft (end of
period) 141 138 2.2 141 138 2.2
Block hours 140,329 141,169 (0.6) 564,523 557,126 1.3
Average stage
length (miles) 1,022 1,048 (2.4) 1,028 1,052 (2.4)
Average passenger
journey (miles) 1,598 1,682 (5.0) 1,659 1,686 (1.6)
Fuel consumption
(gallons in
millions) 110.9 112.6 (1.5) 449.5 450.4 (0.2)
Average fuel price
(dollars per gallon)
with related taxes 2.05 1.55 32.3 1.80 1.31 37.4
Average fuel price
including realized
gains on fuel hedging
instruments, net
(dollars) 1.87 1.41 32.5 1.65 1.25 31.6
Average number of
full-time
equivalent
employees 12,003 11,845 1.3 12,134 11,904 1.9
Operating cost per
ASM (cents) 10.48 8.37 25.2 9.28 7.92 17.2
Operating cost per
ASM excluding
special items
(cents) 9.18 8.09 13.5 8.88 7.93 12.0
Operating cost per
ASM excluding
special items,
fuel and realized
gains on fuel
hedging
instruments ,
net (cents) 6.44 6.00 7.3 6.45 6.06 6.4
Operating cost
per ASM excluding
special items,
fuel, realized
gains on fuel
hedging instruments
and including impact
of change in
accounting
principle (cents) 6.44 6.13 5.1 6.45 6.21 3.9
Express:
Revenue passenger
miles (in millions) 807 694 16.3 3,300 2,451 34.6
Available seat miles
(in millions) 1,122 946 18.6 4,589 3,368 36.3
Passenger load factor
(percent) 71.9 73.4 (1.5)pts 71.9 72.8 (0.9)pts
Passenger revenue per
ASM (cents) 12.53 9.78 28.1 11.16 10.47 6.6
Passenger
enplanements
(in thousands) 1,400 1,186 18.0 5,600 4,244 32.0
Operating cost
per ASM (cents) 13.43 11.60 15.8 11.90 11.10 7.2
Total:
Revenue passenger
miles (in millions) 6,677 6,579 1.5 27,560 25,784 6.9
Available seat miles
(in millions) 8,693 8,548 1.7 35,092 33,521 4.7
Passenger load factor
(percent) 76.8 77.0 (0.2)pts 78.5 76.9 1.6pts
Total revenue per ASM
(cents) 9.58 8.15 17.5 9.28 8.20 13.2
Passenger
enplanements
(in thousands) 6,804 6,522 4.3 27,730 25,376 9.3
Operating cost
per ASM (cents) 10.86 8.73 24.4 9.62 8.24 16.7
US Airways, Inc.
Statements of Operations
(in millions)
(unaudited)
Successor Predecessor
Company(1) Company(1)
3 Months 3 Months 9 Months 12 Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Sept. 30, Dec. 31,
2005 2004(2) 2005 2004(2)
Operating revenues
Mainline passenger $1,123 $1,132 $3,738 $4,966
Express passenger 443 338 1,182 1,379
Cargo 24 33 68 132
Other 166 151 469 596
Total operating revenues 1,756 1,654 5,457 7,073
Operating expenses
Aircraft fuel and related taxes 375 282 1,111 991
Salaries and related costs 329 450 1,070 2,169
Express expenses 490 402 1,371 1,572
Aircraft rent 98 100 293 399
Other rent and landing fees 87 99 280 396
Selling expenses 67 75 257 360
Aircraft maintenance 81 79 252 299
Depreciation and amortization 37 70 153 220
Special charges, net 15 -- -- --
Other 248 225 812 1,015
Total operating expenses 1,827 1,782 5,599 7,421
Operating loss (71) (128) (142) (348)
Nonoperating income (expenses)
Interest income 11 1 15 12
Interest expense, net (65) (71) (222) (236)
Reorganization items, net -- (20) 636 (32)
Other, net 5 (2) (9) 19
Total nonoperating income
(expenses), net (49) (92) 420 (237)
Income (loss) before income taxes (120) (220) 278 (585)
Income tax benefit -- (2) (2) (7)
Net income (loss) $(120) $(218) $280 $(578)
(1) Successor Company refers to US Airways, Inc. on and after
September 27, 2005, after giving effect to fresh-start reporting.
Predecessor Company refers to US Airways, Inc. prior to
September 27, 2005. As a result of the application of fresh-start
reporting, the Successor Company's financial statements are not
comparable with the Predecessor Company's financial statements.
(2) Certain prior year amounts have been reclassified to conform with
the 2005 presentation. Among these reclassifications, expenses
associated with US Airways' MidAtlantic division, US Airways Group's
wholly owned regional airlines and affiliate regional airlines
operating as US Airways Express have been reclassified as "Express
expenses."
US Airways, Inc.
Operating Statistics
3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Percent Dec. 31, Dec. 31, Percent
2005 2004 Change 2005 2004 Change
Mainline:
Revenue passenger
miles (in
millions) 8,266 9,515 (13.1) 38,895 39,970 (2.7)
Available seat
miles (ASM)
(in millions) 11,290 13,005 (13.2) 51,518 53,229 (3.2)
Passenger load
factor (percent) 73.2 73.2 --pt 75.5 75.1 0.4pts
Yield (cents) 13.59 11.91 14.1 12.50 12.43 0.6
Passenger revenue
per ASM (cents) 9.95 8.72 14.1 9.44 9.33 1.2
Passenger
enplanements
(in thousands) 8,513 10,152 (16.1) 39,977 41,518 (3.7)
Aircraft (end of
period) 232 281 (17.4) 232 281 (17.4)
Block hours 199,928 238,652 (16.2) 928,362 960,678 (3.4)
Average stage
length (miles) 792 772 2.6 793 792 0.1
Average passenger
journey (miles) 971 937 3.6 973 963 1.0
Fuel consumption
(gallons in
millions) 178.7 215.6 (17.1) 841.9 883.9 (4.8)
Average fuel
price (dollars
per gallon) with
related taxes 2.10 1.31 60.3 1.77 1.12 58.0
Average number of
full-time
equivalent
employees 19,669 26,106 (24.7) 21,486 26,670 (19.4)
Operating cost
per ASM (cents) 11.83 10.62 11.4 10.80 10.99 (1.7)
Operating cost per
ASM excluding
special items
(cents) 11.70 10.62 10.2 10.77 10.99 (2.0)
Operating cost per
ASM excluding
special items and
fuel (cents) 8.38 8.45 (0.8) 7.89 9.13 (13.6)
Express
Revenue passenger
miles
(in millions) 1,707 1,439 18.6 6,640 5,123 29.6
Available seat
miles
(in millions) 2,687 2,233 20.3 10,369 8,133 27.5
Passenger load
factor (percent) 63.5 64.4 (0.9)pts 64.0 63.0 1.0pt
Passenger revenue
per ASM (cents) 16.49 15.13 9.0 15.67 16.95 (7.6)
Passenger
enplanements
(in thousands) 4,448 3,949 12.6 17,520 14,445 21.3
Operating cost per
ASM (cents) 18.25 17.99 1.4 17.95 19.33 (7.1)
TOTAL -- Mainline
& Express
Revenue passenger
miles (in
millions) 9,972 10,953 (9.0) 45,535 45,093 1.0
Available seat
miles (in
millions) 13,977 15,238 (8.3) 61,887 61,362 0.9
Passenger load
factor (percent) 71.3 71.9 (0.6)pts 73.6 73.5 0.1pt
Total revenue per
ASM (cents) 12.56 10.86 15.7 11.65 11.53 1.0
Operating cost
per ASM (cents) 13.07 11.70 11.7 12.00 12.09 (0.7)
US Airways Group, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
December 31, December 31,
2005 2004
Assets
Current assets
Cash equivalents and short-term
investments $1,578 $276
Restricted cash 8 41
Other current assets, net 973 308
Total current assets 2,559 625
Property and equipment, net 2,064 656
Other assets
Restricted cash 792 72
Goodwill 732 --
Intangibles, net 583 --
Other assets 234 122
Total assets $6,964 $1,475
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term
debt $211 $155
Other liabilities 2,448 510
Total current liabilities 2,659 665
Long-term debt, less current
maturities 2,749 640
Deferred credits and other
noncurrent liabilities 1,136 134
Stockholders' equity 420 36
Total liabilities and
stockholders' equity $6,964 $1,475
Source: prnewswire
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