Highlights of US Airways Group, Inc.’s (the Company) second quarter 2012 results:
- The Company reported a record second quarter net profit excluding net special charges of $321 million, or $1.61 per diluted share. This is a 203 percent increase versus the Company’s second quarter 2011 net profit excluding net special charges of $106 million, or $0.56 per diluted share.
- On a GAAP basis, the Company reported record net profit for the second quarter 2012 of $306 million, or $1.54 per diluted share. This is 233 percent above the second quarter 2011 net profit of $92 million, or $0.49 per diluted share. It is also the highest quarterly profit in company history.
- The Company accrued $33 million during the quarter for its annual employee profit sharing program. In addition, through May US Airways’ employees earned approximately $10 million in operational incentive payouts related to the Company’s outstanding operational performance.
US Airways Group, Inc. (NYSE: LCC) today reported its second quarter 2012 financial results. For the second quarter 2012, net profit excluding net special charges was a record $321 million, or $1.61 per diluted share versus $106 million, or $0.56 per diluted share in the Company’s second quarter 2011. On a GAAP basis, the Company reported a record net profit of $306 million for its second quarter 2012, or $1.54 per diluted share, compared to a net profit of $92 million, or $0.49 per diluted share, for the same period in 2011.
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 report the highest quarterly profit in our company’s history. Consumer demand for our product remained strong during the second quarter, resulting in record revenue, passenger yields, and unit revenue performance.
“These results speak volumes about the collective efforts of our 32,000 employees, who continue to run an outstanding airline for our customers. Thanks to their hard work, we have set numerous Company records in operating reliability, including our best-ever year-to-date performance in on-time arrivals, baggage handling and completion factor.
“These financial and operating results are not only the best in US Airways’ history but also among the very best in the industry, proving that US Airways is well-positioned for the remainder of 2012 and beyond,” concluded Parker.
Revenue and Cost Comparisons
Strong passenger demand and record passenger yields led to improved revenue performance. Total revenues in the second quarter were a record $3.8 billion, up 7.2 percent versus the second quarter 2011 on a 1.0 percent increase in total available seat miles (ASMs). Total revenue per ASM was a record 16.30 cents, up 6.1 percent versus the same period last year, driven by a 7.4 percent increase in passenger yields.
Total operating expenses in the second quarter were $3.4 billion, up 0.7 percent over the same period last year. Mainline cost per available seat mile (CASM) was 13.14 cents, down 0.1 percent on a 1.4 percent increase in mainline ASMs. Total average fuel price per gallon fell 3.5 percent versus last year, to $3.18 per gallon. Excluding special charges, fuel, and profit sharing mainline CASM was 8.25 cents, up 1.1 percent versus the same period last year. Express CASM excluding special charges and fuel was 14.19 cents, down 0.1 percent on a 1.1 percent decrease in Express ASMs.
Liquidity
As of June 30, 2012, the Company had $2.9 billion in total cash and investments, of which $393 million was restricted. That is up from $2.6 billion, of which $388 million was restricted, on June 30, 2011.
During the second quarter, the Company completed an enhanced equipment trust certificate offering in the aggregate face amount of approximately $623 million. The proceeds were used to refinance two Airbus aircraft owned by US Airways and to finance the Company’s purchase of twelve Airbus aircraft scheduled to be delivered from Sept. 2012 to March 2013 with the remaining balance used for general corporate purposes.
Special Charges
The Company recognized $15 million of net special charges in the second quarter of 2012. This included $9 million of net operating expense primarily related to corporate transaction and auction rate securities arbitration costs and a gain on a vendor settlement and a $3 million charge associated with the ratification of a new fleet and passenger services contract at Piedmont, a wholly-owned Express subsidiary. In addition, the Company recorded $3 million in nonoperating expense related to debt pre-payment penalties and non-cash write-offs of certain debt issuance costs.
Notable Accomplishments
Awards and Recognition
- Was the only airline named one of the top 40 Best for Vets employers for 2012 among 1,000 major corporations surveyed by Military Times Edge. For the second year in a row, the magazine recognized US Airways for its policies and programs to recruit and retain military veterans and to accommodate and support deployments by employees who serve in the National Guard and on reserve duty.
- Shared more than $260,000 with employees in the Company’s “Above and Beyond” program. The program allows US Airways’ most frequent flyers and its employees at the manager level and above to submit coupons recognizing employees for providing excellent customer service in the air and on the ground. Since launching the program in 2006, the airline has received nearly 270,000 A&B coupons and has awarded more than $6 million to more than 8,000 employees.
Marketing and Customer Enhancements
- Began connecting its customers in San Diego, Cincinnati and Des Moines, Iowa with the launch of new daily, nonstop flights to Washington, D.C.’s Reagan National Airport. Business, government and leisure travelers in all three communities have nonstop access to the nation’s capital’s downtown airport and connections to other destinations throughout the East Coast with the new flights.
- Announced its “30 Days for D.C.” campaign, which is the airline’s way of thanking its customers for embracing its new service between Washington’s downtown airport and 22 new communities in the U.S. and Canada. Service to 17 new communities began last spring and on July 11, the airline began service between Reagan National and Augusta, Ga., Minneapolis, Fayetteville, Ark., Montreal, Quebec and Toronto, Ontario. To support the expanded service, US Airways has added 100 new jobs at Reagan National, is adding three new gates on the Center Pier and will open a new US Airways Club, its second in the airport, conveniently located near the new departure gates.
- Launched the PreferredAccess program, which offers customers the option to breeze through the airport and onto the aircraft. Customers checking in online can purchase PreferredAccess and receive priority check-in, security lanes and boarding, where available. The same benefits continue to be complimentary to Preferred members of Dividend Miles, US Airways’ frequent flyer program.
- Started TSA PreCheck(TM) operations at Washington’s Reagan National Airport. Select US Airways frequent flyers and members of U.S. Customs and Border Protection (CBP) Trusted Traveler program are now eligible to participate in the expedited screening initiative. TSA PreCheck(TM) recently launched in the airline’s Charlotte, N.C. hub and will expand to its Philadelphia and Phoenix hubs in the third quarter.
- Completed installation of the Envoy Suite on all wide-body Airbus aircraft. Every fully adjustable seat in US Airways’ trans-Atlantic business class, Envoy, reclines into a comfortable fully flat bed. Also, each seat has direct aisle access and is angled away from the aisle for privacy.
- Resumed seasonal service from Philadelphia to Athens, Greece; Barcelona, Spain, Glasgow, Scotland, and Lisbon, Portugal and Charlotte to Dublin, Ireland and Madrid, Spain. The airline also added an additional daily flight this summer to Frankfurt, Germany from Philadelphia and Charlotte.
Labor Relations
Announced that the Company’s fleet and passenger service employees at Piedmont Airlines, a wholly owned subsidiary of US Airways, voted to ratify a new collective bargaining agreement. The new four-and-a-half year agreement was ratified by Piedmont Airlines’ more than 3,000 employees, who are represented by the Communications Workers of America (CWA).
Corporate Citizenship
- Welcomed a new partner to its “Miles of Hope” program with the addition of the national nonprofit organization Keep America Beautiful. Miles of Hope gives Dividend Miles members the opportunity to donate their unused miles to five nonprofit organizations. Nearly 900 million miles have been donated since the Miles of Hope program began in 1998.
- Awarded a total of $325,000 in grants from the US Airways Community Foundation to four nonprofit organizations for the spring funding period. Grants were provided to nonprofit organizations located in and providing services in the airline’s hub and focus cities of Charlotte, Phoenix, Philadelphia and Washington, D.C.
- Honored, along with firm Urban Engineers, with an Engineering Excellence Award from the American Council of Engineering Companies for the airline’s state-of-the-art ground service equipment maintenance facility at Philadelphia. The building opened in September and is the only LEED (Leadership in Energy and Environmental Design) Silver-certified building at Philadelphia International Airport.
Analyst Conference Call/Webcast Details
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 Web site through August 25.
2012 Investor Guidance
The Company will also update its investor relations guidance on its Web site (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 2012.
