-----------------------------------------
The new US Airways formed from the merger of America West Airlines and US Airways last year, on Tuesday said first-quarter results swung to a profit, benefiting from fare increases and capacity reduction throughout the industry and its shares rose 5 percent.
The airline also said that it expected to be profitable for the full 2006 year, helped by cost savings from the merger.
Excluding special items, the merged US Air reported a profit of $5 million, or 5 cents per share in the most recent quarter, reversing a loss of $16 million, or $1.09 per share, a year earlier at the stand-alone America West.
On that basis, Wall Street analysts had a consensus forecast for a loss of 15 cents per share, according to Reuters Estimates.
"There is a strong macro trend in RASM (revenue per available seat mile) and yield increases for the industry as domestic capacity is being cut back," said Calyon Securities analyst Ray Neidl in a research note.
"However, the old America West management that is now running the combined companies is doing a commendable job in controlling costs but, even more importantly, raising yields in the old US Airways system," he said.
Calyon raised its rating on US Air to "buy" from "add" with a target price of $60.
Net income for the combined airline was $65 million, or 76 cents per share, compared with a loss of $174 million, or $6.58 per share, a year ago, reflecting an independent America West's struggles with overcapacity and price competition.
"Looking forward, we anticipate a very strong spring and summer and now expect to be profitable for the full year 2006, even after accounting for merger related expenses and with continued high fuel costs," Chief Executive Doug Parker said in a statement.
Before the effect of an accounting change, the combined airline had profit of 75 cents per share in the 2006 first quarter, compared with year-ago profit of $1.29 per share at a stand-alone America West.
The special items in the most recent quarter include a $90 million gain associated with the forgiveness by Airbus of a company loan and a $26 million unrealized gain related to the airline's fuel hedges. The carrier said the gains were offset by $46 million in merger-related expenses. There was also $11 million associated with the pay-down of debt.
US Air reported operating revenue of $2.65 billion, up from $733 million a year earlier. At the former America West, revenue per available seat mile (RASM) rose 16.2 percent to 10.27 cents. At the former US Air, RASM rose 27.7 percent to 13.34 cents.
The company said fuel prices in the first quarter were $1.95 per gallon, up 37.3 percent over the same quarter in 2005 at the former America West.
The carrier ended the quarter with an unrestricted cash balance of $1.6 billion.
.jpg)
Release #06.AAA-AWA
May 9, 2006
Pilots Respond to US Airways’ First Quarter Earnings Report
Management Announces Gains, Pilots Expect Recognition of Sacrifices at the Bargaining Table
PHOENIX -- As US Airways [NYSE: LCC] management today announced a $5 million profit for the first quarter with expectations to continue profitability looking forward, the pilots of America West and US Airways are demanding that management fully recognize the pilots and other front-line employees who have made substantial sacrifices to ensure the viability of the newly merged airline.
The America West and US Airways pilots, who are represented by the Air Line Pilots Association, Int’l (ALPA), together entered into negotiations with management for a single collective bargaining agreement in November 2005. Such an agreement is a significant step toward enabling US Airways to achieve millions of dollars in synergies created by the merger of the two airlines. Negotiations are currently ongoing, and ALPA has informed management that the pilots will only ratify a single contract that ensures the pilots’ investment in their airline results in appropriate returns.
“For years, the America West and US Airways pilots have sacrificed for our respective airlines to succeed in a competitive marketplace,” said Captain JR Baker, chairman of the America West Master Executive Council (MEC). “As our fortunes begin to turn for the better, and the synergies of this merger are realized, we will not be wasting time in negotiations on management’s unrealistic efforts to impose concessionary work rules while management enriches themselves at the expense of the very employees who are on the front lines every day working to make the new US Airways a success.”
“We’re pleased with US Airways’ earnings report because the pilots played a major part in the company being able to move forward. However, just as US Airways’ stockholders and executives are reaping the rewards of the new US Airways, the pilots of this airline fully expect to receive commensurate returns,” said Captain Jack Stephan, chairman of the US Airways MEC. “We invested billions of dollars in US Airways to provide it with the resources that it needed to survive and prosper. As we negotiate to achieve a fair single contract, we expect management to recognize and reward our pilots for their important role in US Airways’ turnaround.”
Demonstrating their resolve for a single agreement that recognizes their sacrifices, America West and US Airways pilots will formally attend a Town Hall meeting today at corporate headquarters in Tempe, Ariz. Additionally, the pilots will formally attend the first shareholders meeting of the new US Airways in Charlotte, N.C., on May 17 as a sign of their unity and resolve towards supporting joint negotiations.
Before the merger was completed, the pilots negotiated and implemented a Transition Agreement to provide key building blocks for the negotiation of a single collective bargaining agreement, an orderly seniority integration process, and integration of the two separate airline operations. Until these three requirements are met, the new US Airways cannot fully capitalize upon the synergies it promised investors.
If joint negotiations do not proceed constructively toward a single agreement, the America West pilot group may enter into separate negotiations with US Airways in June 2006, under the Railway Labor Act. Such negotiations would result in a traditional collective bargaining process between US Airways management and the America West pilot group.
Founded in 1931, ALPA represents 62,000 pilots at 39 airlines in the U.S. and Canada. Visit the ALPA website at http://www.alpa.org.
# # #
America West contact: Lydia Jakub
US Airways contact: Jack Stephan
Air Line Pilots Assoc., Intl.
Air Line Pilots Assoc., Intl.
America West Pilots Master Executive Council
US Airways Pilots Master Executive Council
(480) 586-5873; (602) 306-1208
Posted by: Chad McJannett | May 13, 2006 2:58 PM | Permalink to Comment