American Airlines Group, Inc.

US Airways Reports Record Second Quarter Profit

July 24, 2013
Record pretax profit of $409 million excluding special items
Highlights of US Airways Group, Inc.'s (the Company) second quarter 2013 results:
-- Second quarter pretax profit excluding net special items was a record $409 million - the highest for any quarter in Company history.
-- The Company has made significant progress with its merger integration planning efforts with American Airlines.The merger remains on track and the Company continues to expect it to close in the third quarter.

 

TEMPE, Ariz., July 24, 2013 /PRNewswire/ -- US Airways Group, Inc. (NYSE: LCC) today reported its second quarter 2013 financial results. For the second quarter 2013, pretax profit excluding net special items was $409 million, the highest in Company history. Net profit excluding net special items was a record $324 million, or $1.58 per diluted share. Net profit excluding net special items for the second quarter 2012 was $321 million, or $1.61 per diluted share. The Company's 2013 second quarter net profit excluding net special items was negatively impacted by a non-cash provision for income tax of $85 million. There was no provision for income tax recorded in 2012.

(Logo: http://photos.prnewswire.com/prnh/20120103/LA28814LOGO)

On a GAAP basis, the Company reported a net profit of $287 million for its second quarter 2013, or $1.40 per diluted share. This compares to a net profit of $306 million, or $1.54 per diluted share, for the same period in 2012. The Company's 2013 second quarter net profit was negatively impacted by a non-cash provision for income tax of $67 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.

"These record financial results are thanks to the 32,000 team members of US Airways who delivered record results on multiple fronts," said US Airways Chairman and CEO Doug Parker. "This performance provides excellent momentum as we transition into the new American Airlines. The teams are working very well together and we continue to expect to close the merger in the third quarter."

 

Revenue and Cost Comparisons

Total revenues in the second quarter were a record $3.9 billion, up 2.9 percent versus the second quarter 2012 on a 3.4 percent increase in total available seat miles (ASMs). Total revenue per ASM was 16.22 cents, down 0.5 percent versus the same period last year driven by a 2.8 percent decrease in passenger yield, offset by a record quarterly load factor of 85.1 percent.

Total operating expenses in the second quarter were $3.4 billion, up 1.0 percent over the same period last year. Mainline cost per available seat mile (CASM) was 12.88 cents, down 2.0 percent on a 4.2 percent increase in mainline ASMs. Excluding special items, fuel and profit sharing, mainline CASM was 8.21 cents, down 0.4 percent versus the same period last year. Express CASM excluding special items and fuel was 14.34 cents, up 1.1 percent on a 0.3 percent decrease in ASMs.

Liquidity

 

As of June 30, 2013, the Company had a record $4.0 billion in total cash and investments, of which $350 million was restricted. This is up approximately $1.1 billion from the Company's first quarter 2013 total cash and investments balance of $2.9 billion, of which $352 million was restricted.

During the second quarter, the Company raised approximately $870 million in net incremental cash through a series of financing transactions. These transactions included the refinancing of the Company's term loan (resulting in approximately $270 million in incremental cash); the issuance of high yield bonds in an aggregate principal amount of $500 million; and a $100 million C-tranche to its 2012-2 EETC.

"We are extremely pleased with the results of our recent financing transactions," said US Airways' Chief Financial Officer Derek Kerr. "Our record financial results combined with our pending merger with American have enabled the Company to refinance its term loan and secure incremental liquidity at very attractive rates."

 

Special Items

The Company recognized approximately $55 million of net special items before taxes in the second quarter. Operating special items totaled $24 million and were primarily related to merger costs. The Company also recognized approximately $31 million in nonoperating special items primarily related to debt extinguishment charges due to non-cash write offs of debt discount and debt issuance costs in connection with conversions of the Company's 7.25% convertible senior notes and repayment of the Citicorp North America term loan. The net tax effect of these special items was approximately $18 million.

 

Merger Update

 

The Company and its representatives continue to work closely with their counterparts at American in merger integration planning. The Company continues to expect the transaction to close in the third quarter. Recent accomplishments include:

  • June 10: US Airways and American announced the new Board of Directors and the senior leadership team for the new American Airlines Group Inc.
  • June 10: The Securities Exchange Commission (SEC) Form S-4 Registration Statement was declared effective by the SEC.
  • June 19: US Airways' Chairman and CEO Doug Parker and American Airlines' Senior Vice President, General Counsel & Chief Compliance Officer Gary Kennedy, jointly testified before the Senate Subcommittee on Aviation, Operations, Safety and Security about the benefits of the new American Airlines to customers, employees, financial stakeholders and communities.
  • July 12: US Airways' shareholders approved the proposed merger with 99.8 percent in favor and 0.2 percent against.
  • To date, leadership teams have been announced for operations, finance, revenue management, marketing, human resources, corporate communications, and legal and labor relations.

Notable Accomplishments

 

  • The Company completed installation of Gogo® Wi-Fi in-flight Internet service on its fleet of 270 Airbus A319, A320, A321 and Embraer 190 aircraft along with 58 Embraer 170 and 175 aircraft operated by Republic Airlines as US Airways Express. With the completion of installation, 90 percent of US Airways' domestic flights now offer customers in-flight wireless access.
  • After a four-year hiatus, the Company resumed service to Shannon, Ireland with daily, non-stop, summer service from its international gateway at Philadelphia.
  • US Airways launched year-round, daily non-stop service to Sao Paulo, Brazil from its largest hub at Charlotte, N.C. The new flight is US Airways' second destination in South America and complements the airline's existing non-stop service to Rio de Janeiro from Charlotte.
  • The US Airways Education Foundation awarded a record $455,000 in college scholarships to 130 children of employees and retirees. Since 1992, the US Airways Education Foundation has awarded nearly $4.6 million in scholarships to dependents of US Airways employees as well as grants to nonprofit organizations that support children's educational programs. The Foundation is funded entirely by fundraising events and donations.
  • US Airways received FAA certification on its wide-body Airbus A330 aircraft for SafeRoute®, a set of four flight deck applications that will provide enhanced operational safety and efficiency in all phases of flight as part of the FAA'sNextGen implementation program. US Airways is the first airline to receive certification for the combination of all four of these applications.
  • US Airways and airlines serving Philadelphia International Airport signed a new two year lease extension with the City of Philadelphia that allows for $734 million in new capital investments at the airport. Partnering with the City on these projects is critical to creating a better customer experience at US Airways' largest international gateway and also to the airport's long-term ability to compete with other hubs across the country.
  • For the second year in a row, US Airways was named "Best of the Best Top Veteran-Friendly Companies" by U.S. Veterans Magazineand a "Best for Vets" employer for the third year in a row by Military Times Edge Magazine.

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 website through Aug. 24.

2013 Investor Guidance

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.

 

About US Airways

US Airways, along with US Airways Shuttle and US Airways Express, operates more than 3,100 flights per day and serves 198 communities in the U.S., Canada, Mexico, Europe, the Middle East, the Caribbean, 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)

 

Additional Information and Where To Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.  AMR Corporation ("AMR") has filed with the Securities and Exchange Commission ("SEC") a registration statement on Form S-4, which includes a proxy statement of US Airways Group, Inc. ("US Airways") that also constitutes a prospectus of AMR, and US Airways has filed with the SEC its definitive proxy statement on Schedule 14A. AMR and US Airways have mailed the proxy statement/prospectus to US Airways security holders. Investors and security holders of US Airways are urged to read the proxy statement/prospectus and other relevant documents filed with the SEC  carefully and in their entirety because they contain important information about the proposed transaction.  Investors and security holders may obtain free copies of the proxy statement/prospectus and other documents containing important information about AMR and US Airways through the website maintained by the SEC at http://www.sec.gov.  Copies of the documents filed with the SEC by US Airways can be obtained free of charge on US Airways' website at www.usairways.com or by directing a written request to US Airways Group, Inc., 111 West Rio Salado Parkway, Tempe, Arizona 85281, Attention: Vice President, Legal Affairs.  Copies of the documents filed with the SEC by AMR can be obtained free of charge on AMR's website at www.aa.com or by directing a written request to AMR Corporation, P.O. Box 619616, MD 5675, Dallas/Fort Worth International Airport, Texas 75261-9616, Attention: Investor Relations or by emailing investor.relations@aa.com.

 

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 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)

(Unaudited)

                       
 

3 Months Ended

June 30,

 

Percent

Change

 

6 Months Ended

June 30,

 

Percent

Change

 

2013

 

2012

   

2013

 

2012

 
                       

Operating revenues:

                     

    Mainline passenger

$          2,566

 

$          2,446

 

4.9

 

$          4,763

 

$           4,562

 

4.4

    Express passenger

882

 

916

 

(3.7)

 

1,640

 

1,680

 

(2.4)

    Cargo

36

 

39

 

(7.3)

 

77

 

79

 

(2.1)

    Other

381

 

353

 

7.6

 

765

 

700

 

9.3

    Total operating revenues

3,865

 

3,754

 

2.9

 

7,245

 

7,021

 

3.2

                       

Operating expenses:

                     

    Aircraft fuel and related taxes

872

 

906

 

(3.8)

 

1,733

 

1,766

 

(1.9)

    Salaries and related costs

701

 

674

 

4.2

 

1,338

 

1,279

 

4.6

    Express expenses:

                     

         Fuel

261

 

282

 

(7.3)

 

532

 

558

 

(4.7)

         Other

522

 

521

 

0.1

 

1,046

 

1,047

 

(0.1)

    Aircraft rent

153

 

161

 

(5.2)

 

307

 

323

 

(5.0)

    Aircraft maintenance

177

 

172

 

2.5

 

342

 

336

 

2.1

    Other rent and landing fees

158

 

132

 

19.8

 

301

 

272

 

10.7

    Selling expenses

124

 

126

 

(0.9)

 

237

 

237

 

0.3

    Special items, net

24

 

9

 

 nm 

 

63

 

11

 

 nm 

    Depreciation and amortization

70

 

61

 

13.4

 

136

 

122

 

11.6

    Other

322

 

306

 

5.4

 

626

 

607

 

3.2

    Total operating expenses

3,384

 

3,350

 

1.0

 

6,661

 

6,558

 

1.6

                       

    Operating income

481

 

404

 

18.9

 

584

 

463

 

26.0

                       

Nonoperating income (expense):

                     

    Interest income

1

 

-

 

58.6

 

1

 

1

 

42.3

    Interest expense, net

(90)

 

(85)

 

6.2

 

(174)

 

(167)

 

4.3

    Other, net

(38)

 

(13)

 

 nm 

 

(13)

 

58

 

 nm 

    Total nonoperating expense, net

(127)

 

(98)

 

30.1

 

(186)

 

(108)

 

71.6

                       

Income before income taxes

354

 

306

 

15.4

 

398

 

355

 

12.2

                       

Income tax provision

67

 

-

 

 nm 

 

67

 

-

 

 nm 

                       

    Net income

$             287

 

$             306

 

(6.3)

 

$             331

 

$            355

 

(6.6)

                       
                       

Earnings per common share:

                     

    Basic 

$            1.66

 

$            1.89

     

$            1.97

 

$            2.19

   

    Diluted

$            1.40

 

$            1.54

     

$            1.65

 

$            1.82

   
                       

Shares used for computation (in thousands):

                     

    Basic

173,215

 

162,310

     

168,058

 

162,220

   

    Diluted

207,931

 

203,981

     

207,439

 

202,997

   
                       

Note: Percent change may not recalculate due to rounding.

                   
                       
                       
                       
                             

US Airways Group, Inc.

Operating Statistics

   
                             
     

3 Months Ended

June 30,

     

6 Months Ended

June 30,

     
     

2013

 

2012

 

Change

 

2013

 

2012

 

Change

 
                             

Mainline

                           

Revenue passenger miles (millions)

 

17,374

 

16,403

 

5.9

%

32,260

 

30,704

 

5.1

%

Available seat miles (ASM) (millions)

 

20,192

 

19,387

 

4.2

%

38,154

 

37,105

 

2.8

%

Passenger load factor (percent)

 

86.0

 

84.6

 

1.4

pts

84.6

 

82.7

 

1.9

pts

Yield (cents)

 

14.77

 

14.91

 

(0.9)

%

14.76

 

14.86

 

(0.6)

%

Passenger revenue per ASM (cents)

 

12.71

 

12.62

 

0.7

%

12.48

 

12.30

 

1.5

%

                             

Passenger enplanements (thousands)

 

14,728

 

13,902

 

5.9

%

28,238

 

27,188

 

3.9

%

Departures (thousands)

 

117

 

115

 

2.2

%

229

 

229

 

(0.1)

%

Aircraft at end of period

 

346

 

339

 

2.1

%

346

 

339

 

2.1

%

                             

Block hours (thousands)

 

324

 

313

 

3.6

%

624

 

612

 

2.0

%

Average stage length (miles)

 

1,029

 

1,025

 

0.4

%

1,007

 

990

 

1.7

%

Average passenger journey (miles)

 

1,723

 

1,738

 

(0.8)

%

1,674

 

1,674

 

-

%

Fuel consumption (gallons in millions)

 

299

 

286

 

4.4

%

564

 

550

 

2.6

%

Average aircraft fuel price including related taxes (dollars per gallon) 

 

2.92

 

3.17

 

(7.9)

%

3.07

 

3.21

 

(4.4)

%

Full-time equivalent employees at end of period

 

32,210

 

31,467

 

2.4

%

32,210

 

31,467

 

2.4

%

                             

Operating cost per ASM (cents)

 

12.88

 

13.14

 

(2.0)

%

13.32

 

13.35

 

(0.2)

%

Operating cost per ASM excluding special items (cents)

 

12.76

 

13.09

 

(2.5)

%

13.16

 

13.32

 

(1.2)

%

Operating cost per ASM excluding special items and fuel (cents)

 

8.45

 

8.42

 

0.4

%

8.62

 

8.56

 

0.7

%

Operating cost per ASM excluding special items, fuel and profit

                         

sharing (cents)

 

8.21

 

8.25

 

(0.4)

%

8.48

 

8.47

 

0.1

%

                             

Express*

                           

Revenue passenger miles (millions)

 

2,902

 

2,803

 

3.5

%

5,506

 

5,262

 

4.6

%

Available seat miles (millions)

 

3,637

 

3,649

 

(0.3)

%

7,093

 

7,078

 

0.2

%

Passenger load factor (percent)

 

79.8

 

76.8

 

3.0

pts

77.6

 

74.3

 

3.3

pts

Yield (cents)

 

30.39

 

32.68

 

(7.0)

%

29.78

 

31.92

 

(6.7)

%

Passenger revenue per ASM (cents)

 

24.25

 

25.10

 

(3.4)

%

23.12

 

23.73

 

(2.6)

%

                             

Passenger enplanements (thousands)

 

7,383

 

7,304

 

1.1

%

14,033

 

13,840

 

1.4

%

Aircraft at end of period

 

281

 

288

 

(2.4)

%

281

 

288

 

(2.4)

%

Fuel consumption (gallons in millions)

 

88

 

88

 

0.4

%

172

 

172

 

0.1

%

Average aircraft fuel price including related taxes (dollars per gallon) 

 

2.96

 

3.20

 

(7.7)

%

3.09

 

3.25

 

(4.8)

%

                             

Operating cost per ASM (cents)

 

21.52

 

22.01

 

(2.2)

%

22.24

 

22.68

 

(1.9)

%

Operating cost per ASM excluding special items (cents)

 

21.52

 

21.91

 

(1.8)

%

22.22

 

22.63

 

(1.8)

%

Operating cost per ASM excluding special items and fuel (cents)

 

14.34

 

14.19

 

1.1

%

14.72

 

14.74

 

(0.1)

%

                             

Total Mainline & Express

                         

Revenue passenger miles (millions)

 

20,276

 

19,206

 

5.6

%

37,766

 

35,966

 

5.0

%

Available seat miles (millions)

 

23,829

 

23,036

 

3.4

%

45,247

 

44,183

 

2.4

%

Passenger load factor (percent)

 

85.1

 

83.4

 

1.7

pts

83.5

 

81.4

 

2.1

pts

Yield (cents)

 

17.00

 

17.50

 

(2.8)

%

16.95

 

17.36

 

(2.3)

%

Passenger revenue per ASM (cents)

 

14.47

 

14.59

 

(0.9)

%

14.15

 

14.13

 

0.2

%

Total revenue per ASM (cents)

 

16.22

 

16.30

 

(0.5)

%

16.01

 

15.89

 

0.8

%

                             

Passenger enplanements (thousands)

 

22,111

 

21,206

 

4.3

%

42,271

 

41,028

 

3.0

%

Aircraft at end of period

 

627

 

627

 

-

%

627

 

627

 

-

%

Fuel consumption (gallons in millions)

 

387

 

374

 

3.5

%

736

 

722

 

2.0

%

Average aircraft fuel price including related taxes (dollars per gallon) 

 

2.93

 

3.18

 

(7.8)

%

3.07

 

3.22

 

(4.5)

%

                             

Operating cost per ASM (cents)

 

14.20

 

14.54

 

(2.4)

%

14.72

 

14.84

 

(0.8)

%

Operating cost per ASM excluding special items (cents)

 

14.10

 

14.49

 

(2.7)

%

14.58

 

14.81

 

(1.5)

%

Operating cost per ASM excluding special items and fuel (cents)

 

9.35

 

9.33

 

0.2

%

9.57

 

9.55

 

0.3

%

Operating cost per ASM excluding special items, fuel and profit

                         

sharing (cents)

 

9.15

 

9.19

 

(0.4)

%

9.46

 

9.47

 

(0.2)

%

                             
                             

* Express includes US Airways Group's wholly owned regional airline subsidiaries,

                     

Piedmont Airlines and PSA Airlines, as well as operating and financial results from

                     

capacity purchase agreements with Republic Airlines, Mesa Airlines, Air Wisconsin

                     

Airlines, Chautauqua Airlines and SkyWest Airlines.

                         
                             

Note: Amounts may not recalculate due to rounding.

                         
                           
                           
                           

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information 

                       
                       

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 and profit sharing, 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 and express CASM excluding fuel 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. Management uses mainline and express CASM excluding special items, fuel and profit sharing to evaluate the Company's operating performance.

                     
       

3 Months Ended

June 30,

 

6 Months Ended

June 30,

       

2013

 

2012

 

2013

 

2012

Reconciliation of Income Before Income Taxes Excluding 

 

(In millions, except share and per share amounts)

 

(In millions, except share and per share amounts)

Special Items

                   
                     

Income before income taxes as reported

   

$     354

 

$     306

 

$     398

 

$     355

Special items:

                   

   Special items, net (1)

   

24

 

9

 

63

 

11

   Express operating special items, net

   

-

 

3

 

2

 

3

   Nonoperating special items, net (2)

   

31

 

3

 

1

 

(70)

Income before income taxes as adjusted for special items

 

$     409

 

$     321

 

$     464

 

$     299

                     
                     
       

3 Months Ended

June 30,

 

6 Months Ended

June 30,

Reconciliation of Net Income Excluding Special Items

 

2013

 

2012

 

2013

 

2012

                     

Net income as reported

   

$     287

 

$     306

 

$     331

 

$     355

Special items:

                   

   Special items, net (1)

   

24

 

9

 

63

 

11

   Express operating special items, net

   

-

 

3

 

2

 

3

   Nonoperating special items, net (2)

   

31

 

3

 

1

 

(70)

   Net tax effect of special items

   

(18)

 

-

 

(18)

 

-

Net income as adjusted for special items

   

$     324

 

$     321

 

$     379

 

$     299

                     
                     
       

3 Months Ended

June 30,

 

6 Months Ended

June 30,

Reconciliation of Basic and Diluted Earnings Per Share As

 

2013

 

2012

 

2013

 

2012

Adjusted for Special Items

                 
                     

Net income as adjusted for special items

   

$     324

 

$     321

 

$     379

 

$     299

                     

Shares used for computation (in thousands):

               

   Basic

     

173,215

 

162,310

 

168,058

 

162,220

   Diluted

     

207,931

 

203,981

 

207,439

 

202,997

                     

Earnings per share as adjusted for special items:

               

   Basic

     

$    1.87

 

$    1.98

 

$    2.25

 

$    1.85

   Diluted (3)

     

$    1.58

 

$    1.61

 

$    1.87

 

$    1.55

                     
                     
       

3 Months Ended

June 30,

 

6 Months Ended

June 30,

Reconciliation of Operating Income Excluding Special Items

 

2013

 

2012

 

2013

 

2012

                     

Operating income as reported

   

$     481

 

$     404

 

$     584

 

$     463

                     

Special items:

                   

   Special items, net (1)

   

24

 

9

 

63

 

11

   Express operating special items, net

   

-

 

3

 

2

 

3

Operating income as adjusted for special items

 

$     505

 

$     416

 

$     649

 

$     477

                     
                     
                     

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

 
       

3 Months Ended

June 30,

 

6 Months Ended

June 30,

Reconciliation of Operating Cost per ASM Excluding Special

 

2013

 

2012

 

2013

 

2012

Items, Fuel and Profit Sharing - Mainline only

               
                     

Total operating expenses

   

$  3,384

 

$  3,350

 

$  6,661

 

$  6,558

Less express expenses:

                 

   Fuel

     

(261)

 

(282)

 

(532)

 

(558)

   Other

     

(522)

 

(521)

 

(1,046)

 

(1,047)

Total mainline operating expenses

   

2,601

 

2,547

 

5,083

 

4,953

                     

   Special items, net (1)

   

(24)

 

(9)

 

(63)

 

(11)

Mainline operating expenses, excluding special items

 

2,577

 

2,538

 

5,020

 

4,942

                     

   Aircraft fuel and related taxes 

   

(872)

 

(906)

 

(1,733)

 

(1,766)

Mainline operating expenses, excluding special items and fuel 

 

1,705

 

1,632

 

3,287

 

3,176

                     

Profit sharing

     

(47)

 

(33)

 

(53)

 

(33)

Mainline operating expenses, excluding special items, fuel and 

profit sharing

               
 

$  1,658

 

$  1,599

 

$  3,234

 

$  3,143

                     

 (In cents) 

                   

Mainline operating expenses per ASM

   

$  12.88

 

$  13.14

 

$  13.32

 

$  13.35

                     

   Special items, net per ASM (1)

   

(0.12)

 

(0.05)

 

(0.16)

 

(0.03)

Mainline operating expenses per ASM, excluding special items

 

12.76

 

13.09

 

13.16

 

13.32

                     

   Aircraft fuel and related taxes per ASM

   

(4.32)

 

(4.67)

 

(4.54)

 

(4.76)

Mainline operating expenses per ASM, excluding special items

and fuel

               
 

8.45

 

8.42

 

8.62

 

8.56

                     

Profit sharing per ASM

   

(0.23)

 

(0.17)

 

(0.14)

 

(0.09)

Mainline operating expenses per ASM, excluding special items,

fuel and profit sharing

               
 

$    8.21

 

$    8.25

 

$    8.48

 

$    8.47

                     

Note: Amounts may not recalculate due to rounding.

               
       

3 Months Ended

June 30,

 

6 Months Ended

June 30,

Reconciliation of Operating Cost per ASM Excluding Special

 

2013

 

2012

 

2013

 

2012

Items and Fuel - Express only

                 
                     

Total express operating expenses

   

$     783

 

$     803

 

$  1,578

 

$  1,605

                     

   Express operating special items, net

   

-

 

(3)

 

(2)

 

(3)

Express operating expenses, excluding special items

 

783

 

800

 

1,576

 

1,602

                     

   Aircraft fuel and related taxes

   

(261)

 

(282)

 

(532)

 

(558)

Express operating expenses, excluding special items and fuel

 

$     522

 

$     518

 

$  1,044

 

$  1,044

                     

 (In cents) 

                   

Express operating expenses per ASM

   

$  21.52

 

$  22.01

 

$  22.24

 

$  22.68

                     

   Express operating special items, net per ASM

 

-

 

(0.09)

 

(0.02)

 

(0.05)

Express operating expenses per ASM, excluding special items

 

21.52

 

21.91

 

22.22

 

22.63

                     

   Aircraft fuel and related taxes per ASM

   

(7.18)

 

(7.72)

 

(7.50)

 

(7.89)

Express operating expenses per ASM, excluding special items and fuel

 

$  14.34

 

$  14.19

 

$  14.72

 

$  14.74

                     

Note: Amounts may not recalculate due to rounding.

               
                     
                     
                     

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

               
         

3 Months Ended

June 30,

 

6 Months Ended

June 30,

 

Reconciliation of Operating Cost per ASM Excluding Special 

 

2013

 

2012

 

2013

 

2012

 

Items, Fuel and Profit Sharing - Total Mainline and Express

               
                       
 

Total operating expenses

   

$  3,384

 

$  3,350

 

$  6,661

 

$  6,558

                       
 

Special items:

                   
 

   Special items, net (1)

   

(24)

 

(9)

 

(63)

 

(11)

 

   Express operating special items, net

   

-

 

(3)

 

(2)

 

(3)

 

Total operating expenses, excluding special items

 

3,360

 

3,338

 

6,596

 

6,544

                       
 

Fuel:

                   
 

   Aircraft fuel and related taxes - mainline

   

(872)

 

(906)

 

(1,733)

 

(1,766)

 

   Aircraft fuel and related taxes - express

   

(261)

 

(282)

 

(532)

 

(558)

 

Total operating expenses, excluding special items and fuel 

 

2,227

 

2,150

 

4,331

 

4,220

                       
 

Profit sharing

     

(47)

 

(33)

 

(53)

 

(33)

 

Total operating expenses, excluding special items, fuel 

and profit sharing

               
   

$  2,180

 

$  2,117

 

$  4,278

 

$  4,187

                       
 

 (In cents) 

                   
 

Total operating expenses per ASM

   

$  14.20

 

$  14.54

 

$  14.72

 

$  14.84

                       
 

Special items per ASM:

                 
 

   Special items, net (1)

   

(0.10)

 

(0.04)

 

(0.14)

 

(0.03)

 

   Express operating special items, net

   

-

 

(0.01)

 

-

 

(0.01)

 

Total operating expenses per ASM, excluding special items

 

14.10

 

14.49

 

14.58

 

14.81

                       
 

Fuel per ASM:

                   
 

   Aircraft fuel and related taxes - mainline

   

(3.66)

 

(3.93)

 

(3.83)

 

(4.00)

 

   Aircraft fuel and related taxes - express

   

(1.10)

 

(1.22)

 

(1.18)

 

(1.26)

 

Total operating expenses per ASM, excluding special items

               
 

and fuel

     

9.35

 

9.33

 

9.57

 

9.55

                       
 

Profit sharing per ASM

   

(0.20)

 

(0.14)

 

(0.12)

 

(0.07)

 

Total operating expenses per ASM, excluding special items,

fuel and profit sharing

               
   

$    9.15

 

$    9.19

 

$    9.46

 

$    9.47

                       
 

Note: Amounts may not recalculate due to rounding.

               
                       
 

FOOTNOTES:

                   
                       

1)

The 2013 second quarter consisted primarily of merger related costs. The 2013 six month period consisted primarily of merger related costs and charges related to the ratification of the US Airways flight attendant collective bargaining agreement.

The 2012 second quarter and six month periods consisted primarily of merger related and auction rate securities arbitration costs.

                       

2)

The 2013 second quarter consisted of $31 million primarily related to debt extinguishment charges due to non-cash write offs of debt discount and debt issuance costs in connection with conversions of 7.25% convertible senior notes and repayment of the former Citicorp North America term loan. The 2013 six month period consisted of $31 million in charges primarily related to debt extinguishment costs discussed above, offset in part by a $30 million credit in connection with an award received in an arbitration related to previous investments in auction rate securities.
 

The 2012 second quarter consisted of $3 million in debt prepayment penalties and non-cash write offs of certain debt issuance costs related to the refinancing of two Airbus aircraft. The 2012 six month period consisted of a $73 million gain related to the slot transaction with Delta Air Lines, Inc., offset in part by the $3 million in debt prepayment penalties and non-cash write offs of certain debt issuance costs discussed above.

                       

3)

The 2013 second quarter and six month period diluted EPS excludes $4 million and $10 million of interest, net of profit sharing and income tax effects, respectively, related to 7.25% and 7% convertible notes. The 2012 second quarter and six month period diluted EPS excludes $8 million and $15 million of interest, net of profit sharing, respectively, related to 7.25% and 7% convertible notes. 

 
 
 
 

US Airways Group, Inc.

Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)

       
       
 

June 30, 2013

 

December 31, 2012

Assets

     
       

Current assets

     

   Cash, cash equivalents and investments in marketable securities

$                     3,622

 

$                      2,376

   Accounts receivable, net

490

 

298

   Materials and supplies, net

323

 

300

   Prepaid expenses and other

705

 

608

      Total current assets

5,140

 

3,582

       

Property and equipment

     

   Flight equipment

5,852

 

5,188

   Ground property and equipment

1,055

 

1,005

   Less accumulated depreciation and amortization

(1,862)

 

(1,733)

 

5,045

 

4,460

   Equipment purchase deposits

262

 

244

      Total property and equipment

5,307

 

4,704

       

Other assets

     

   Other intangibles, net

527

 

539

   Restricted cash

350

 

336

   Other assets

274

 

235

      Total other assets

1,151

 

1,110

       

      Total assets

$                   11,598

 

$                      9,396

       

Liabilities and Stockholders' Equity

     
       

Current liabilities

     

   Current maturities of debt and capital leases

$                        473

 

$                         417

   Accounts payable

414

 

366

   Air traffic liability

1,535

 

1,054

   Accrued compensation and vacation

269

 

258

   Accrued taxes

248

 

181

   Other accrued expenses

1,028

 

1,027

      Total current liabilities

3,967

 

3,303

       

Noncurrent liabilities and deferred credits

     

   Long-term debt and capital leases, net of current maturities

5,378

 

4,376

   Deferred gains and credits, net

280

 

290

   Employee benefit liabilities and other

719

 

637

      Total noncurrent liabilities and deferred credits

6,377

 

5,303

       

Stockholders' equity

     

   Common stock

2

 

2

   Additional paid-in capital

2,267

 

2,134

   Accumulated other comprehensive loss

(7)

 

(7)

   Accumulated deficit

(1,008)

 

(1,339)

      Total stockholders' equity

1,254

 

790

       

      Total liabilities and stockholders' equity

$                   11,598

 

$                      9,396

SOURCE US Airways Group, Inc.

Dan Cravens, 480-693-5729