US Airways Net Profit Up 1.5% Despite Winter Slowdown
US Airways Group said its first-quarter net profit rose about 1.5%, despite severe winter weather, as the airline flew fuller planes and charged higher ticket prices.
US Airways, the No. 7 U.S. airline, joins a list of airlines, including AMR's
US Air's shares rose after the earnings statement.
"They're not quite as seasonal as other airlines because of their Phoenix hub," Ray Neidl, an airline analyst at Calyon Securities said, referring to a predictable winter slowdown for the industry. "The results are good."
The airline, formed in 2005 from the merger of America West and US Airways, said first-quarter profit totaled $66 million, or 70 cents a share, compared with a profit of $65 million million, or 76 cents a share, a year earlier. US Airways' earnings per share fell because the company used almost 10,000 more shares in its computation in 2007 than it did in 2006.
Excluding special items amounting to $32 million, the airline reported a profit of $34 million, or 37 cents a share. On that basis, Wall Street analysts had expected US Airways to earn 13 cents a share.
The special items included a $90 million, noncash credit related to a change in the value of the carrier's fuel hedge contracts, $39 million of merger-related transition expenses and an $18 million write-off of debt issuance costs.
US Air paid $550 million for fuel in the first quarter, down from $555 million a year earlier, but Chief Executive Doug Parker warned in a statement that a recent spike in fuel prices weakens the airline's outlook.
"Our current estimate for 2007 fuel price results in an additional $300 million of expense versus our 2007 operating budget," Parker said. "Despite this significant cost increase, we continue to project a profitable second quarter and full-year 2007."
US Airways reported revenue of $2.73 billion, an increase of 3.8% over the comparable period in 2006. The airline said its load factor in the first quarter rose to 77.7% from 76.6% a year ago. Yields, which represent average fares, rose 1.9%.
US Airways ended the quarter with $3.3 billion in total cash and investments, of which $2.5 billion was unrestricted.
The airline was battered along with its rivals in the first quarter by severe weather that caused thousands of cancellations. It also suffered a glitch in its self-service reservation system in March that forced customers to wait in line for up to three hours.
US Airways said it plans to put 1,000 workers in airports this summer to help passengers get on flights and will install 600 new self-service check-in machines.
The airline industry is recovering from a years-long slump that tipped several major carriers, including the former US Airways, into bankruptcy. The 2005 merger saved US Airways from liquidation. The merged carrier is still working to combine all of its operations and work forces.
Last year, US Airways made a hostile bid for bankrupt Delta Air Lines
In a television interview, Parker declined to comment on the status of the airline's order for Airbus' new wide-body A350 plane, in the face of industry talk that it may switch to Boeing Co.'s
"We're talking to both Boeing and Airbus about replacement aircraft for both narrow-body and wide-body," Parker said in an interview on CNBC.