US Airways Reports Second Quarter Profit

TEMPE, Ariz.—(BUSINESS WIRE)— US Airways Group, Inc. (NYSE:LCC – News) today reported its second quarter 2011 financial results. The Company reported a net profit excluding special items for the second quarter 2011 of $106 million, or $0.56 per diluted share. This compares to the second quarter 2010 net profit excluding special items of $265 million, or $1.34 per diluted share. On a GAAP basis, the Company reported a net profit for the second quarter 2011 of $92 million, or $0.49 per diluted share. This compares to the second quarter 2010 net profit of $279 million, or $1.41 per diluted share.

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 pleased to report a profit for the second quarter 2011 – particularly in spite of a 47 percent year-over-year increase in fuel price. Overall demand for our services remained strong during the quarter with revenues up more than ten percent, while our mainline unit cost excluding special items, fuel and profit sharing increased only one percent.

“Looking forward, our team is doing an excellent job of managing through a challenging environment and we believe their efforts combined with continued capacity discipline, revenue management and cost discipline have us well positioned for the future.”

Revenue and Cost Comparisons

A strong demand environment led to improved revenue performance. Total revenues in the second quarter were approximately $3.5 billion, up 10.5 percent versus the second quarter 2010 on a 3.3 percent increase in total available seat miles (ASMs). Total revenue per available seat mile was 15.36 cents, up 6.9 percent versus the same period last year driven primarily by a 6.5 percent increase in passenger yields.

Total operating expenses in the second quarter were $3.3 billion, up 18.8 percent over the same period last year due primarily to a $424 million increase in consolidated fuel expense. Mainline CASM was 13.15 cents, up 14.6 percent. Excluding special items, fuel and profit sharing, mainline CASM was 8.16 cents, up only 1.0 percent versus the same period last year. Express CASM excluding special items and fuel was 14.21 cents, up 5.4 percent on a 1.6 percent increase in ASMs, largely due to our PSA CRJ-200 fleet coming off their maintenance honeymoon.

Liquidity

As of June 30, 2011, the Company had approximately $2.6 billion in total cash and investments, of which $388 million was restricted.

During the second quarter, the Company completed an offering of 2011-1 Class A, B and C enhanced equipment trust certificates (EETCs) in the aggregate face amount of approximately $471 million. The net proceeds from the offering were used to refinance five owned Airbus aircraft, to finance four Airbus aircraft scheduled to be delivered in September 2011 and October 2011, and for general corporate purposes.

In addition, on June 30, the Company announced an additional offering of EETCs in the aggregate face amount of approximately $53 million. This offering was an issuance of Class C certificates under the Company’s Series 2010-1 series of EETCs issued in December 2010. The net proceeds from the offering will be used for general corporate purposes and will be reflected in the Company’s third quarter cash and investments balance.

As a result of the above mentioned EETC transactions and other recently completed aircraft financings, the Company has secured market based financing commitments for all of its aircraft deliveries through June 2012.

US Airways’ Chief Financial Officer, Derek Kerr stated, “We are very pleased with the results of our recent EETC financings. These transactions allowed us to efficiently finance our remaining 2011 aircraft deliveries and increase liquidity by approximately $137 million through the two separate issuances of Class C certificates. The completion of these transactions, which have not been available to any airline since 2007, indicates an improving capital markets environment for our Company and the industry.”

Special Items

The Company recognized approximately $14 million of net special items in the second quarter. These special items include $6 million of operating charges primarily related to legal costs incurred in connection with our Delta slot transaction. In addition, included within nonoperating expense was $8 million primarily related to refinancings completed in the second quarter, which includes debt prepayment penalties and non-cash write-offs of certain debt issuance costs.

Notable Accomplishments

Achieved a number one ranking in the annual Airline Quality Rating (AQR) report, which is an industry benchmark that measures airline reliability and service. For the fifth consecutive year, US Airways improved its standing in the AQR and earned its first number one ranking among the ‘Big Five’ hub-and-spoke network carriers for its 2010 performance.

Announced the Company’s flight dispatchers, represented by the Transport Workers Union (TWU), voted to ratify a four-year collective bargaining agreement, which represents the second contract for the airline’s 164 dispatchers since the US Airways-America West Airlines merger in 2005.

Announced the addition of First Class service to 110 US Airways Express regional jets, encompassing Embraer 170 and 175 and Canadair Regional Jet 700 and 900 aircraft. The initial introduction of the First Class product for the Embraer E175 fleet will begin in October 2011 with the three remaining RJ fleets to be completed by January 2012.

Announced a new agreement with Delta Air Lines to transfer takeoff and landing rights at New York’s LaGuardia and Washington D.C.’s Reagan National airports, subject to receipt of regulatory and other approvals. The agreement revises a 2009 transaction agreed between Delta and US Airways, which was approved by the Department of Transportation but under terms not acceptable to the carriers. The new agreement enables Delta and US Airways to expand their services and increase competition.

Launched new daily, seasonal summer service between Charlotte Douglas International Airport and Madrid, Spain and Dublin, Ireland, and new daily year-round service from Philadelphia International Airport to Quebec City, Canada.