US Airways Group, Inc. Reports Third Quarter 2008 Results

Business Wire, Oct 23, 2008

Highlights of US Airways Group, Inc.'s (the Company's) third quarter 2008 results:

* Excluding special charges, the Company reported a net loss of $242 million or $2.35 per share. The decline in earnings was driven primarily by higher oil prices. Holding fuel prices constant at third quarter 2007 prices would have resulted in reduced fuel expenses of approximately $538 million.

* The Company's GAAP (Generally Accepted Accounting Principles) third quarter 2008 net loss was $865 million, or $8.45 per share, which included special charges of $623 million.

* As announced separately today, the Company has significantly improved its liquidity position and raised approximately $950 million of financing and near-term liquidity commitments.

* The Company's operational improvement plan continues to produce industry-leading on-time performance results. When measured by the Department of Transportation (DOT) against the ten largest U.S. airlines, the Company ranks number one in on-time performance for the first eight months of 2008.

TEMPE, Ariz. -- US Airways Group, Inc. (NYSE: LCC) today reported a net loss for its third quarter 2008 of $242 million or $2.35 per share which excluded special charges that totaled $623 million. Special charges in the third quarter 2008 included $488 million of unrealized losses resulting from mark-to-market adjustments on fuel hedging instruments. On a GAAP basis, the Company reported a net loss for its third quarter 2008 of $865 million, or $8.45 per share, compared to a net profit of $177 million, or $1.87 per diluted share for the same period last year. 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 Chairman and CEO Doug Parker said, "Our third quarter loss reflects the crippling fuel price environment that US Airways and other airlines faced this summer. Fortunately, oil prices have recently fallen to levels well below those experienced in the third quarter, but at the same time concerns have increased about the impact the global economic crisis may place on demand for air travel.

"While we are concerned about the global economic environment, we are encouraged by the aggressive steps that both US Airways and our industry have taken to adapt to a quickly changing and challenging environment. We, along with the industry, have made significant reductions in capacity for 2009 and beyond. The industry is also moving to a more profitable a la carte pricing model of its product and services with US Airways at the forefront of that change. We expect these new a la carte pricing initiatives to contribute between $400 million and $500 million in revenue during 2009.

"We are particularly pleased with the outstanding operational reliability our team is producing. Through the first eight months of 2008, US Airways ranked number one in on-time performance among the ten largest U.S. airlines as measured by the DOT after ranking tenth on the same measure during 2007. This remarkable turnaround is due to the efforts of all of our employees. We are proud to have awarded nearly $16 million thus far in 2008 through our Triple Play employee incentive program, and we look forward to additional payouts in the months ahead.

"Our actions to improve profitability, as well as our outstanding operational performance, have allowed us to raise approximately $950 million of new financing and near-term liquidity commitments which we announced separately today. This financing package dramatically improves our liquidity position in these uncertain times and places US Airways' total cash position relative to annual revenues among the highest of U.S. airlines.

"In summary, we believe US Airways is very well positioned to manage through turbulent times. We have reduced capacity to better match demand and adjusted our business model to improve profitability. Our team is doing an outstanding job of taking care of our customers and our investors and business partners have displayed confidence in us with $950 million of new financing and near-term liquidity commitments. While it is difficult to make projections in such volatile times, based on what we know today which includes the current price of fuel, we expect 2009 will be a much better year than 2008 for both US Airways and our industry," concluded Parker.

Revenue and Cost Comparisons

Mainline passenger revenue per available seat mile (PRASM) in the third quarter was 11.32 cents, up 4.4 percent over the same period last year. Express PRASM was 19.55 cents, up 1.3 percent over the third quarter 2007. Total mainline and Express PRASM for US Airways Group was 12.71 cents, which was up 4.6 percent over the third quarter 2007 on a 0.4 percent increase in total available seat miles (ASMs).

Mainline cost per available seat mile (CASM) was 16.01 cents, up 44.1 percent versus the same period last year on a decrease in mainline capacity of 1.4 percent versus the third quarter of 2007. Fuel expense was the driver in the Company's increase in unit costs as the average mainline fuel price per gallon (excluding realized gains/losses on fuel hedging instruments) increased 68 percent year-over-year. Excluding fuel, unrealized and realized gains/losses on fuel hedging instruments, and special charges, mainline CASM was 8.08 cents, up 5.3 percent from the same period last year.