US Airways reports earnings
ARLINGTON, Va. (AP) – Bankrupt US Airways lost $232 million in July through September, more than twice as much as a year ago, but was able to maintain its cash reserves at a higher level than forecast, the airline reported Thursday. The airline’s cash reserves are particularly crucial as it seeks to stay afloat while under bankruptcy protection. Earlier this month, the airline imposed 21 percent pay cuts on all its union workers after a bankruptcy judge likened the company’s status to a “ticking fiscal time bomb.”
US Airways Group Inc., the parent company of US Airways, reported restricted cash of $733 million as of Sept. 30. In a bankruptcy filing last month, the company had projected a cash level of $687 million for Oct. 1.
The airline has said it believes the temporary pay cuts give it sufficient breathing room in the coming months to negotiate permanent cost cuts from all its unions and implement changes that would transform the airline into a low-cost carrier in the mold of JetBlue or America West.
But increasing fuel costs have disrupted the company’s financial projections, and major aircraft lease payments due in January and February will take a big chunk of the company’s cash. Including the cash collateral, the airline’s cash level is $1.49 billion as of Sept. 30.
Three months prior to that, its cash position was $1.73 billion, meaning the company burned through $240 million in cash in the last three months.
The news came the same day that the chief executive of Delta Air Lines Inc. said a tentative pact with its pilots for $1 billion in concessions was encouraging, but might not keep the cash-strapped company out of bankruptcy. Delta shares were up 66 cents, or 13 percent, at $5.60 in midday trading Thursday on the New York Stock Exchange.
US Airways chief executive Bruce Lakefield said Thursday he is “confident that we are charting a new course with a well-crafted plan, that if fully implemented, can return US Airways to profitability.”
So far, the airline has negotiated new contracts with its 3,000 pilots and its smaller Transport Workers Union that collectively save the airline more than $300 million a year. The airline is still seeking close to $650 million in savings from unions representing machinists, flight attendants and passenger service employees. The airline is negotiating with all three unions.
The quarterly loss of $232 million, or $4.22 a share, compares to a loss of $90 million, or $1.69 a share, in the year-ago quarter. Two analysts surveyed by Thomson First call predicted an average loss of $2.51 per share.
Quarterly revenue increased 2 percent, to $1.80 billion from $1.77 billion.
High fuel costs hurt US Airways, as they have all airlines. The cost of fuel per gallon rose 29 percent from the year-ago quarter to $1.12 per gallon. The airline saved 16.4 cents per gallon in the quarter by hedging it purchases, or locking in lower prices before they jumped higher. But the airline has said it has no hedges in place for the upcoming quarter.
For the year, the company has lost $375 million, or $6.88 per share, on revenue of $5.46 billion. In the first nine months of 2003, it reported a profit of $1.56 billion, or $22.59 per share, on revenue of $5.08 billion. The comparison is skewed, though, because of a one-time credit of $1.9 billion the airline received in March 2003 in association with its emergence from bankruptcy.
AP-ES-10-28-04 1257EDT