News Column

US Airways Profit Soars as Traffic Rises

Jan. 24, 2013

Ely Portillo, The Charlotte Observer

us airways

US Airways said Wednesday that its 2012 profit increased almost eightfold over the year before, as the carrier deflected speculation about what many analysts believe is now a nearly inevitable merger with American Airlines.

The airline posted a $637 million profit for 2012, as passenger traffic rose and the airline kept a lid on capacity. US Airways' stock also more than doubled in 2012, as investors bet that the company will soon combine with American and pushed shares higher.

Tom Horton, CEO of American parent company AMR Corp., has said a decision on the merger will be made in the coming weeks. US Airways has been pushing for the merger while AMR is in Chapter 11 bankruptcy for more than a year.

US Airways chief executive Doug Parker, long a fierce advocate of airline consolidation, made clear right from the start of a conference call with analysts and reporters Wednesday that the potential merger wasn't up for discussion.

"I know many of you would like to ask about the specifics regarding US Airways and American; however, we continue to operate under a nondisclosure act which precludes us from discussing that," he said.

Parker said the company's financial results leave it positioned for "whatever may lie ahead."

Tempe, Ariz.-based US Airways operates about 90 percent of the daily flights at Charlotte Douglas International Airport, its busiest hub. The company has some 7,100 employees based at Charlotte.

Jamie Baker, an aviation industry analyst for J.P. Morgan, said the company's financial results don't change his analysis of a merger's likelihood. "Where today's results do matter is in the event that AMR is able to thwart (US Airways') merger ambitions," Baker said in a note to clients. He said the results demonstrate that if a merger were to fall through, US Airways is strong enough to prosper on its own, even though it's the smallest of the nation's five big airlines.

Last week, AMR reported a $1.9 billion loss for 2012, mostly due to restructuring costs stemming from its bankruptcy. But excluding those items, the company said it would have lost only $130 million, which would have been $932 million less than the carrier lost in 2011.

In the fourth quarter, US Airways had revenue of just under $3.3 billion and a profit of $37 million, or 22 cents per diluted share. That beat analysts' consensus estimates of 18 cents a share in earnings.

For all of 2012, US Airways' revenue totaled $13.8 billion, up 5.9 percent from the prior year. US Airways' passenger boardings increased 2.5 percent, to 82.5 million, while the airline's planes flew with an average of 82.9 percent of seats filled. That's up 0.6 percentage points from last year.

As a result, US Airways' revenue per available seat mile -- a measure of how much money the airline made for each seat on each flight -- grew 3.9 percent, to a record high of 15.64 cents.

Spikes in jet fuel costs have hurt airlines in the past, pushing them to big losses in 2008 and trimming profits to the barest of margins in 2011. But the average price US Airways paid for jet fuel climbed only 2 percent in 2012, to $3.17 a gallon. The airline's fuel consumption increased less than 1 percent, to 1.45 billion gallons.

US Airways' stock closed up 22 cents, or 1.5 percent, at $15.07 a share on Wednesday.



Source: (c)2013 The Charlotte Observer (Charlotte, N.C.) Distributed by MCT Information Services


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