US Airways Group, Inc. Reports Second Quarter Profit of $305 Million
TEMPE, Ariz., July 27 /PRNewswire-FirstCall/ — The new US Airways Group, Inc. today reported a second quarter 2006 profit of $305 million or $3.25 per diluted share. This compares to a net loss of $3 million or $0.20 per diluted share for the same period last year. Results for the new US Airways Group’s second quarter 2006 are being compared to America West’s standalone results for second quarter 2005 due to the former US Airways Group and America West Holdings Corporation merger on Sept. 27, 2005. Although the merger was structured so that America West became a wholly owned subsidiary of the new US Airways Group, America West was treated as the acquiring company for accounting purposes under Statement of Financial Accounting Standards No. 141 “Business Combinations.”
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US Airways Group’s second quarter 2006 results include $35 million of merger-related transition expenses, which were offset in part by a $7 million gain from interest income earned on certain prior year federal income tax refunds and an $18 million unrealized gain related to the airline’s fuel hedges. Excluding these special items, the Company reported a second quarter 2006 profit of $315 million or $3.35 per diluted share versus a $4 million profit or $0.21 per diluted share in the second quarter 2005 for standalone America West Holdings. See the accompanying notes in the Financial Tables section of this press release for a reconciliation of Generally Accepted Accounting Principles (GAAP) financial information to non-GAAP financial information.
On a standalone basis, America West reported a net profit of $68 million for the second quarter 2006 as compared to a net loss of $2 million for the same period last year. US Airways reported a net profit of $246 million on a standalone basis for the second quarter 2006 as compared to a net loss of $44 million for the same period last year.
US Airways Group Chairman, President and CEO Doug Parker stated, “We are extremely pleased to report a second quarter profit of this magnitude. This quarterly profit excluding special items is a record for US Airways Group, Inc. and is amongst the highest of its predecessor companies. While other airlines are reporting second quarter profits, no other airline has experienced an improvement as dramatic as US Airways as evidenced by our second quarter 2006 profit margin, which is the highest among the major hub-and-spoke airlines and a remarkable reversal from recent years. The primary driver of this turnaround is the merger of US Airways and America West, which has improved the earnings power and viability of both companies versus their standalone capabilities.
“We are particularly pleased that the quarterly results include a significant accrual of $36 million for employee profit sharing. The 35,000 employees of US Airways are doing an excellent job of taking care of our customers and are the compelling force behind our success.
“Looking forward, we are encouraged by a continuing strong revenue environment and an industry that is keeping capacity in check. We anticipate a profitable third quarter and full year 2006.”
Revenue and Cost Comparisons
The revenue environment continued to gain momentum during the second quarter 2006 and showed considerable improvement over the same period in 2005. For the America West standalone network, total (mainline and express) revenue per available seat mile (RASM) increased 18.6 percent during the second quarter 2006 to 11.16 cents, driven primarily by a 16.4 percent improvement in mainline yields. For the US Airways standalone network, total RASM increased 28.8 percent to 15.23 cents driven by a 16.9 percent improvement in mainline yields and a 4.6 point improvement in mainline load factor as compared to the same period last year.
On a standalone basis, America West’s mainline operating costs per available seat mile (CASM) increased 12.3 percent from 8.95 cents for the second quarter of 2005 to 10.05 cents for the second quarter 2006, largely due to a 25.3 percent increase in the price of fuel in the same period from $1.74 to $2.18 per gallon. US Airways’ standalone mainline CASM for the second quarter 2006 increased 14.3 percent from 10.25 cents for the second quarter 2005 to 11.72 cents also largely due to higher fuel prices, which increased 28.2 percent versus the same period last year. In total, US Airways Group paid $183 million more for fuel in the second quarter 2006 than it would have paid had fuel prices remained at second quarter 2005 levels.
Excluding fuel and special items, America West’s mainline CASM increased 7.4 percent from 6.45 cents for the second quarter 2005 to 6.92 cents for the second quarter 2006 on a 2.3 percent decrease in available seat miles (ASMs). On the US Airways’ standalone network, mainline CASM excluding fuel and special items increased 7.9 percent in the same period to 8.08 cents for the second quarter 2006 on a 12.8 percent decrease in ASMs. The increase in unit costs excluding fuel and special items was due largely to an accrual for the Company’s employee profit sharing plan, which allocates 10 percent of the Company’s pre tax profits excluding special items to its employees at the end of 2006, as well as a $31 million credit associated with US Airways’ post retirement benefits in 2005.
Liquidity
As of June 30, 2006, the Company had $3.2 billion in total cash and investments, of which $2.2 billion was unrestricted.
Summary of Integration Progress
The Company’s integration efforts remain on track. The following list includes a summary of integration progress the Company has achieved during its second quarter 2006.
Operations * Continued to achieve near the top rankings in arrivals as measured by the Department of Transportation (DOT); the new US Airways ranks second among its peer airlines for year-to-date arrivals with 78.9 percent of flights arriving within 14 minutes of their scheduled arrival time. * Improved baggage handling by 50 percent on a year over year basis. * Consolidated operations at all but four airports where both airlines operated prior to the merger. * Remained on track to merge its two operating certificates onto one operating certificate during the second quarter 2007. Finance * Completed a $1.25 billion refinancing, which was used to replace approximately $1.1 billion of outstanding debt at lower interest rates and with an extended amortization period. * Completed the conversion of approximately $112 million in principal amount of America West Holdings Corporation’s 7.5 percent convertible senior notes due in 2009, which lowered the airline’s annual interest expenses by $8.4 million. Marketing * Launched the combined airline’s new Web site, usairways.com. The new site integrates the former americawest.com and increases overall functionality. * Merged the former America West frequent flyer program, FlightFund, into US Airways’ frequent flyer program, Dividend Miles, to create one consolidated program that allows customers to more easily earn and redeem miles across the airline’s network and the Star Alliance. Labor Relations * Reached a final agreement with the Airline Customer Service Employee Association, an alliance between the Communication Workers of America (CWA) and the International Brotherhood of Teamsters (IBT), the two unions that represent the airline’s 7,700 passenger service employees and reservation agents. * Received notification from the International Brotherhood of Teamsters (IBT) and Transport Workers Union (TWU) that both unions had reached an agreement resulting in IBT representation of the combined carrier’s fleet service workers. Culture * Conducted and reported results from the first employee survey for the new US Airways, which included building follow up plans for improving communication and leadership. * Unveiled the third and fourth heritage planes (Piedmont and Allegheny) that will feature throwback liveries of the four major airlines that comprise the new US Airways (Allegheny, America West, Piedmont and PSA). Analyst Conference Call/Webcast Details
US Airways will conduct a live audio Webcast of its earnings call today at 12 p.m. EDT, which will be available to the public on a listen-only basis at http://www.usairways.com/ under the Public/Investor Relations tab. An archive of the call/Webcast will be available in the Public/Investor Relations portion of the Web site through Aug. 27, 2006.
The airline will also update its investor relations guidance on its Web site (http://www.usairways.com/). Information to be updated includes cost per available seat mile (CASM) excluding fuel and transition expenses, fuel prices and hedging positions, other revenues, estimated interest expense/income and merger related transition expense guidance. The investor relations update page also includes the airline’s capacity, fleet plan for 2006 and estimated capital spending for 2006.
About US Airways
US Airways and America West’s recent merger creates the fifth largest domestic airline employing nearly 35,000 aviation professionals. US Airways, US Airways Shuttle and US Airways Express operate approximately 3,800 flights per day and serve more than 230 communities in the U.S., Canada, Europe, the Caribbean and Latin America. US Airways is a member of Star Alliance, which provides connections for our customers to 842 destinations in 152 countries worldwide. This press release and additional information on US Airways can be found at http://www.usairways.com/. (LCCF)
Certain of the statements contained herein should be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,”"will,”"expect,”"intend,”"anticipate,”"believe,”"estimate,”"plan,”"could,”"should,” and “continue” and similar terms used in connection with statements regarding the outlook of US Airways Group, Inc. (the Company), expected fuel costs, the revenue and pricing environment, and expected financial performance. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving America West Holdings and US Airways Group, including future financial and operating results, the combined companies’ plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties that could cause the Company’s actual results and financial position to differ materially from these statements. Such risks and uncertainties include, but are not limited to, the following: the ability of the Company to obtain and maintain any necessary financing for operations and other purposes (including compliance with financial covenants); the ability of the Company to maintain adequate liquidity; the impact of changes in fuel prices; the impact of economic conditions; changes in prevailing interest rates; the ability to attract and retain qualified personnel; the ability of the Company to attract and retain customers; the ability of the Company to obtain and maintain commercially reasonable terms with vendors and service providers; the cyclical nature of the airline industry; competitive practices in the industry, including significant fare restructuring activities by major airlines; labor costs; security-related and insurance costs; weather conditions; government legislation and regulation; relations with unionized employees generally and the impact and outcome of the labor negotiations; the impact of global instability including the potential impact of current and future hostilities, terrorist attacks, infectious disease outbreaks or other global events; the impact of the resolution of remaining claims in US Airways Group’s Chapter 11 proceedings; the ability of the Company to fund and execute its business plan following the Chapter 11 proceedings and the merger; and other risks and uncertainties listed from time to time in the companies’ reports to the SEC. There may be other factors not identified above of which the Company is not currently aware that may affect matters discussed in the forward-looking statements, and may also cause actual results to differ materially from those discussed. The Company assumes no obligation to publicly update any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law. Additional factors that may affect the future results of the Company are set forth in the section entitled “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and in the filings of the Company with the SEC, which are available at http://www.usairways.com/.
US Airways Group, Inc. Condensed Consolidated Statements of Operations (in millions except share and per share amounts) (unaudited) 3 Months 3 Months 6 Months 6 Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2006 2005 2006 2005 Operating revenues Mainline passenger $2,186 $657 $3,996 $1,234 Express passenger 780 129 1,392 233 Cargo 37 8 74 17 Other 188 51 378 96 Total operating revenues 3,191 845 5,840 1,580 Operating expenses Aircraft fuel and related taxes 669 199 1,223 359 Gain on fuel hedging instruments, net: Realized (11) (12) (12) (23) Unrealized (18) 3 (44) (46) Salaries and related costs 542 174 1,045 349 Express expenses Fuel 203 44 375 77 Other 457 92 901 170 Aircraft rent 180 81 365 158 Aircraft maintenance 153 66 291 120 Other rent and landing fees 145 46 285 87 Selling expenses 121 44 228 81 Special items, net 35 — (9) 1 Depreciation and amortization 45 12 90 23 Other 328 83 635 166 Total operating expenses 2,849 832 5,373 1,522 Operating income 342 13 467 58 Nonoperating income (expenses) Interest income 41 2 66 4 Interest expense, net (72) (20) (147) (39) Other, net — 2 (11) 2 Nonoperating expenses, net (31) (16) (92) (33) Income (loss) before income taxes and cumulative effect of change in accounting principle 311 (3) 375 25 Income tax provision 6 — 6 — Income before cumulative effect of change in accounting principle 305 (3) 369 25 Cumulative effect of change in accounting principle — — 1 (202) Net income (loss) $305 $(3) $370 $(177) Income (loss) per share before cumulative effect of change in accounting principle: Basic $3.55 $(0.20) $4.40 $1.70 Diluted $3.25 $(0.20) $4.02 $1.31 Net income (loss) per share: Basic $3.55 $(0.20) $4.41 $(11.89) Diluted $3.25 $(0.20) $4.03 $(7.89) Shares used for computation (in thousands): Basic 85,886 14,863 83,794 14,856 Diluted 94,673 14,863 94,012 21,943 US Airways Group, Inc. Operating Statistics 3 Months 3 Months 6 Months 6 Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2006 2005 2006 2005 Mainline Revenue passenger miles (in millions) 16,148 6,386 30,104 12,057 Available seat miles (ASM) (in millions) 19,635 7,755 37,864 15,057 Passenger load factor (percent) 82.2 82.3 79.5 80.1 Yield (cents) 13.5 10.29 13.27 10.23 Passenger revenue per ASM (cents) 11.13 8.47 10.55 8.20 Passenger enplanements (in thousands) 15,171 5,752 28,763 10,924 Aircraft (end of period) 359 143 359 143 Operating cost per ASM (cents) 11.15 8.97 10.82 8.47 Operating cost per ASM excluding special items (cents) 11.06 8.88 10.96 8.71 Operating cost per ASM excluding special items, aircraft fuel and realized gains on fuel hedging instruments, net (cents) 7.71 6.47 7.76 6.48 Express Revenue passenger miles (in millions) 2,918 875 5,349 1,574 Available seat miles (in millions) 3,770 1,225 7,429 2,206 Passenger load factor (percent) 77.4 71.4 72.0 71.4 Passenger revenue per ASM (cents) 20.69 10.53 18.74 10.56 Operating cost per ASM (cents) 17.51 11.10 17.18 11.20 Operating cost per ASM excluding aircraft fuel (cents) 12.12 7.51 12.13 7.71 TOTAL – Mainline & Express Revenue passenger miles (in millions) 19,066 7,261 35,453 13,631 Available seat miles (in millions) 23,405 8,980 45,293 17,263 Passenger load factor (percent) 81.5 80.9 78.3 79.0 Passenger revenue per ASM (cents) 12.67 8.75 11.90 8.50 Total revenue per ASM (cents) 13.63 9.41 12.89 9.15 Operating cost per ASM (cents) 12.17 9.27 11.86 8.82 *** Express includes US Airways Group’s wholly owned regional airline subsidiaries, Piedmont Airlines and PSA Airlines, US Airways’ MidAtlantic regional jet division as well as operating and financial results from capacity purchases agreements with Mesa Airlines, Chautauqua Airlines, Air Wisconsin Airlines and Republic Airlines. Reconciliation of GAAP Financial Information to Non-GAAP Financial Information and Operating Cost per ASM Excluding Special Items, Aircraft Fuel, Realized Gains on Fuel Hedging Instruments, Net – Mainline only US Airways Group, Inc. (the Company) is providing disclosure of the reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. The Company believes that the non- GAAP financial measures provide investors the ability to measure financial performance excluding special items which is more indicative of the Company’s ongoing performance and is more comparable to measures reported by other major airlines. The Company believes that the presentation of mainline CASM excluding fuel and gains or losses on fuel hedging instruments is useful to investors as both the cost and availability of fuel are subject to many economic and political factors beyond the Company’s control. 3 Months 3 Months 6 Months 6 Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2006 2005 2006 2005 (in millions) Reconciliation of Income before Cumulative Effect of Change in Accounting Principle Excluding Special items for US Airways Group, Inc. Income (loss) before cumulative effect of change in accounting principle as reported $305 $(3) $369 $25 Special items Unrealized (gains) losses on fuel hedging instruments, net (1) (18) 3 (44) (46) Special items, net (2) 35 — (9) 1 Other special charges (3) (7) 4 4 8 Income (loss) before cumulative effect of change in accounting principle, as adjusted for special items $315 $4 $320 $(12) Shares used for computation (in thousands): Basic 85,886 14,863 83,794 14,856 Diluted 94,673 18,750 94,012 14,856 Income (loss) per share before cumulative effect of change in accounting principle, as adjusted for special items Basic $3.66 $0.27 $3.81 $(0.82) Diluted (7) $3.35 $0.21 $3.49 $(0.82) Reconciliation of Income before Cumulative Effect of Change in Accounting Principle Excluding Special items for America West Airlines, Inc. Income before cumulative effect of change in accounting principle as reported $68 $(2) $126 $27 Special items: Unrealized (gains) losses on fuel hedging instruments, net (1) (18) 3 (44) (46) Special items, net (4) 23 — (7) 1 Other special charges (3) (7) 4 4 8 Income (loss) before cumulative effect of change in accounting principle, as adjusted for special items $66 $5 $79 $(10) Reconciliation of Net Income (Loss) Excluding Special items for US Airways, Inc. Net income (loss) as reported $246 $(44) $247 $(303) Special items: Special items, net (5) 12 — (3) — Reorganization items, net (6) — 26 — 28 Net loss, as adjusted for special items $258 $(18) 244 (275) Reconciliation of GAAP Financial Information to Non-GAAP Financial Information and Operating Cost per ASM Excluding Special Items, Aircraft Fuel, Realized Gains on Fuel Hedging Instruments, Net – Mainline only 3 Months 3 Months 6 Months 6 Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2006 2005 2006 2005 Reconciliation of Operating Cost per ASM Excluding Special Items, Fuel, Realized Gains on Fuel Hedging instruments, Net – Mainline only US Airways Group, Inc. (in millions) Total operating expenses $2,849 $832 $5,373 $1,522 Less Express expenses: Fuel (203) (44) (375) (77) Other (457) (92) (901) (170) Total mainline operating expenses 2,189 696 4,097 1,275 Special items Unrealized (gains) losses on fuel hedging instruments, net (1) 18 (3) 44 46 Special items, net (2) (35) — 9 (1) Other special charges (6) — (4) — (8) Mainline operating expenses, excluding special items 2,172 689 4,150 1,312 Aircraft fuel (669) (199) (1,223) (359) Realized gains on fuel hedging instruments, net 11 12 12 23 Mainline operating expenses, excluding special items, aircraft fuel and realized gains on fuel hedging instruments, net $1,514 $502 $2,939 $976 (in cents) Mainline operating expenses per ASM 11.15 8.97 10.82 8.47 Special items per ASM Unrealized (gains) losses on fuel hedging instruments, net (1) 0.09 (0.04) 0.12 0.31 Special items, net (2) (0.18) — 0.02 (0.01) Other special charges (6) — (0.05) — (0.05) Mainline operating expenses per ASM, excluding special items 11.06 8.88 10.96 8.71 Aircraft fuel (3.41) (2.57) (3.23) (2.38) Realized gains on fuel hedging instruments, net 0.06 0.15 0.03 0.15 Mainline operating expenses per ASM, excluding special items, aircraft fuel and realized gains on fuel hedging instruments, net 7.71 6.47 7.76 6.48 Reconciliation of GAAP Financial Information to Non-GAAP Financial Information and Operating Cost per ASM Excluding Special Items, Aircraft Fuel, Realized Gains on Fuel Hedging Instruments, Net – Mainline only 3 Months 3 Months 6 Months 6 Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2006 2005 2006 2005 America West Airlines Inc. (in millions) Total operating expenses $920 $830 $1,698 $1,519 Less Express expenses: Fuel (57) (44) (103) (77) Other (102) (92) (202) (170) Total mainline operating expenses 761 694 1,393 1,272 Special items: Unrealized (gains) losses on fuel hedging instruments, net (1) 18 (3) 44 46 Special items, net (4) (23) — 7 (1) Other special charges (6) — (4) — (8) Mainline operating expenses, excluding special items 756 687 1,444 1,309 Aircraft fuel (242) (199) (447) (359) Realized gains on fuel hedging instruments, net 11 12 12 23 Mainline operating expenses, excluding special items, aircraft fuel and realized gains on fuel hedging instruments, net $525 $500 $1,009 $973 (in cents) Mainline Operating expenses per ASM 10.05 8.95 9.43 8.45 Special items per ASM: Unrealized (gains) losses on fuel hedging instruments, net (1) 0.24 (0.04) 0.30 0.31 Special items, net (4) (0.31) — 0.05 (0.01) Other special charges (6) — (0.05) — (0.05) Mainline operating expenses per ASM, excluding special items 9.98 8.86 9.78 8.69 Aircraft fuel (3.20) (2.57) (3.03) (2.38) Realized gains on fuel hedging instruments, net 0.14 0.15 0.08 0.15 Mainline operating expenses per ASM, excluding special items, aircraft fuel and realized gains on fuel hedging instruments, net 6.92 6.45 6.84 6.46 US Airways, Inc. (in millions) Total operating expenses $1,946 $1,892 $3,706 $3,695 Less: Express expenses (534) (476) (1,033) (896) Total mainline operating expenses 1,412 1,416 2,673 2,799 Special items: Special items, net (5) (12) — 3 — Mainline operating expenses, excluding special items 1,400 1,416 2,676 2,799 Aircraft fuel (426) (381) (776) (703) Mainline operating expenses, excluding special items and aircraft fuel $974 $1,035 $1,900 $2,096 (in cents) Mainline operating expenses per ASM (excluding Express expenses) 11.72 10.25 11.58 10.37 Special items per ASM: Special items, net (5) (0.10) — 0.01 — Mainline operating expenses per ASM, excluding special items 11.62 10.25 11.59 10.37 Aircraft fuel (3.53) (2.76) (3.36) (2.60) Mainline operating expenses per ASM excluding special items and aircraft fuel 8.08 7.49 8.23 7.76 Note: Amounts may not recalculate due to rounding. FOOTNOTES: 1) The 2006 second quarter and the 2006 six-month period include an $18 million and $44 million unrealized gain respectively, and the 2005 second quarter and the 2005 six month period include a $3 million unrealized loss and a $46 million unrealized gain respectively, resulting from mark-to-market accounting for changes in the fair value of AWA’s fuel hedging instruments. 2) The 2006 second quarter period includes $35 million of merger related transition expenses, including $11 million associated with the integration of the AWA FlightFund and US Airways Dividend Miles frequent traveler programs. The 2006 six month period includes a $90 million gain associated with the return of equipment deposits upon forgiveness of a loan, and $81 million of merger related transition expenses. The 2005 six month period includes $1 million of charges related to aircraft removed from service. 3) The 2006 second quarter includes $7 million of interest income earned by AWA on certain prior year Federal income tax refunds. The 2006 six month period includes $6 million of prepayment penalties and $5 million write-off of debt issue costs incurred with the extinguishment of debt in connection with the $1.25 billion debt refinancing in the first quarter of 2006 less $7 million of interest income earned by AWA on certain prior year Federal income tax refunds. 4) The 2006 second quarter period includes $23 million of merger related transition expenses, including $12 million associated with the integration of the AWA FlightFund and US Airways Dividend Miles frequent traveler programs. The 2006 six month period includes $51 million gain associated with the return of equipment deposits upon forgiveness of a loan, and $44 million of merger related transition expenses that occurred during the first quarter of 2006. The 2005 six month period includes $1 million of charges related to aircraft removed from service. 5) The 2006 second quarter includes $12 million of merger related transition expenses, including a $1 million credit associated with the integration of the AWA FlightFund and US Airways Dividend Miles frequent traveler programs. The 2006 six month period includes a $40 million gain associated with the return of equipment deposits upon forgiveness of a loan, and $37 million of merger related transition expenses. 6) During the 2005 second quarter and 2005 six month period US Airways recognized $26 million and $28 million, respectively in reorganization items incurred as a direct result of the Company’s Chapter 11 filing. 7) Computation excludes interest associated with the 7.0% senior convertible notes of $3 million and $5 million for the three and six months ended June 30, 2006, respectively; the 7.5% convertible senior notes of $4 million for the six months ended June 30, 2006. 8) The second quarter of 2005 includes a $4 million loss on the sale and leaseback of one new Airbus A320 aircraft acquired during the period. The 2005 six month period includes a total of a $8 million loss on the sale and leaseback of two new Airbus A320 aircraft acquired during the period. America West Airlines, Inc. Consolidated Statements of Operations (in millions) (unaudited) 3 Months Ended 3 Months Ended Percent June 30, 2006 June 30, 2005 Change Operating revenues Mainline passenger $747 $657 13.7 Express passenger 184 129 42.6 Cargo 7 8 (12.5) Other 43 51 (15.7) Total operating revenues 981 845 16.1 Operating expenses Aircraft fuel and related taxes 242 199 21.6 Gain on fuel hedging instruments, net: Realized (11) (12) (8.3) Unrealized (18) 3 — Salaries and related costs 191 173 10.4 Express expenses Fuel 57 44 29.5 Other 102 92 10.9 Aircraft rent 85 81 4.9 Aircraft maintenance 73 66 10.6 Other rent and landing fees 45 46 (2.2) Selling expenses 42 44 (4.5) Special items, net 23 — — Depreciation and amortization 10 12 (16.7) Other 79 82 (3.7) Total operating expenses 920 830 10.8 Operating income 61 15 306.7 Nonoperating income (expenses) Interest income 20 4 — Interest expense, net (10) (21) (52.4) Other, net 1 — — Nonoperating expenses, net 11 (17) (164.7) Income before income taxes and cumulative effect of change of accounting principle 72 (2) — Income taxes provision 4 — — Income before cumulative effect of change in accounting principle 68 (2) — Cumulative effect of change in accounting principle — — — Net income (loss) $68 $(2) — America West Airlines, Inc. Consolidated Statements of Operations (in millions) (unaudited) 6 Months Ended 6 Months Ended Percent June 30, 2006 June 30, 2005 Change Operating revenues Mainline passenger $1,399 $1,234 13.4 Express passenger 337 233 44.6 Cargo 16 17 (5.9) Other 90 95 (5.3) Total operating revenues 1,842 1,579 16.7 Operating expenses Aircraft fuel and related taxes 447 359 24.5 Gain on fuel hedging instruments, net: Realized (12) (23) (47.8) Unrealized (44) (46) (4.3) Salaries and related costs 366 348 5.2 Express expenses Fuel 103 77 33.8 Other 202 170 18.8 Aircraft rent 171 158 8.2 Aircraft maintenance 125 120 4.2 Other rent and landing fees 90 87 3.4 Selling expenses 81 81 — Special items, net (7) 1 — Depreciation and amortization 21 23 (8.7) Other 155 164 (5.5) Total operating expenses 1,698 1,519 11.8 Operating income 144 60 — Nonoperating income (expenses) Interest income 33 7 371.4 Interest expense, net (37) (42) (11.9) Other, net (10) 2 — Nonoperating expenses, net (14) (33) (57.6) Income before income taxes and cumulative effect of change of accounting principle 130 27 — Income taxes provision 4 — — Income before cumulative effect of change in accounting principle 126 27 — Cumulative effect of change in accounting principle 1 (202) — Net income (loss) $127 $(175) — America West Airlines, Inc. Operating Statistics 3 Months Ended 3 Months Ended Percent June 30, 2006 June 30, 2005 Change Mainline Revenue passenger miles (in millions) 6,238 6,386 -2.3% Available seat miles (ASM) (in millions) 7,580 7,755 -2.3% Passenger load factor (percent) 82.3 82.3 — pts Yield (cents) 11.97 10.29 16.4% Passenger revenue per ASM (cents) 9.85 8.47 16.3% Passenger enplanements (in thousands) 5,545 5,752 -3.6% Aircraft (end of period) 135 143 -5.6% Block hours 139,183 143,365 -2.9% Average stage length (miles) 1,040 1,037 0.3% Average passenger journey (miles) 1,609 1,681 -4.3% Fuel consumption (gallons in millions) 111.1 114.5 -3.0% Average fuel price (dollars per gallon) 2.18 1.74 25.3% Average fuel price including realized gains on fuel hedging instruments, net (dollars) 2.08 1.63 27.6% Full-time equivalent employees (end of period) 12,766 12,200 4.6% Operating cost per ASM (cents) 10.05 8.95 12.7% Operating cost per ASM excluding special items (cents) 9.98 8.86 12.5% Operating cost per ASM excluding special items, fuel and realized gains on fuel hedging instruments, net (cents) 6.92 6.45 7.4% Express Revenue passenger miles (in millions) 963 875 10.1% Available seat miles (in millions) 1,209 1,225 -1.3% Passenger load factor (percent) 79.7 71.4 8.3 pts Passenger revenue per ASM (cents) 15.23 10.53 44.6% Passenger enplanements (in thousands) 1,832 1,469 24.7% Operating cost per ASM (cents) 13.14 11.10 18.4% Total Revenue passenger miles (in millions) 7,201 7,261 -0.8% Available seat miles (in millions) 8,789 8,980 -2.1% Passenger load factor (percent) 81.9 80.9 1.0 pts Total revenue per ASM (cents) 11.16 9.41 18.6% Passenger enplanements (in thousands) 7,377 7,221 2.2% Operating cost per ASM (cents) 10.47 9.24 13.3% America West Airlines, Inc. Operating Statistics 6 Months Ended 6 Months Ended Percent June 30, 2006 June 30, 2005 Change Mainline Revenue passenger miles (in millions) 11,898 12,057 -1.3% Available seat miles (ASM) (in millions) 14,779 15,057 -1.8% Passenger load factor (percent) 80.5 80.1 0.4 pts Yield (cents) 11.76 10.23 14.9% Passenger revenue per ASM (cents) 9.47 8.20 15.5% Passenger enplanements (in thousands) 10,637 10,924 -2.6% Aircraft (end of period) 135 143 -5.6% Block hours 273,153 279,862 -2.4% Average stage length (miles) 1,034 1,030 0.4% Average passenger journey (miles) 1,594 1,653 -3.6% Fuel consumption (gallons in millions) 216.3 221.7 -2.4% Average fuel price (dollars per gallon) 2.07 1.62 27.6% Average fuel price including realized gains on fuel hedging instruments, net (dollars) 2.01 1.52 32.7% Full-time equivalent employees (end of period) 12,766 12,177 4.8% Operating cost per ASM (cents) 9.43 8.45 11.7% Operating cost per ASM excluding special items (cents) 9.78 8.69 12.5% Operating cost per ASM excluding special items, fuel and realized gains on fuel hedging instruments, net (cents) 6.84 6.46 5.8% Express Revenue passenger miles (in millions) 1,810 1,574 15.0% Available seat miles (in millions) 2,376 2,206 7.7% Passenger load factor (percent) 76.2 71.4 4.8 pts Passenger revenue per ASM (cents) 14.20 10.56 34.5% Passenger enplanements (in thousands) 3,471 2,668 30.1% Operating cost per ASM (cents) 12.80 11.20 14.3% Total Revenue passenger miles (in millions) 13,708 13,631 0.6% Available seat miles (in millions) 17,155 17,263 -0.6% Passenger load factor (percent) 79.9 79.0 0.9 pts Total revenue per ASM (cents) 10.74 9.15 17.4% Passenger enplanements (in thousands) 14,108 13,592 3.8% Operating cost per ASM (cents) 9.90 8.80 12.5% US Airways, Inc. Statements of Operations (in millions) (unaudited) Successor Company Predecessor Company 3 Months Ended 3 Months Ended Percent June 30, 2006 June 30, 2005 Change Operating revenues Mainline passenger $1,439 $1,332 8.0 Express passenger 596 436 36.7 Cargo 29 25 16.0 Other 162 158 2.5 Total operating revenues 2,226 1,951 14.1 Operating expenses Aircraft fuel and related taxes 426 381 11.8 Salaries and related costs 351 332 5.7 Express expenses 534 476 12.2 Aircraft rent 95 97 (2.1) Aircraft maintenance 80 89 (10.1) Other rent and landing fees 100 114 (12.3) Selling expenses 79 87 (9.2) Special items, net 12 — — Depreciation and amortization 37 56 (33.9) Other 232 260 (10.8) Total operating expenses 1,946 1,892 2.9 Operating income (loss) 280 59 — Nonoperating income (expenses) Interest income 21 7 — Interest expense, net (53) (80) (33.8) Reorganization items, net — (26) — Other, net (1) (6) (83.3) Total nonoperating expenses, net (33) (105) (68.6) Income (loss) before income taxes 247 (46) — Income tax provision 1 (2) — Net income (loss) $246 $(44) — US Airways, Inc. Statements of Operations (in millions) (unaudited) Successor Company Predecessor Company 6 Months Ended 6 Months Ended Percent June 30, 2006 June 30, 2005 Change Operating revenues Mainline passenger $2,597 $2,465 5.4 Express passenger 1,054 750 40.5 Cargo 58 46 26.1 Other 319 311 2.6 Total operating revenues 4,028 3,572 12.8 Operating expenses Aircraft fuel and related taxes 776 703 10.4 Salaries and related costs 680 741 (8.2) Express expenses 1,033 896 15.3 Aircraft rent 194 195 (0.5) Aircraft maintenance 166 161 3.1 Other rent and landing fees 195 214 (8.9) Selling expenses 146 181 (19.3) Special items, net (3) — — Depreciation and amortization 73 105 (30.5) Other 446 499 (10.6) Total operating expenses 3,706 3,695 0.3 Operating income (loss) 322 (123) (361.8) Nonoperating income (expenses) Interest income 34 9 277.8 Interest expense, net (107) (156) (31.4) Reorganization items, net — (28) — Other, net (1) (7) (85.7) Total nonoperating expenses, net (74) (182) — Income (loss) before income taxes 248 (305) — Income tax provision 1 (2) (150.0) Net income (loss) $247 $(303) — US Airways, Inc. Operating Statistics 3 Months Ended 3 Months Ended Percent June 30, 2006 June 30, 2005 Change Mainline: Revenue passenger miles (in millions) 9,910 10,728 -7.6% Available seat miles (ASM) (in millions) 12,055 13,817 -12.8% Passenger load factor (percent) 82.2 77.6 4.6 pts Yield (cents) 14.52 12.42 16.9% Passenger revenue per ASM (cents) 11.94 9.64 23.8% Passenger enplanements (in thousands) 9,626 11,102 -13.3% Aircraft (end of period) 224 268 -16.4% Block hours 205,547 249,186 -17.5% Average stage length (miles) 883 797 10.8% Average passenger journey (miles) 1,030 966 6.6% Fuel consumption (gallons in millions) 197.4 226.4 -12.8% Average fuel price (dollars per gallon) with related taxes 2.16 1.68 28.2% Full-time equivalent employees (end of period) 19,222 21,396 -10.2% Operating cost per ASM (cents) 11.72 10.25 14.3% Operating cost per ASM excluding special items (cents) 11.62 10.25 13.4% Operating cost per ASM excluding special items and fuel (cents) 8.08 7.49 7.9% Express Revenue passenger miles (in millions) 1,955 1,803 8.4% Available seat miles (in millions) 2,561 2,679 -4.4% Passenger load factor (percent) 76.3 67.3 9.0 pts Passenger revenue per ASM (cents) 23.28 16.27 43.1% Passenger enplanements (in thousands) 5,239 4,725 10.9% Operating cost per ASM (cents) 20.85 17.77 17.3% TOTAL – Mainline & Express Revenue passenger miles (in millions) 11,865 12,531 -5.3% Available seat miles (in millions) 14,616 16,496 -11.4% Passenger load factor (percent) 81.2 76.0 5.2 pts Total revenue per ASM (cents) 15.23 11.83 28.8% Operating cost per ASM (cents) 13.31 11.47 16.1% US Airways, Inc. Operating Statistics 6 Months Ended 6 Months Ended Percent June 30, 2006 June 30, 2005 Change Mainline: Revenue passenger miles (in millions) 18,206 20,373 -10.6% Available seat miles (ASM) (in millions) 23,085 27,003 -14.5% Passenger load factor (percent) 78.9 75.4 3.5 pts Yield (cents) 14.26 12.10 17.9% Passenger revenue per ASM (cents) 11.25 9.13 23.2% Passenger enplanements (in thousands) 18,126 21,355 -15.1% Aircraft (end of period) 224 268 -16.4% Block hours 398,468 496,239 -19.7% Average stage length (miles) 855 796 7.4% Average passenger journey (miles) 1,005 954 5.3% Fuel consumption (gallons in millions) 379.7 444.6 -14.6% Average fuel price (dollars per gallon) with related taxes 2.04 1.58 29.3% Full-time equivalent employees (end of period) 19,222 21,396 -10.2% Operating cost per ASM (cents) 11.58 10.37 11.7% Operating cost per ASM excluding special items (cents) 11.59 10.37 11.8% Operating cost per ASM excluding special items and fuel (cents) 8.23 7.76 6.0% Express Revenue passenger miles (in millions) 3,539 3,206 10.4% Available seat miles (in millions) 5,053 5,013 0.8% Passenger load factor (percent) 70.0 64.0 9.4 pts Passenger revenue per ASM (cents) 20.87 14.96 39.5% Passenger enplanements (in thousands) 9,508 8,540 11.3% Operating cost per ASM (cents) 20.44 17.87 14.4% TOTAL – Mainline & Express Revenue passenger miles (in millions) 21,745 23,579 -7.8% Available seat miles (in millions) 28,138 32,016 -12.1% Passenger load factor (percent) 77.3 73.6 3.7 pts Total revenue per ASM (cents) 14.32 11.16 28.3% Operating cost per ASM (cents) 13.17 11.54 14.1% US Airways Group, Inc. Condensed Consolidated Balance Sheets (in millions) (unaudited) June 30, December 31, 2006 2005 Assets Current assets Cash equivalents and short-term investments $2,220 $1,577 Restricted cash 4 8 Accounts receivable, net 467 353 Materials and supplies, net 228 229 Prepaid expenses and other 498 392 Total current assets 3,417 2,559 Property and equipment, net Flight equipment 1,985 1,920 Ground property and equipment 557 532 Less accumulated depreciation and amortization (498) (431) 2,044 2,021 Equipment purchase deposits 40 43 Total property and equipment 2,084 2,064 Other assets Goodwill 701 732 Other intangibles, net 567 583 Restricted cash 984 792 Other assets 235 234 Total other assets 2,487 2,341 Total assets $7,988 $6,964 Liabilities and Stockholders’ Equity Current liabilities Current maturities of debt and capital leases $113 $211 Accounts payable 469 457 Air traffic liability 1,214 788 Accrued compensation and vacation 230 210 Accrued taxes 191 146 Other accrued expenses 861 847 Total current liabilities 3,078 2,659 Noncurrent liabilities and deferred credits Long-term debt and capital leases, net of current maturities 2,903 2,749 Deferred gains and credits 229 254 Employment benefit liabilities and other 851 882 Total noncurrent liabilities and deferred credits 3,983 3,885 Stockholders’ equity Preferred stock — — Common stock 1 1 Additional paid-in capital 1,395 1,258 Accumulated deficit (456) (826) Treasury stock (13) (13) Total stockholders’ equity 927 420 Total liabilities and stockholders’ equity $7,988 $6,964
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US Airways Group, Inc.
CONTACT: Elise Eberwein of US Airways Group, Inc., +1-480-693-5574
Web site: http://www.americawest.com/
Web site: http://www.usairways.com/