US Airways Group, Inc. Reports Fourth Quarter and Full Year 2006 Profit
TEMPE, Ariz., Jan. 30 /PRNewswire-FirstCall/ — The new US Airways Group, Inc. today reported its fourth quarter and 2006 results. Net profit for the fourth quarter was $12 million, or $0.13 per share compared to a net loss of $261 million, or $3.27 per share for the same period last year. Excluding special items of $74 million, the Company reported a net profit of $86 million, or $0.91 per diluted share, compared to a net loss of $138 million, or $1.73 per share in the fourth quarter of 2005.
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The fourth quarter 2006 is the first full quarter where the Company’s results for both periods reflect consolidated results for the new US Airways Group. Because the merger of US Airways and America West occurred on Sept. 27, 2005, the results for the full year 2006 are being compared to 2005 results, which consist of 269 days of America West results, and 96 days of consolidated US Airways Group’s results. 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.”
For the full year 2006, the Company reported a net profit before cumulative effect of change in accounting principle of $303 million, or $3.32 per diluted share, which compares to a net loss before cumulative effect of change in accounting principle of $335 million, or $10.65 per share for the full year 2005. Excluding special items of $204 million, the Company reported a net profit before cumulative effect of change in accounting principle of $507 million, or $5.47 per diluted share compared to a net loss before cumulative effect of change in accounting principle of $188 million, or $6.00 per share for the same period last year. 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.
Chairman and CEO Doug Parker stated, “We are extremely pleased to report our fourth quarter earnings, and couldn’t be more proud of our 35,000 employees who will share in these positive results through our profit sharing plan. 2006 marks the first full year of operating and financial results for the new US Airways, and our team has done a remarkable job of integrating our two airlines while taking care of the more than 41 million customers who flew US Airways last year. Few people would have believed, at the time of our merger, that the new US Airways would be the most profitable network airline in 2006. Fortunately, our team believed and we thank them for their great work.
“Looking forward, we anticipate reporting even better results in 2007 with even higher profit sharing payments. This will provide our employees with job stability and the opportunity to share in the financial success of the Company and our customers with the choice and value they deserve,” continued Parker.
Revenue and Cost Comparisons
The revenue environment during the fourth quarter 2006 remained robust for both mainline and Express operations. Mainline passenger revenue per available seat mile (PRASM) was 10.12 cents, up 8.6 percent over the same period last year. Express PRASM was 17.60 cents, up 14.8 percent over the fourth quarter 2005. On a consolidated basis, PRASM for US Airways Group was 11.33 cents, up 9.7 percent compared to the fourth quarter 2005.
“Although fuel prices have come down significantly from the historically high levels we saw throughout the year, fuel still remains our largest operating expense. If fuel prices had remained at 2005 levels, our total fuel expense would have been $467 million lower for the year,” said Chief Financial Officer Derek Kerr.
Total operating cost per available seat mile (CASM) for US Airways Group for the quarter was 11.97 cents, down 1.5 percent on reduced capacity of 0.1 percent. Consolidated mainline operating CASM was 10.98 cents, down 1.3 percent compared to the fourth quarter 2005. Excluding fuel, special items, and merger related transition expenses, mainline CASM was 7.64 cents, up 2.8 percent from the same period last year.
Liquidity
As of Dec. 31, 2006, the Company had $3.0 billion in total cash and investments, of which $2.4 billion was unrestricted.
Fourth Quarter Special Items
During its fourth quarter, the Company recognized $74 million of special items, which included a $26 million non-cash charge for unrealized net losses associated with the change in fair value of the Company’s outstanding fuel hedge contracts, $10 million of net merger-related transition expenses and a $12 million payment in connection with an inducement to the note holders to convert a portion of the Company’s seven percent senior convertible notes to common stock. In addition, during the fourth quarter, the Company used $26 million of net operating losses acquired from US Airways, which was recognized as a reduction in goodwill rather than a reduction in tax expense. As a result, the Company has a $26 million non-cash expense for income taxes for the quarter. 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.
Integration Update Fourth quarter 2006 accomplishments include: Operations * Paid a one-time special $50 bonus to employees, which totaled approximately $1.8 million, for the airline’s operational performance during the Thanksgiving holiday travel period. * Finished the month of November with a year-to-date on time performance of 77.4 percent, ranking US Airways second of the ten largest carriers as measured by the Department of Transportation. * The Company achieved significant operational improvements at its Philadelphia hub. Specifically, customer complaints are down over 30 percent from 2005 levels. In addition, mishandled baggage per 1,000 enplanements is down nearly 15 percent year-over-year, with over 95 percent of all local in-bound baggage now delivered to the baggage carousel in 19.1 minutes on average. Marketing * Continued reducing fares to more cities including Wilmington, N.C., Augusta Ga. and Huntington W.Va. In total the new US Airways has reduced fares in more than 1,100 markets. * Began testing the combined SHARES reservations system at both Tempe, Ariz. and Winston-Salem, N.C. reservations locations, which will help move the airline to a combined reservations system scheduled to occur in the first half of 2007. Labor * Reached a final labor agreement, including transition items, with the Transport Workers Union (TWU), representing about 150 dispatchers. Analyst Conference Call/Webcast Details
US Airways will conduct a live audio webcast of its earnings call today at 11 a.m. EST, which will be available to the public on a listen-only basis at http://www.usairways.com/ under About US >> Investor Relations tab. An archive of the call/webcast will be available in the Public/Investor Relations portion of the Web site through Feb. 28, 2007.
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 2007 and estimated capital spending for 2007.
About US Airways
US Airways is the fifth largest domestic airline employing nearly 35,000 aviation professionals worldwide. 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. The new US Airways — the product of a merger between America West and US Airways in September 2005 — is a member of the Star Alliance, which provides connections for our customers to 841 destinations in 157 countries worldwide. This press release and additional information on US Airways can be found at http://www.usairways.com/. (LCCF)
Forward Looking Statements
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,”"indicate,”"anticipate,”"believe,”"forecast,”"estimate,”"plan,”"guidance,”"outlook,”"could,”"should,”"continue” and similar terms used in connection with statements regarding the outlook of US Airways Group, Inc. (the “Company”). Such statements include, but are not limited to, statements about expected fuel costs, the revenue and pricing environment, the Company’s expected financial performance and operations, future financing plans and needs, overall economic conditions and the benefits of the business combination transaction involving America West Holdings Corporation and US Airways Group, including future financial and operating results and the combined companies’ plans, objectives, expectations and intentions. Other forward-looking statements that do not relate solely to historical facts include, without limitation, statements that discuss the possible future effects of current known trends or uncertainties or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. 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 the Company’s expectations. Such risks and uncertainties include, but are not limited to, the following: the impact of high fuel costs, significant disruptions in the supply of aircraft fuel and further significant increases to fuel prices; our high level of fixed obligations and our ability to obtain and maintain financing for operations and other purposes; our ability to achieve the synergies anticipated as a result of the merger and to achieve those synergies in a timely manner; our ability to integrate the management, operations and labor groups of US Airways Group and America West Holdings; labor costs and relations with unionized employees generally and the impact and outcome of labor negotiations; the impact of global instability, including the current instability in the Middle East, the continuing impact of the military presence in Iraq and Afghanistan and the terrorist attacks of September 11, 2001 and the potential impact of future hostilities, terrorist attacks, infectious disease outbreaks or other global events that affect travel behavior; reliance on automated systems and the impact of any failure or disruption of these systems; the impact of future significant operating losses; changes in prevailing interest rates; our ability to obtain and maintain commercially reasonable terms with vendors and service providers and our reliance on those vendors and service providers; security-related and insurance costs; changes in government legislation and regulation; our ability to use pre-merger NOLs and certain other tax attributes; competitive practices in the industry, including significant fare restructuring activities, capacity reductions and in court or out of court restructuring by major airlines; continued existence of prepetition liabilities; interruptions or disruptions in service at one or more of our hub airports; weather conditions; our ability to obtain and maintain any necessary financing for operations and other purposes; our ability to maintain adequate liquidity; our ability to maintain contracts that are critical to our operations; our ability to operate pursuant to the terms of our financing facilities (particularly the financial covenants); our ability to attract and retain customers; the cyclical nature of the airline industry; our ability to attract and retain qualified personnel; economic conditions; and other risks and uncertainties listed from time to time in our reports to the Securities and Exchange Commission. 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. All forward-looking statements are based on information currently available to the Company. The Company assumes no obligation to publicly update or revise any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting such estimates. 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 period ended Sept. 30, 2006, which is available at http://www.usairways.com/.
Financial Tables to Follow US Airways Group, Inc. Condensed Consolidated Statements of Operations (in millions except share and per share amounts) (unaudited) 3 Months 3 Months 12 Months 12 Months Ended Ended Ended Ended Dec. 31, Dec. 31, Percent Dec. 31, Dec. 31, 2006 2005 Change 2006 2005 Operating revenues Mainline passenger $1,918 $1,757 9.2 $7,966 $3,695 Express passenger 650 584 11.3 2,744 976 Cargo 39 33 18.2 153 58 Other 179 187 (4.3) 694 340 Total operating revenues 2,786 2,561 8.8 11,557 5,069 Operating expenses Aircraft fuel and related taxes 575 603 (4.6) 2,518 1,214 Loss (gain) on fuel hedging instruments, net: Realized 20 (20) nm 9 (71) Unrealized 26 69 (62.3) 70 (4) Salaries and related costs 516 505 2.2 2,090 1,046 Express expenses: Fuel 179 193 (7.3) 764 327 Other 451 463 (2.6) 1,795 746 Aircraft rent 186 182 2.2 732 429 Aircraft maintenance 150 153 (2.0) 582 349 Other rent and landing fees 136 147 (7.5) 568 281 Selling expenses 99 103 (3.9) 446 232 Special items, net 10 36 (72.2) 27 121 Depreciation and amortization 43 49 (12.2) 175 88 Other 320 270 18.5 1,223 528 Total operating expenses 2,711 2,753 (1.5) 10,999 5,286 Operating income (loss) 75 (192) nm 558 (217) Nonoperating income (expenses) Interest income 42 22 90.9 153 30 Interest expense, net (73) (87) (16.1) (295) (147) Other, net 1 (4) nm (12) (1) Nonoperating expenses, net (30) (69) (56.5) (154) (118) Income (loss) before income taxes and cumulative effect of change in accounting principle 45 (261) nm 404 (335) Income tax provision 33 — nm 101 — Income (loss) before cumulative effect of change in accounting principle 12 (261) nm 303 (335) Cumulative effect of change in accounting principle — — nm 1 (202) Net income (loss) $12 $(261) nm $304 $(537) Income (loss) per share before cumulative effect of change in accounting principle: Basic $0.13 $(3.27) $3.50 $(10.65) Diluted $0.13 $(3.27) $3.32 $(10.65) Net income (loss) per share: Basic $0.13 $(3.27) $3.51 $(17.06) Diluted $0.13 $(3.27) $3.33 $(17.06) Shares used for computation (in thousands): Basic 89,892 80,145 86,447 31,488 Diluted 91,872 80,145 93,821 31,488 US Airways Group, Inc. Operating Statistics 3 Months 3 Months 12 Months Ended Ended Ended Dec. 31, Dec. 31, Percent Dec. 31, 2006 2005 Change 2006** Mainline Revenue passenger miles (in millions) 14,630 14,136 3.5% 60,689 Available seat miles (ASM) (in millions) 18,963 18,861 0.5% 76,983 Passenger load factor (percent) 77.2 74.9 2.2 pts 78.8 Yield (cents) 13.11 12.43 5.5% 13.13 Passenger revenue per ASM (cents) 10.12 9.32 8.6% 10.35 Passenger enplanements (in thousands) 14,156 13,917 1.7% 57,345 Aircraft (end of period) 359 373 -3.8% 359 Block Hours 339,297 340,257 -0.3% 1,364,895 Average stage length (miles) 910 877 3.8% 927 Fuel consumption (gallons in millions) 297.7 289.6 2.8% 1,210 Average fuel price (dollars per gallon) with related taxes 1.93 2.08 -7.2% 2.08 Average fuel price including related taxes and realized gains (losses) on fuel hedging instruments, net (dollars) 2.00 2.01 -0.5% 2.09 Full-time equivalent employees (end of period) 32,459 32,210 0.8% 32,459 Operating cost per ASM (cents) 10.98 11.12 -1.3% 10.96 Operating cost per ASM excluding special items (cents) 10.78 10.52 2.5% 10.84 Operating cost per ASM excluding special items, fuel and realized gains (losses) on fuel hedging instruments, net (cents) 7.64 7.43 2.8% 7.55 Express* Revenue passenger miles (in millions) 2,559 2,514 1.8% 10,635 Available seat miles (in millions) 3,694 3,809 -3.0% 14,911 Passenger load factor (percent) 69.3 66.0 3.3 pts 71.3 Passenger revenue per ASM (cents) 17.60 15.32 14.8% 18.40 Passenger enplanements (in thousands) 6,259 5,848 7.0% 25,836 Operating cost per ASM (cents) 17.05 17.23 -1.0% 17.17 TOTAL – Mainline & Express Revenue passenger miles (in millions) 17,189 16,650 3.2% 71,324 Available seat miles (in millions) 22,657 22,670 -0.1% 91,894 Passenger load factor (percent) 75.9 73.4 2.5 pts 77.6 Passenger revenue per ASM (cents) 11.33 10.33 9.7% 11.66 Total revenue per ASM (cents) 12.30 11.30 8.9% 12.58 Passenger enplanements (in thousands) 20,415 19,765 3.3% 83,181 Operating cost per ASM (cents) 11.97 12.14 -1.5% 11.97 * Express includes US Airways Group’s wholly owned regional airline subsidiaries, Piedmont Airlines and PSA Airlines, US Airways’ MidAtlantic regional jet division, through May 27, 2006, as well as operating and financial results from capacity purchase agreements with Mesa Airlines, Chautauqua Airlines, Air Wisconsin Airlines and Republic Airlines. ** The 2006 Full-Year Operating Statistics reflects the consolidated results for the new US Airways Group. The 2005 Full-Year Operating Statistics, which would consist of 269 days of America West results and 96 days of consolidated US Airways Group results do not provide a meaningful comparison and have been omitted.
Reconciliation of GAAP Financial Information to Non-GAAP Financial Information and Operating Cost per ASM Excluding Special Items, Aircraft Fuel, Realized (Gains) Losses 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 12 Months 12 Months Ended Ended Ended Ended Dec. 31 Dec. 31 Dec. 31 Dec. 31 2006 2005 2006 2005 (in millions, except share and per share amounts) Reconciliation of Income (loss) 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 $12 $(261) $303 $(335) Special items: Unrealized (gains) losses on fuel hedging instruments, net (1) 26 69 70 (4) Non-cash tax provision from utilization of pre-acquisition NOL (2) 26 — 85 — Special items, net (3) 10 36 27 121 Other special charges (4) 12 18 22 30 Income (loss) before cumulative effect of change in accounting principle, as adjusted for special items $86 $(138) $507 $(188) Shares used for computation (in thousands): Basic 89,892 80,145 86,447 31,488 Diluted 96,045 80,145 94,876 31,488 Income (loss) per share before cumulative effect of change in accounting principle, as adjusted for special items: Basic $0.96 $(1.73) $5.86 $(6.00) Diluted (8) $0.91 $(1.73) $5.47 $(6.00) Reconciliation of Income (loss) before Cumulative Effect of Change in Accounting Principle Excluding Special Items for America West Airlines, Inc. Loss before cumulative effect of change in accounting principle as reported $(63) $(139) $(38) $(195) Special items: Unrealized (gains) losses on fuel hedging instruments, net (1) 26 69 70 (4) Special items, net (5) 9 21 17 106 Other special charges (10) (1) 18 3 30 Income (loss) before cumulative effect of change in accounting principle, as adjusted for special items $(29) $(31) $52 $(63) Reconciliation of Net Income (Loss) Excluding Special Items for US Airways, Inc. Net income (loss) as reported $61 $(120) $345 $160 Special items: Non-cash tax provision from utilization of pre-acquisition NOL (2) 26 — 85 — Special items, net (6) 12 15 21 15 Reorganization items, net (7) — — — (636) Net income (loss), as adjusted for special items $99 $(105) $451 $(461) 3 Months 3 Months 12 Months 12 Months Ended Ended Ended Ended Dec. 31 Dec. 31 Dec. 31 Dec. 31 2006 2005 2006 2005 Reconciliation of Operating Cost per ASM Excluding Special Items, Fuel, Realized Gains (Losses) on Fuel Hedging Instruments, Net – Mainline only US Airways Group, Inc. (in millions) Total operating expenses $2,711 $2,753 $10,999 $5,286 Less Express expenses: Fuel (179) (193) (764) (327) Other (451) (463) (1,795) (746) Total mainline operating expenses 2,081 2,097 8,440 4,213 Special items: Unrealized gains (losses) on fuel hedging instruments, net (1) (26) (69) (70) 4 Special items, net (3) (10) (36) (27) (121) Other special charges (9) — (7) — (19) Mainline operating expenses, excluding special items 2,045 1,985 8,343 4,077 Aircraft fuel (575) (603) (2,518) (1,214) Realized gains (losses) on fuel hedging instruments, net (20) 20 (9) 71 Mainline operating expenses, excluding special items, fuel and realized gains (losses) on fuel hedging instruments, net $1,450 $1,402 $5,816 $2,934 (in cents) Mainline operating expenses per ASM 10.98 11.12 10.96 9.95 Special items per ASM Unrealized gains (losses) on fuel hedging instruments, net (1) (0.14) (0.37) (0.09) 0.01 Special items, net (3) (0.05) (0.19) (0.04) (0.29) Other special charges (9) — (0.04) — (0.04) Mainline operating expenses per ASM, excluding special items 10.78 10.52 10.84 9.63 Aircraft fuel (3.03) (3.20) (3.27) (2.87) Realized gains (losses) on fuel hedging instruments, net (0.11) 0.11 (0.01) 0.17 Mainline operating expenses per ASM, excluding special items, fuel and realized gains (losses) on fuel hedging instruments, net 7.64 7.43 7.55 6.93 3 Months 3 Months 12 Months 12 Months Ended Ended Ended Ended Dec. 31 Dec. 31 Dec. 31 Dec. 31 2006 2005 2006 2005 America West Airlines Inc. (in millions) Total operating expenses $944 $946 $3,671 $3,383 Less Express expenses: Fuel (47) (53) (210) (182) Other (100) (97) (401) (363) Total mainline operating expenses 797 796 3,060 2,838 Special items: Unrealized gains (losses) on fuel hedging instruments, net (1) (26) (69) (70) 4 Special items, net (5) (9) (21) (17) (106) Other special charges (9) — (7) — (19) Mainline operating expenses, excluding special items 762 699 2,973 2,717 Aircraft fuel (208) (228) (911) (812) Realized gains (losses) on fuel hedging instruments, net (20) 20 (9) 71 Mainline operating expenses, excluding special items, fuel and realized (gains) losses on fuel hedging instruments, net $534 $491 $2,053 $1,976 (in cents) Mainline Operating expenses per ASM 11.05 10.51 10.35 9.30 Special items per ASM: Unrealized gains (losses) on fuel hedging instruments, net (1) (0.37) (0.91) (0.24) 0.01 Special items, net (5) (0.12) (0.28) (0.06) (0.35) Other special charges (9) — (0.09) — (0.06) Mainline operating expenses per ASM, excluding special items 10.56 9.23 10.06 8.91 Aircraft fuel (2.89) (3.00) (3.08) (2.66) Realized gains (losses) on fuel hedging instruments, net (0.28) 0.26 (0.03) 0.23 Mainline operating expenses per ASM, excluding special items, fuel and realized gains (losses) on fuel hedging instruments, net 7.39 6.49 6.94 6.48 US Airways, Inc. (in millions) Total operating expenses $1,799 $1,826 $7,464 $7,420 Less: Express expenses (504) (490) (2,060) (1,862) Total mainline operating expenses 1,295 1,336 5,404 5,558 Special items: Special items, net (6) (12) (15) (21) (15) Mainline operating expenses, excluding special items 1,283 1,321 5,383 5,543 Aircraft fuel (367) (375) (1,607) (1,486) Mainline operating expenses, excluding special items and fuel $916 $946 $3,776 $4,057 (in cents) Mainline operating expenses per ASM (excluding Express expenses) 11.02 11.83 11.39 10.79 Special items per ASM: Special items, net (6) (0.10) (0.13) (0.04) (0.03) Mainline operating expenses per ASM, excluding special items 10.92 11.70 11.35 10.76 Aircraft fuel (3.12) (3.32) (3.39) (2.88) Mainline operating expenses per ASM excluding special items and fuel 7.79 8.38 7.96 7.87 Note: Amounts may not recalculate due to rounding. FOOTNOTES: 1) The 2006 fourth quarter and the 2006 twelve month period include a $26 million and $70 million unrealized loss respectively, and the 2005 fourth quarter and the 2005 twelve month period include a $69 million unrealized loss and a $4 million unrealized gain, respectively, resulting from mark-to-market accounting for changes in the fair value of AWA’s fuel hedging instruments. 2) For the three and twelve month periods ended December 31, 2006 the Company utilized $26 million and $85 million, respectively, of NOL acquired from US Airways, the valuation allowance associated with these acquired NOL was recognized as a reduction of goodwill rather than a reduction in tax expense. As a result, US Airways had a non-cash expense for income taxes of $26 million and $85 million in the three month and twelve month periods, respectively. 3) The 2006 fourth quarter includes $14 million of gains associated with the settlement of bankruptcy claims, offset by $24 million of merger related transition expenses. The 2006 twelve month period includes a $90 million gain associated with the return of equipment deposits upon forgiveness of a loan and $14 million of gains associated with the settlement of bankruptcy claims, offset by $131 million of merger related transition expenses. The 2005 fourth quarter includes $28 million of merger related transition expenses, $7 million related to power by the hour program penalties associated with the return of certain leased aircraft and $1 million of severance for terminated employees resulting from the merger. The 2005 twelve month period includes the above mentioned fourth quarter items plus a $57 million charge related to the restructuring of an agreement with Airbus, a $27 million loss on the sale-leaseback of 8 aircraft and a $1 million charge related to aircraft removed from service. 4) The 2006 fourth quarter includes a $12 million payment in connection with the inducement to convert $49 million of the 7% Senior Convertible Notes to common stock and a $1 million write off of debt issuance costs associated with the converted notes, less $1 million of interest income earned by AWA on certain prior year Federal income tax refunds. The 2006 twelve month period includes $6 million of prepayment penalties and $5 million write off of debt issuance costs in connection with the $1.25 billion debt refinancing in the first quarter of 2006, $17 million in payments in connection with the inducement to convert $70 million of the 7% Senior Convertible Notes to common stock and $2 million write off of debt issuance costs associated with the converted notes, less $8 million of interest income earned by AWA on certain prior year Federal income tax refunds. The 2005 fourth quarter includes $8 million related to the write off of the unamortized value of the ATSB warrants, upon their repurchase in the fourth quarter of 2005, $4 million related to the acceleration of depreciation expense for certain leasehold improvements, $3 million out-of-period expense related to the retroactive TSA assessment, $2 million write off of debt issuance costs in connection with the conversion of the 7.25% senior notes and $1 million write off of debt issuance costs for the Debis portion of the ATSB loan. The 2005 twelve month period includes the above mentioned fourth quarter items excluding the out-of-period $3 million TSA assessment, an $8 million loss on the sale and leaseback of two new Airbus A320 aircraft acquired during the first and second quarters and $7 million in fees related to the early return of ten aircraft in connection to the GE MOU. 5) The 2006 fourth quarter includes $9 million of merger related transition expenses. The 2006 twelve month period includes a $51 million gain associated with the return of equipment deposits upon forgiveness of a loan, offset by $68 million of merger related transition expenses. The 2005 fourth quarter includes $13 million of merger related transition expenses, $7 million related to power by the hour program penalties associated with the return of certain leased aircraft and $1 million of severance for terminated employees resulting from the merger. The 2005 twelve month period includes the above mentioned fourth quarter items plus a $57 million charge related to the restructuring of an agreement with Airbus, a $27 million loss on the sale-leaseback of 8 aircraft and a $1 million charge related to aircraft removed from service. 6) The 2006 fourth quarter includes $3 million of gains associated with the settlement of bankruptcy claims, offset by $15 million of merger related transition expenses, and the 2006 twelve month period includes a $40 million gain associated with the return of equipment deposits upon forgiveness of a loan and $3 million of gains associated with the settlement of bankruptcy claims, offset by $64 million of merger related transition expenses. The 2005 fourth quarter and twelve month periods include $15 million of merger related transition expenses. 7) During the twelve months ended December 31, 2005, US Airways recognized $636 million in reorganization items incurred as a result of its Chapter 11 filing. 8) Computation excludes interest associated with the 7.0% senior convertible notes of $2 million and $9 million for the three and twelve months ended December 31, 2006, respectively, and the 7.5% convertible senior notes of $4 million for the twelve months ended December 31, 2006. 9) The 2005 fourth quarter includes $4 million related to the acceleration of depreciation expense for certain leasehold improvements and $3 million out-of-period expense related to the retroactive TSA assessment. The 2005 twelve month period includes the above mentioned fourth quarter items excluding the out-of-period $3 million TSA assessment, an $8 million loss on the sale and leaseback of two new Airbus A320 aircraft acquired during the first and second quarters and $7 million in fees related to the early return of ten aircraft in connection to the GE MOU. 10) The 2006 fourth quarter includes $1 million of interest income earned by AWA on certain prior year Federal income tax refunds. The 2006 twelve month period includes $6 million of prepayment penalties and a $5 million write off of debt issuance costs in connection with the $1.25 billion debt refinancing in the first quarter of 2006 less $8 million of interest income earned by AWA on certain prior year Federal income tax refunds. The 2005 fourth quarter includes $8 million related to the write off of the unamortized value of the ATSB warrants, upon their repurchase in the fourth quarter 2005, $4 million related to the acceleration of depreciation expense for certain leasehold improvements, $3 million out-of-period expense related to the retroactive TSA assessment, $2 million write off of debt issuance costs in connection with the conversion of the 7.25% senior notes and $1 million write off of debt issuance costs for the Debis portion of the ATSB loan. The 2005 twelve month period includes the above mentioned fourth quarter items excluding the out-of-period $3 million TSA assessment, an $8 million loss on the sale and leaseback of two new Airbus A320 aircraft acquired during the first and second quarters and $7 million in fees related to the early return of ten aircraft in connection to the GE MOU. America West Airlines, Inc. Consolidated Statements of Operations (in millions) (unaudited) 3 Months 3 Months 12 Months 12 Months Ended Ended Ended Ended Dec. 31, Dec. 31, Percent Dec. 31, Dec. 31, Percent 2006 2005 Change 2006 2005 Change Operating revenues Mainline passenger $659 $634 3.9 $2,761 $2,521 9.5 Express passenger 158 145 9.0 660 512 28.9 Cargo 7 9 (22.2) 31 33 (6.1) Other 48 47 2.1 184 197 (6.6) Total operating revenues 872 835 4.4 3,636 3,263 11.4 Operating expenses Aircraft fuel and related taxes 208 228 (8.8) 911 812 12.2 Loss (gain) on fuel hedging instruments, net: Realized 20 (20) nm 9 (71) nm Unrealized 26 69 (62.3) 70 (4) nm Salaries and related costs 189 175 8.0 735 701 4.9 Express expenses: Fuel 47 53 (11.3) 210 182 15.4 Other 100 97 3.1 401 363 10.5 Aircraft rent 83 86 (3.5) 339 327 3.7 Aircraft maintenance 53 67 (20.9) 242 259 (6.6) Other rent and landing fees 47 44 6.8 175 176 (0.6) Selling expenses 42 35 20.0 162 161 0.6 Special items, net 9 21 (57.1) 17 106 (84.0) Depreciation and amortization 12 16 (25.0) 46 53 (13.2) Other 108 75 44.0 354 318 11.3 Total operating expenses 944 946 (0.2) 3,671 3,383 8.5 Operating loss (72) (111) (35.1) (35) (120) (70.8) Nonoperating income (expenses) Interest income 19 13 46.2 68 25 nm Interest expense, net (10) (32) (68.8) (57) (94) (39.4) Other, net — (9) nm (9) (6) 50.0 Nonoperating income (expenses), net 9 (28) nm 2 (75) nm Loss before income taxes and cumulative effect of change of accounting principle (63) (139) (54.7) (33) (195) (83.1) Income tax provision — — nm 5 — nm Loss before cumulative effect of change in accounting principle (63) (139) (54.7) (38) (195) (80.5) Cumulative effect of change in accounting principle — — nm 1 (202) nm Net loss $(63) $(139) (54.7) $(37) $(397) (90.7) America West Airlines, Inc. Operating Statistics 3 Months 3 Months Ended Ended Dec. 31, Dec. 31, Percent 2006 2005 Change Mainline Revenue passenger miles (in millions) 5,620 5,870 -4.3% Available seat miles (ASM) (in millions) 7,208 7,571 -4.8% Passenger load factor (percent) 78.0 77.5 0.4 pts Yield (cents) 11.72 10.81 8.4% Passenger revenue per ASM (cents) 9.14 8.38 9.0% Passenger enplanements (in thousands) 5,161 5,404 -4.5% Aircraft (end of period) 133 141 -5.7% Block hours 134,504 140,329 -4.2% Average stage length (miles) 1,013 1,022 -0.9% Average passenger journey (miles) 1,499 1,598 -6.2% Fuel consumption (gallons in millions) 106.4 110.9 -4.1% Average fuel price (dollars per gallon) with related taxes 1.96 2.05 -4.4% Average fuel price including related taxes and realized gains (losses) on fuel hedging instruments, net (dollars) 2.15 1.87 15.1% Full-time equivalent employees (end of period) 13,038 12,100 7.8% Operating cost per ASM (cents) 11.05 10.51 5.1% Operating cost per ASM excluding special items (cents) 10.56 9.23 14.4% Operating cost per ASM excluding special items, fuel and realized gains (losses) on fuel hedging instruments, net (cents) 7.39 6.49 13.9% Express Revenue passenger miles (in millions) 842 807 4.3% Available seat miles (in millions) 1,133 1,122 1.0% Passenger load factor (percent) 74.3 71.9 2.4 pts Passenger revenue per ASM (cents) 13.97 12.88 8.5% Passenger enplanements (in thousands) 1,672 1,400 19.4% Operating cost per ASM (cents) 12.97 13.43 -3.4% TOTAL – Mainline & Express Revenue passenger miles (in millions) 6,462 6,677 -3.2% Available seat miles (in millions) 8,341 8,693 -4.0% Passenger load factor (percent) 77.5 76.8 0.7 pts Passenger revenue per ASM (cents) 9.79 8.96 9.3 Total revenue per ASM (cents) 10.45 9.61 8.8% Passenger enplanements (in thousands) 6,833 6,804 0.4% Operating cost per ASM (cents) 11.31 10.88 3.9% 12 Months 12 Months Ended Ended Dec. 31, Dec. 31, Percent 2006 2005 Change Mainline Revenue passenger miles (in millions) 23,559 24,260 -2.9% Available seat miles (ASM) (in millions) 29,555 30,503 -3.1% Passenger load factor (percent) 79.7 79.5 0.2 pts Yield (cents) 11.72 10.39 12.8% Passenger revenue per ASM (cents) 9.34 8.27 12.9% Passenger enplanements (in thousands) 21,260 22,130 -3.9% Aircraft (end of period) 133 141 -5.7% Block hours 547,348 564,523 -3.0% Average stage length (miles) 1,026 1,028 -0.2% Average passenger journey (miles) 1,576 1,659 -5.0% Fuel consumption (gallons in millions) 435.4 449.5 -3.1% Average fuel price (dollars per gallon) with related taxes 2.09 1.80 16.5% Average fuel price including related taxes and realized gains (losses) on fuel hedging instruments, net (dollars) 2.11 1.65 28.2% Full-time equivalent employees (end of period) 13,038 12,100 7.8% Operating cost per ASM (cents) 10.35 9.30 11.3% Operating cost per ASM excluding special items (cents) 10.06 8.91 12.9% Operating cost per ASM excluding special items, fuel and realized gains (losses) on fuel hedging instruments, net (cents) 6.94 6.48 7.2% Express Revenue passenger miles (in millions) 3,559 3,300 7.8% Available seat miles (in millions) 4,714 4,589 2.7% Passenger load factor (percent) 75.5 71.9 3.6 pts Passenger revenue per ASM (cents) 14.01 11.16 25.5% Passenger enplanements (in thousands) 6,870 5,600 22.7% Operating cost per ASM (cents) 12.97 11.90 9.0% TOTAL – Mainline & Express Revenue passenger miles (in millions) 27,118 27,560 -1.6% Available seat miles (in millions) 34,269 35,091 -2.3% Passenger load factor (percent) 79.1 78.5 0.6 pts Passenger revenue per ASM (cents) 9.98 8.64 15.5% Total revenue per ASM (cents) 10.61 9.30 14.1% Passenger enplanements (in thousands) 28,130 27,730 1.4% Operating cost per ASM (cents) 10.71 9.64 11.1% US Airways, Inc. Statements of Operations (in millions) (unaudited) Predecessor Successor Company Company 3 Months 3 Months 12 Months 3 Months 9 Months Ended Ended Ended Ended Ended Dec. 31, Dec. 31, Percent Dec. 31, Dec. 31, Sept. 30, 2006 2005 Change 2006 2005 2005 Operating revenues Mainline passenger $1,260 $1,123 12.2 $5,205 $1,123 $3,738 Express passenger 491 442 11.1 2,084 442 1,178 Cargo 32 25 28.0 122 25 71 Other 161 165 (2.4) 645 165 465 Total operating revenues 1,944 1,755 10.8 8,056 1,755 5,452 Operating expenses Aircraft fuel and related taxes 367 375 (2.1) 1,607 375 1,111 Salaries and related costs 328 330 (0.6) 1,354 330 1,073 Express expenses 504 490 2.9 2,060 490 1,372 Aircraft rent 103 98 5.1 393 98 293 Aircraft maintenance 96 86 11.6 340 86 253 Other rent and landing fees 89 101 (11.9) 393 101 319 Selling expenses 57 68 (16.2) 284 68 258 Special items, net 12 15 (20.0) 21 15 — Depreciation and amortization 33 37 (10.8) 138 37 152 Other 210 226 (7.1) 874 226 763 Total operating expenses 1,799 1,826 (1.5) 7,464 1,826 5,594 Operating income (loss) 145 (71) nm 592 (71) (142) Nonoperating income (expenses) Interest income 23 11 nm 84 11 15 Interest expense, net (53) (65) (18.5) (215) (65) (222) Reorganization items, net — — nm — — 636 Other, net 14 5 nm 13 5 (9) Nonoperating income (expenses), net (16) (49) (67.3) (118) (49) 420 Income (loss) before income taxes 129 (120) nm 474 (120) 278 Income tax provision (benefit) 68 — nm 129 — (2) Net income (loss) $61 $(120) nm $345 $(120) $280 US Airways, Inc. Operating Statistics 3 Months 3 Months Ended Ended Dec. 31, Dec. 31, Percent 2006 2005 Change Mainline Revenue passenger miles (in millions) 9,011 8,266 9.0% Available seat miles (ASM) (in millions) 11,755 11,290 4.1% Passenger load factor (percent) 76.7 73.2 3.4 pts Yield (cents) 13.98 13.59 2.9% Passenger revenue per ASM (cents) 10.72 9.95 7.7% Passenger enplanements (in thousands) 8,995 8,513 5.7% Aircraft (end of period) 226 232 -2.6% Block hours 204,793 199,928 2.4% Average stage length (miles) 850 792 7.3% Average passenger journey (miles) 1,002 971 3.2% Fuel consumption (gallons in millions) 191.3 178.7 7.1% Average fuel price (dollars per gallon) with related taxes 1.92 2.10 -8.5% Full-time equivalent employees (end of period) 19,421 20,110 -3.4% Operating cost per ASM (cents) 11.02 11.83 -6.9% Operating cost per ASM excluding special items (cents) 10.92 11.70 -6.7% Operating cost per ASM excluding special items and fuel (cents) 7.79 8.38 -7.0% Express Revenue passenger miles (in millions) 1,717 1,707 0.6% Available seat miles (in millions) 2,561 2,687 -4.7% Passenger load factor (percent) 67.0 63.5 3.5 pts Passenger revenue per ASM (cents) 19.18 16.45 16.6% Passenger enplanements (in thousands) 4,587 4,448 3.1% Operating cost per ASM (cents) 19.66 18.24 7.8% TOTAL – Mainline & Express Revenue passenger miles (in millions) 10,727 9,973 7.6% Available seat miles (in millions) 14,316 13,977 2.4% Passenger load factor (percent) 74.9 71.3 3.6 pts Passenger revenue per ASM (cents) 12.23 11.20 9.2 Total revenue per ASM (cents) 13.58 12.56 8.1% Passenger enplanements (in thousands) 13,582 12,961 4.8% Operating cost per ASM (cents) 12.56 13.06 -3.8% 12 Months 12 Months Ended Ended Dec. 31, Dec. 31, Percent 2006 2005 Change Mainline Revenue passenger miles (in millions) 37,130 38,895 -4.5% Available seat miles (ASM) (in millions) 47,428 51,518 -7.9% Passenger load factor (percent) 78.3 75.5 2.8 pts Yield (cents) 14.02 12.50 12.2% Passenger revenue per ASM (cents) 10.97 9.44 16.3% Passenger enplanements (in thousands) 36,085 39,977 -9.7% Aircraft (end of period) 226 232 -2.6% Block hours 817,547 928,362 -11.9% Average stage length (miles) 869 791 9.8% Average passenger journey (miles) 1,029 973 5.8% Fuel consumption (gallons in millions) 774.8 841.9 -8.0% Average fuel price (dollars per gallon) with related taxes 2.07 1.77 16.8% Full-time equivalent employees (end of period) 19,421 20,110 -3.4% Operating cost per ASM (cents) 11.39 10.79 5.6% Operating cost per ASM excluding special items (cents) 11.35 10.76 5.5% Operating cost per ASM excluding special items and fuel (cents) 7.96 7.87 1.1% Express Revenue passenger miles (in millions) 7,076 6,640 6.6% Available seat miles (in millions) 10,197 10,369 -1.7% Passenger load factor (percent) 69.4 64.0 5.4 pts Passenger revenue per ASM (cents) 20.44 15.62 30.8% Passenger enplanements (in thousands) 18,966 17,520 8.3 Operating cost per ASM (cents) 20.20 17.96 12.5% TOTAL – Mainline & Express Revenue passenger miles (in millions) 44,206 45,535 -2.9% Available seat miles (in millions) 57,625 61,887 -6.9% Passenger load factor (percent) 76.7 73.6 3.1 pts Passenger revenue per ASM (cents) 12.65 10.47 20.8 Total revenue per ASM (cents) 13.98 11.65 20.0% Passenger enplanements (in thousands) 55,051 57,997 -4.3% Operating cost per ASM (cents) 12.95 11.99 8.0% US Airways Group, Inc. Condensed Consolidated Balance Sheets (in millions) (unaudited) Dec. 31, 2006 Dec. 31, 2005 Assets Current assets Cash equivalents and short-term investments 2,366 1,577 Restricted cash 1 8 Accounts receivable, net 388 353 Materials and supplies, net 223 229 Prepaid expenses and other 377 392 Total current assets 3,355 2,559 Property and equipment, net Flight equipment 2,051 1,920 Ground property and equipment 598 532 Less accumulated depreciation and amortization (583) (431) 2,066 2,021 Equipment purchase deposits 48 43 Total property and equipment 2,114 2,064 Other assets Goodwill 629 732 Other intangibles, net 554 583 Restricted cash 666 792 Other assets 258 234 Total other assets 2,107 2,341 Total assets $7,576 $6,964 Liabilities and Stockholders’ Equity Current liabilities Current maturities of debt and capital leases 95 $211 Accounts payable 454 457 Air traffic liability 847 788 Accrued compensation and vacation 262 210 Accrued taxes 181 146 Other accrued expenses 873 847 Total current liabilities 2,712 2,659 Noncurrent liabilities and deferred credits Long-term debt and capital leases, net of current maturities 2,863 2,749 Deferred gains and credits 205 254 Employment benefit liabilities and other 826 882 Total noncurrent liabilities and deferred credits 3,894 3,885 Stockholders’ equity Preferred stock — — Common stock 1 1 Additional paid-in capital 1,502 1,258 Accumulated deficit (522) (826) Treasury stock (13) (13) Other comprehensive income 2 — Total stockholders’ equity 970 420 Total liabilities and stockholders’ equity $7,576 $6,964
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US Airways Group, Inc.
CONTACT: Elise Eberwein of US Airways, +1-480-693-5574
Web site: http://www.usairways.com/