July 24--Solid travel demand and lower fuel costs lifted US Airways to a $287 million profit in the second quarter.
However, net income was down 6 percent compared with the second quarter in 2012 as the carrier said it was hurt by a noncash provision for income tax of $67 million.
"Last year, we were not booking income taxes and this year we are because of our success," CEO Doug Parker told Wall Street analysts in a conference call Wednesday.
The Tempe, Ariz.-based carrier, which plans to merge with American Airlines' parent, AMR Corp., said revenues grew 2.9 percent to a record $3.9 billion as the airline increased capacity by 3.4 percent in the quarter.
Fuel costs dropped 8 percent to an average of $2.92 per gallon. The carrier does not hedge its fuel costs and has benefited from lower fuel prices compared with last year.
Bookings were also strong for the carrier in June and July. US Airways executives said travel demand seems to be stronger going into the fall, even September, which is traditionally a slower business travel month.
Excluding one-time accounting items, US Airways said its income was $324 million, or $1.58 per share, beating Wall Street analysts' estimates of $1.52 per share, according to FactSet Research.
"It's very rewarding for our last earnings report as an independent company to be the best in our history," Parker said, adding the carrier expects to complete its merger with AMR in the third quarter.
The airline ended the quarter with $4 billion in total cash and investments, including $352 million in restricted cash. US Airways improved its cash balance by $1.1 billion from the first quarter, which Parker said was necessary as it merges with American. The combined company will need cash to help with transition costs, he said.
The companies are awaiting antitrust approvals for their merger, and a bankruptcy court hearing is set to confirm American's reorganization plan on Aug. 15.
To sway European Union regulators, US Airways said it has offered to give up its London Heathrow-Philadelphia takeoff and landing slots.
"We are pleased that as part of the approval process, the EU Commission has completed an initial market investigation and identified only one city pair that raises competitive concerns, London-Philadelphia," the carriers said in a joint statement. "US Airways and American Airlines have provided commitments to the Commission that address those concerns, and we believe we are on track to receive clearance in Europe."
European regulators appear concerned about having more competition on the Philadelphia-London route, which is currently served by US Airways and British Airways, American's business partner in the oneworld alliance.
The EU said it plans to issue a decision Aug. 6 on approval of the merger. The U.S. Justice Department is reviewing the proposed merger along with 19 state attorneys general who are concerned about losing air service or hubs after the airlines combine.
Separately, Delta Air Lines reported a $685 million profit for the quarter, up from a $168 million loss during the same quarter last year. Revenues remained flat at $9.71 billion for the quarter.
Andrea Ahles, 817-390-7631 Twitter: @Sky_Talk
Copyright 2013 - Fort Worth Star-Telegram