US Airways reports $279 million profit

July 22, 2010
Carrier will recall 300 furloughed pilots


July 22--Helped by returning business passengers, capacity cuts, and cost controls, US Airways Group Inc. handily beat Wall Street estimates for the second quarter and announced Wednesday that it will recall 300 furloughed pilots and flight attendants.

Philadelphia International Airport's largest airline reported a $279 million profit, or $1.41 a share, compared with a profit of $58 million, or 42 cents a share, a year earlier.

Excluding special items, earnings were $265 million, or $1.34 a share. Analysts had estimated $1.18 a share, compared with a loss of $95 million, or 77 cents a share, a year earlier.

Revenue rose 19.3 percent to $3.17 billion. Analysts had estimated $3.15 billion.

The carrier said it would be profitable in the current third quarter and the full year.

US Airways also said it would recall 220 flight attendants, 125 from the old US Airways and 95 from the former America West. The two airlines merged in 2005.

Of the 80 pilots expected to return by year's end, 40 are from each predecessor airline.

Chief executive officer Doug Parker said the earnings represented the first quarterly profit, excluding special items, since the third quarter of 2007, and the second-highest since the 2005 merger with America West. "We have more cash today than we've had in two years," he said. "Our earnings are higher than they have been in three years. We feel very good about the prospects."

US Airways has reduced capacity, trimmed operating and capital spending, increased revenue from added fees for such items as checked bags, and made operations more efficient. "Those steps, combined with an improving economic environment, have led to these results," Parker said.

President Scott Kirby said that while "revenue metrics are up dramatically" year-over-year, they are "still down slightly from their peaks in 2008."

"This feels to us like a tepid recovery, and one that isn't getting rapidly better," Kirby told investors. But it is not getting worse. "While that's not what we would like to see for the country, a tepid recovery is also leading to moderate fuel prices. As a result, US Airways and the industry are producing near-record profits, despite a weak recovery under way."

In a memo to employees, US Airways said: "After nearly 24 months of normal attrition, we are now in a position to bring some of those crew members back to active status. Today's news is not about any planned growth for US Airways per se, but rather more about making sure we have ample crew in place to support our existing network."

A breakdown of where the furloughed flight crews are based was not yet available.

"These things take several weeks to play out, but it's safe to say some will be based in Philadelphia," spokesman Morgan Durrant said.

Separately, American Airlines narrowed its second-quarter loss to $10.7 million, or 3 cents a share, compared with last year's loss of $390 million, or $1.39 a share.

American is the only U.S. airline, so far, to report a second-quarter loss.

American's revenue rose 16 percent to $5.67 billion. The carrier said fuel costs jumped 24 percent.

Meanwhile, AirTran Holdings Inc. reported that its quarterly profit fell 84 percent on higher fuel costs, and the company recorded derivative losses, compared with gains a year earlier.

AirTran reported a profit of $12.4 million, or 9 cents a share, from a profit of $78.4 million, or 56 cents a share, a year earlier.

Revenue rose 16 percent to $700.6 million.

Fuel costs increased 37.2 percent, which was AirTran's largest expense year-over-year.

Contact staff writer Linda Loyd at 215-854-2831 or [email protected].