The new US Airways Group has reported a first quarter 2006 profit before the cumulative effect of a change in accounting principle of $64 million or $0.75 per diluted share.This compares to a profit before the cumulative effect of a change in accounting principle of $28 million or $1.29 per diluted share for the same period last year. Results for the new US Airways Group’s first quarter 2006 are being compared to America West’s standalone results for first 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.”
US Airways Group’s first quarter 2006 results include a $90 million gain associated with the forgiveness by Airbus of a Company loan, which represents the return of certain aircraft deposits previously paid to Airbus as restructuring fees in conjunction with the merger. In addition, the Company recognized a $26 million unrealized gain related to the airline’s fuel hedges. These gains were offset in part by $46 million of merger-related transition expenses and $11 million of costs incurred in connection with the extinguishment of certain debt instruments as part of the loan refinancing completed with GE Commercial Finance on March 31, 2006. The Company also recognized a $1 million gain from the cumulative effect of a change in accounting principle upon the adoption of SFAS No. 123R, “Share-Based Payment.” Excluding these special items, the Company reported a first quarter 2006 profit of $5 million or $0.05 per diluted share versus a loss excluding special items of $16 million or $1.09 per diluted share in the first quarter of 2005.
US Airways Group Chairman, President and CEO Doug Parker stated, “We are extremely pleased to post a profitable first quarter. We couldn’t be more proud of our 35,000 employees who are doing a wonderful job of integrating our two airlines and taking care of our customers.
“While we recognize we are early in the integration process and we have much work yet to do, these results highlight the tremendous value we have achieved through the merger of US Airways and America West. Unit revenues were up significantly at both airlines as our customers experienced the value of our expanded network. While fuel prices remain an industry problem, the merger synergies are allowing us to keep our non-fuel related costs in line. With our merger we set out to build an airline that could be profitable in an extremely challenging environment and today’s results confirm that our outstanding employees are making that goal a reality.
“Looking forward we anticipate a very strong spring and summer and now expect to be profitable for the full year 2006, even after accounting for merger related expenses and with continued high fuel costs.”