America West Holdings Corporation (NYSE: AWA), parent company of America West
Airlines, today announced that it expects a second quarter net loss of $20 to
$30 million, excluding special charges previously announced. Including those
special charges, the second quarter net loss is expected to be $40 to
$50 million. The losses are driven by continued weakness in the U.S. economy
and high fuel prices.
The company`s revenue per available seat mile (RASM) is projected to be
6 percent to 8 percent lower than the second quarter of 2000. America West`s
decline in RASM is due to a dramatic industry-wide decrease in business
travel. However, America West`s anticipated RASM decline is less severe than
that announced by other major U.S. airlines. Furthermore, America West`s load
factors for the second quarter have been among the highest in the industry and
have increased while other airlines have experienced declines. The company
believes this relative outperformance is largely due to pricing initiatives
and the significant improvement in operations at America West.
“America West, like the rest of the airline industry, continues to
experience the effects of a sharp reduction in business travel and high fuel
prices,” said William A. Franke, chairman, president and chief executive
officer. “While we are encouraged that we are outperforming the industry, we
are not immune to the business cycle.”
America West has the lowest unit costs of any major hub and spoke carrier.
To underscore its commitment to maintaining its cost advantage and to address
the deteriorating economic environment, America West previously announced
$75 million of cost reduction initiatives including a 10 percent reduction in
management/administration payroll, a $25 million reduction in capital spending
and the return to lessors of seven B737-300 aircraft earlier than anticipated.
As previously announced, these steps will result in a pre-tax charge of
approximately $30 million in the second quarter 2001.
The revised outlook also is expected to affect the company`s book tax
rate. Primarily as a result of the company`s amortization of excess
reorganization value (ERV), which is not deductible for tax purposes, America
West`s book tax rate can fluctuate significantly with changes in earnings.
The expected loss in the second quarter 2001 will result in much smaller book
income tax credits than would be anticipated using a statutory tax rate or
effective tax rates used in prior periods. For example, if the company`s
second quarter 2000 book tax rate of 41.7 percent had been applied, the
estimated second quarter loss would be $10 to $20 million versus the current
estimate of $20 to $30 million. America West currently expects to book an
income tax credit of between $10 and $16 million dollars for the second
quarter. Excluding special charges, the tax provision for the second quarter
is estimated to range between a $4 million credit and $2 million of expense.
America West Holdings expects to announce second quarter 2001 earnings on
July 18, 2001.
company. Wholly owned subsidiary America West Airlines is the nation`s eighth
largest carrier serving 92 destinations with more than 900 daily departures in
the U.S., Canada and Mexico. The Leisure Company, also a wholly owned
subsidiary, is one of the nation`s largest tour packagers.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 that involve risks and
uncertainties that could cause America West`s actual results and financial
position to differ materially from these statements. The risks and
uncertainties include, but are not limited to, the cyclical nature of the
airline industry, competitive practices in the industry, the impact of changes
in fuel prices, relations with unionized employees generally and the impact of
the process of negotiation of labor contracts on the company`s operations, the
outcome of negotiations of collective bargaining agreements and the impact of
these agreements on labor costs, the impact of industry regulation and other
factors described from time to time in the company`s publicly available SEC
reports. The company undertakes no obligation to publicly update any
forward-looking statement to reflect events or circumstances that may arise
after the date of this press release.
This press release, as well as releases issued in the past year by America
West Holdings and its affiliates, can be accessed at http://www.americawest.com.