US Airways Group, Inc. today reported a net loss of $335 million for the third quarter of 2002 on operating revenues of $1.75 billion, compared to a net loss of $766 million on operating revenues of $1.99 billion for the same period in 2001. On a diluted per-share basis, the net loss in the third quarter amounted to $4.92 versus a net loss of $11.42 last year.
Excluding unusual items in both years, which are described in the notes to the financial tables, the net loss for the third quarter of 2002 was $229 million, or $3.36 per diluted share, compared to $433 million, or $6.45 per diluted share, for the third quarter 2001.
“While disappointing, the third quarter numbers are not surprising given the results already reported by a number of other competitors. In addition, the operating environment began to deteriorate further in September with the threat of war, higher fuel prices, and a softening economy,” said David Siegel, US Airways president and chief executive officer. “Our company`s restructuring under Chapter 11 protection is intended to allow us to adapt to this new environment, which we believe includes permanent structural changes to revenue resulting in new industry economics that no longer support high operating costs. While we accomplished much in the third quarter, we clearly have more to do to respond to this new reality.”
Among the accomplishments to which Siegel referred:
- Implemented and made significant progress on key elements of a restructuring plan that are targeted to yield $1.4-$1.6 billion in average annual savings over the next seven years. This includes ratified agreements with all labor groups, and renegotiated terms with aircraft lessors and other vendors.
- Secured $500 million in Debtor-in-Possession (DIP) financing, and an offer of a $240 million equity investment in the company (upon emergence from Chapter 11 protection) from The Retirement Systems of Alabama (RSA).
- Completed a review by the U.S. Department of Transportation (DOT) of US Airways` marketing agreement with United Airlines. The first elements of the agreement were implemented Oct. 14, 2002, with the introduction of reciprocal airport lounge access between the two carriers` club programs, as well as interline electronic ticketing. Other components of the agreement will be implemented over the next several months, including the ability for passengers to earn frequent flier miles on flights operated by either of the two airlines beginning today, Nov. 1, 2002.
- Achieved industry-leading operating performance amongst major network carriers, in which the airline finished second in on-time performance in July and first in August, as measured by the DOT, and achieved its best operating performance on record for September. The airline also posted consistently strong baggage delivery and customer service DOT results, and has operated 5,000 transatlantic flights without a cancellation, dating back to May 2002.
- Reduced capacity by 13 percent in response to the continued industry-wide decline in passenger demand and began returning 32 aircraft to lenders and leasing companies, yet maintained service to 200 communities in its route network.
- Reduced the company`s cost per available seat mile by 10.1 percent, from 12.18 cents per available seat mile in the third quarter of 2001, to 10.95 cents per available seat mile in the third quarter of 2002. The decline in cost per available seat mile would have been approximately 7.3 percent, excluding certain benefits from restructured labor agreements.
“While all stakeholders have made tremendous contributions to the future of US Airways, the company remains focused on doing everything necessary to further reduce our costs and build a successful business model as we restructure,” said Siegel.
The third quarter results reflect the period in which the company filed for Chapter 11 protection on Aug. 11, 2002, in order to complete a previously announced restructuring plan. Earlier this summer, US Airways received unanimous conditional approval from the Air Transportation Stabilization Board (ATSB) of a $900 million federal guarantee of a $1 billion loan. Subsequent to the Chapter 11 filing, the ATSB reaffirmed that its conditional approval remains in effect subject to the company providing supplemental information and a plan of reorganization acceptable to them. The company continues to target a first quarter 2003 emergence from Chapter 11. The company ended the quarter with total restricted and unrestricted cash of $1.33 billion, including $897 million in unrestricted cash, cash equivalents, and short-term investments. This cash balance includes $300 million drawn on the DIP facility.
MORE DETAILS AT www.usairways.com