US Airways Group, Inc. today reported a net loss of $794 million for the fourth quarter 2002, on operating revenues of $1.61 billion, compared to a net loss of $1.16 billion on operating revenues of $1.57 billion for the fourth quarter 2001. Net loss per diluted share for the quarter was $11.67 compared to $17.07 for the fourth quarter 2001, while the net loss excluding unusual items, which are described in the notes to the financial tables, was $295 million compared to $552 million for the same period in 2001.
For the full year 2002, US Airways Group, Inc. reported a net loss of $1.65 billion on operating revenues of $6.98 billion, compared to a net loss of $2.12 billion on operating revenues of $8.29 billion for the same period in 2001. On a diluted per share basis, the net loss for the year was $24.20 compared to $31.48 in 2001. Excluding unusual items in both years, which are described in the notes to the financial tables, the net loss for the full year 2002 was $1.05 billion compared to $1.17 billion for the same period in 2001.
“Our disappointing results reflect an industry that continues to operate in uncertain economic times with weak passenger demand, escalating fuel prices, and the threat of war,” said David Siegel, US Airways president and chief executive officer. “Despite these challenging conditions, we have made great progress in our efforts to restructure our company and remain on track for emerging from Chapter 11 reorganization at the end of March 2003. We are gaining momentum and are achieving the cost position, regional jet growth and alliance network necessary to compete more aggressively,” said Siegel.
Since the beginning of the fourth quarter 2002, US Airways has taken a number of important and necessary steps towards Chapter 11 emergence in March 2003. Among those steps are:
- Secured additional cost savings, which increased the company`s expected savings to approximately $1.9 billion in average annual savings over the next seven years. This includes additional participation from all employees, aircraft lessors and lenders, and other vendors. // Received U.S. Bankruptcy Court approval to present the reorganization plan to creditors for voting. A confirmation hearing on the plan is set for mid-March. // Continued to “right-size” the business to be in line with industry demand by decreasing capacity. This resulted in an 8.8 percent reduction in available seat miles for the quarter compared to the same quarter in 2001. // Reduced cost per available seat mile by 3.1 percent for the current quarter (4.3 percent excluding fuel), versus the same quarter 2001, driven primarily by a 16.8 percent decrease in personnel costs. // Unit revenue for the fourth quarter 2002 increased by 7.7 percent to 10.30 cents per available seat mile, compared to the same period last year. // Introduced code sharing with alliance partner United Airlines, offering seamless ticketing and baggage handling. Customers for both US Airways and United now can travel on 459 code-share flights, with significantly more markets expected to be introduced this year. // Reached agreements with US Airways Express affiliate carriers Mesa, Chautauqua and Midway on regional jet growth. Also established the terms for operating regional jets at a new MidAtlantic Airways operation with a regional cost structure. Finally, employees at US Airways` wholly owned subsidiaries ratified agreements on regional jet flying upon emergence from Chapter 11. // Reached global restructuring agreements with two major partners, GE and Airbus. The Airbus agreement remains subject to Bankruptcy Court approval.
US Airways has shown significant improvement in nearly all operations quality measurements. The company`s completion factor for 2002 was 99.4 percent, up 2.7 percentage points year over year. Departure and arrival performance improved in nine of the 12 months of 2002, while the completion factor improved in each of the 12 months. US Airways ranked number one in on-time arrivals among the 10 carriers in November 2002, according to the U.S. Department of Transportation (DOT) Air Travel Consumer Report. US Airways also ranked first in arrival performance for the months of August and September.
“Our employees have not lost focus on the most important facet of our business - our customers. We continue to rank in the top tier of consumer indexes in terms of operational performance. This would not have been possible if not for the resolve and dedication of our more than 33,000 employees,” said Siegel.
Looking forward, US Airways expects decreased revenue as a result of recent reductions in business fares initiated by its competitors. “While we have fewer routes than most of our competitors that were impacted by these lower fares, we have estimated that our revenues will be reduced by approximately $10 million per month. It also appears that customers are purchasing these fares for future travel, suggesting that buyers are taking full advantage of the lower fares and simply pulling forward sales from future months,” said B. Ben Baldanza, US Airways senior vice president of marketing and planning.
The company also continues to face challenges related to its pension plans. In the fourth quarter of 2002, the company recognized a $742 million charge to stockholders` equity in connection with its increased minimum pension liability. On Jan. 30, 2003, the company filed formal notice with the Pension Benefit Guaranty Corporation of its intent to terminate its defined benefit pension plan for its pilots effective March 31, 2003, and to replace that plan with a defined contribution plan. A hearing on the company`s distress termination motion is scheduled in the Bankruptcy Court on Feb. 20, 2003.
Operating revenues for the fourth quarter 2002 were $1.61 billion, up 3.1 percent over the same period in 2001, while operating expenses of $2.22 billion were down by 3.2 percent. The operating loss for the fourth quarter 2002 was $603 million, compared to an operating loss of $725 million for the fourth quarter 2001.
For the quarter, US Airways, Inc. carried 10.4 million passengers, a decline of 7.1 percent compared to the same period of 2001. Revenue passenger miles for the quarter declined 1.5 percent while available seat miles declined 8.8 percent, resulting in a passenger load factor of 68.3 percent, a year-over-year increase of 5.1 percentage points. The yield of 13.35 cents for the fourth quarter 2002 was down 0.8 percent from the same period in 2001, while revenue per available seat mile of 10.30 cents was up 7.7 percent. Cost per available seat mile of 12.45 cents for the quarter decreased 3.1 percent versus the same period of 2001. The cost of aviation fuel per gallon for the period was 83.67 cents, up 9.3 percent from 2001. The cost per available seat mile, excluding fuel, decreased by 4.3 percent.
US Airways Group ended the year with total restricted and unrestricted cash of $1.15 billion, including $633 million in unrestricted cash, cash equivalents and short-term investments. This cash balance includes $300 million drawn on the company`s $500 million Debtor-in-Possession (DIP) facility.
Operating revenues for 2002 were $6.98 billion, down 15.8 percent from 2001. Operating expenses were $8.29 billion, down 16.8 percent. Available seat miles for US Airways, Inc. for the full year 2002 declined 15.5 percent year-over-year, reflecting US Airways` capacity reductions resulting from the ongoing sluggish economic environment. US Airways carried 47.2 million passengers during 2002, a 16.0 percent decline compared to the 56.1 million passengers carried during the previous year. Revenue passenger miles declined 12.9 percent compared to 2001, while the passenger load factor increased by 2.1 percentage points to 71.0 percent. Revenue per available seat mile was 10.38 cents for 2002, a decrease of 4.9 percent compared to 2001, while the cost per available seat mile was 12.10 cents, a decrease of 2.9 percent year-over-year (0.8 percent excluding fuel).
In light of the company`s continuing restructuring efforts, which includes an ongoing active solicitation period through March 10, 2003, of acceptances to its First Amended Plan of Reorganization pursuant to a related Disclosure Statement, both dated as of Jan. 17, 2003, US Airways will not hold a conference call to discuss these results.