America West Holdings Corporation , parent company of America West
Airlines, Inc., today reported fourth quarter 2003 net income of $6.8
million or $0.13 per diluted earnings per share. This compares to a net
loss of $52.0 million or $1.54 per share for the same period last year.
Excluding special items, the Company reported net income of $10.6 million
or $0.20 per diluted earnings per share during its fourth quarter 2003.
The special items for the fourth quarter 2003 include a charge related to
a new labor agreement between the airline and the Air Line Pilots
Association, offset by gains on the sale of two investments, and a credit
related to the settlement of disputed billings under the Company`s
frequent flyer program. See the accompanying notes in the Financial Tables
section of this press release for a reconciliation of the pro forma
results excluding the special items to Generally Accepted Accounting
Principles (GAAP) results.
For the full year 2003, the Company reported net income of $57.4 million
or $1.29 per diluted earnings per share, as compared to a net loss of
$387.9 million or $11.50 per share for 2002. Excluding special items, the
Company reported a net loss of $10.1 million or $0.29 per share for 2003,
which compares to a net loss of $206.4 million or $6.13 per share during
2002. In addition to the special items for the fourth quarter, special
items for full year 2003 included $81.3 million of security fee
reimbursement from the federal government.
“Our fourth quarter earnings are the result of 13,000 outstanding people
working together to transform America West into a successful, low fare
carrier of choice for our customers,” said Chairman and Chief Executive
Officer Doug Parker. “As one of a very select group of airlines to be
profitable for each of the last three quarters, we enter 2004 with
tremendous momentum and enthusiasm and believe we are properly positioned
for success in a rapidly evolving industry. We plan to expand our capacity
in 2004 by eight to 10 percent and expect to report a profit for the year.”
Operating revenues for the fourth quarter 2003 increased 7.7 percent to
$554.3 million from $514.5 million for 2002. The airline`s revenue
passenger miles (RPMs) during its fourth quarter 2003 increased 4.3
percent to 5.3 billion on a one percent increase in capacity. This
resulted in a record fourth quarter 2003 load factor of 75.5 percent, an
increase of 2.3 points over the airline`s fourth quarter 2002 load factor
of 73.2 percent.
Operating revenues for the full year 2003 increased 10.1 percent to $2.2
billion from $2.0 billion during 2002. The airline`s full year 2003 RPMs
increased 7.1 percent to 21.3 billion on increased capacity of 3.3
percent. The airline generated a record load factor of 76.4 percent during
2003, 2.8 points above the load factor generated during 2002.
Passenger revenue per available seat mile (RASM) during the fourth quarter
2003 increased 4.3 percent to 7.46 cents despite a 7.4 percent increase in
average stage length. Passenger yields during the same period increased
one percent to 9.88 cents. For the airline`s full-year 2003, RASM
increased 6.2 percent to 7.58 cents, despite a 5.9 percent increase in
average stage length, while yields improved 2.3 percent to 9.93 cents.
The airline`s operating expenses in the fourth quarter 2003 decreased 1.5
percent to $544.6 million. Continued cost diligence and increased capacity
resulted in a 2.5 percent decrease in the airline`s cost per available
seat mile (CASM) in the fourth quarter 2003. On a fuel exclusive basis,
the airline`s CASM in the fourth quarter 2003 declined 4.3 percent to 6.44
cents. Excluding fuel and special items, the airline`s CASM decreased 8.8
percent to 6.20 cents in the fourth quarter 2003.
Operating expenses for the full year 2003 were up slightly to $2.2
billion, while on a unit basis the airline`s CASM decreased 2.4 percent to
7.86 cents. Excluding fuel and special items, the airline`s CASM for 2003
decreased 6.4 percent to 6.45 cents.
Senior Vice President and Chief Financial Officer Derek Kerr said, “Our
increase in average stage length and increased aircraft utilization,
combined with other cost saving initiatives, drove unit costs, exclusive
of fuel and special items, down by nearly nine percent in our fourth
quarter. At the same time, our consumer-friendly pricing structure drove
our unit revenue up over four percent despite the longer stage length.”
For the full year 2003, as reported to the Department of Transportation
(DOT), 82.0 percent of the airline`s flights arrived within 15 minutes of
scheduled arrival time, and 99.0 percent of its flights were completed.
America West employees received four monthly performance incentive
payments of $50 each during 2003 (through November 2003 as DOT has not
issued December 2003 results at this time). The airline`s performance
incentive program benchmarks certain operational and customer service
statistics, as reported to DOT, against competing airlines.
On Dec. 31, 2003, the Company had a record $629.5 million in cash and
investments, of which $516.7 million was unrestricted. This compares to
$406.5 million in cash on Dec. 31, 2002, of which $360.5 million was
unrestricted. The airline`s restricted cash includes $42.9 million in a
cash collateral account that secures one of the scheduled principal
payments under its Air Transportation Stabilization Board (ATSB) loan.
During the fourth quarter 2003, the Company maintained a strong cash
balance, which positions the airline to meet its first quarter 2004 cash
obligations. These obligations include an Enhanced Equipment Trust
Certificate (EETC) payment, a guarantee fee, the first principal payment
of the airline`s ATSB loan and payments due under the airline`s new
three-year contract with its pilots.
Additional Business Developments During 2003, America West accomplished
several key initiatives, including:—Improved profitability by divesting
its hub operation in Columbus, Ohio;—Inaugurated service between
Phoenix and Memphis, Tenn.; Edmonton, Canada; Cancun and Monterey, Mexico;
and San Jose, Costa Rica;—Became the first low-fare airline to win the
prestigious “Freddie Award” for best Elite-Level Program in the United
States, Canada and Latin America;—Began its first point-to-point
operations by starting nonstop transcontinental flights between Los
Angeles and New York/JFK and Boston, and between San Francisco and New
York/JFK;—Enhanced its incremental revenue stream by implementing
programs such as tray table advertising and Web site advertising;—
Received ratification from the airline`s 1,700 pilots for a new three-year
contract that went into effect Dec. 30, 2003;—Announced growth plans
for 2004, which call for an eight to 10 percent capacity increase, and to
support that growth, the airline plans to hire approximately 1,000
additional employees and has lease agreements or letters of intent to
acquire four additional Airbus A320 aircraft to support this growth.
Parker concluded, “While competition remains fierce among the larger
carriers, our sights are firmly fixed on the low-cost/low-fare sector as
well, and we intend to work hard to differentiate America West`s service
from other low-fare airlines. We believe we have the right elements to
attract customers to our service over other low-cost carriers, including
assigned seating, opportunities to upgrade to first class, an
award-winning frequent flyer program and a comprehensive route structure,
including some of our newest markets in Mexico and Costa Rica. When
combined with the exceptional customer care our people provide every day,
we believe America West is becoming the premiere low-cost/low-fare carrier
of choice for customers traveling across North America.”