World Airways, Inc. today announced financial results for the quarter and
year ended December 31, 2003. Revenues for the quarter ended December 31, 2003, increased 22.1% to
$122.3 million from $100.1 million in the fourth quarter of 2002. The
Company reported significant growth in both military passenger revenue
associated with the U.S. Air Force`s Air Mobility Command and commercial
passenger full service flying, which more than offset a reduction in
commercial cargo full service flying. Total block hours increased 5.1%, to
11,141 in the fourth quarter of 2003 compared to 10,604 in the same period
of last year.
Operating income for the 2003 fourth quarter was $7.1 million, an
improvement of $12.1 million over an operating loss of $5.0 million for
the prior year`s quarter. The Company`s earnings before income tax for the
fourth quarter of 2003 were $1.0 million versus a loss of $6.8 million for
the comparable period of last year. The Company utilized all of its
unrestricted federal net operating loss carry-forwards in 2003.
Net earnings for the 2003 fourth quarter were $0.9 million, or $0.08 per
basic share and $0.06 per diluted share, compared to a net loss of $6.8
million, or $0.61 per basic and diluted share, for the same quarter of
2002. Per share results were computed on the basis of 11.4 million and
14.8 million weighted average shares outstanding for the fourth quarter of
2003, and 11.1 million weighted average shares for the same quarter of
2002, respectively. Net earnings for the 2003 fourth quarter included, as
previously reported, a $3.0 million non-cash charge for debt
extinguishment related to the restructuring of the Company`s convertible
senior subordinated debentures. The charge is the difference between the
fair market value of the new debentures and the carrying amount of the old
debentures extinguished. In addition, the fourth quarter of 2003 included
$1.3 million of fees paid to Wells Fargo Foothill, Inc. for the early
termination of this credit facility.
Operating expenses were $115.2 million for the fourth quarter of 2003
compared to $105.1 million in the fourth quarter of 2002. The most
significant changes were increases of $8.0 million for flight operations,
$3.7 million for fuel, and $1.5 million for sales, general and
administrative expenses, with a decrease of $2.3 million for maintenance
expenses. Operating expenses for 2002 included $2.0 million related to the
return of grant proceeds received under the Air Transportation Safety and
System Stabilization Act.
The increase in flight operations expense was largely due to increased
travel costs for both pilots and flight attendants, higher pilot and
flight attendant wages, as well as simulator and flight attendant
training, and higher catering, passenger handling and communication costs.
The majority of these higher flight expenses were directly attributable to
the increased military and full-service flying in the fourth quarter of
The increase in fuel costs reflects additional consumption associated with
the increase in full-service flying. In the fourth quarter of 2003, the
Company`s customers paid for approximately 96% of the fuel purchased,
which limits the Company`s exposure to increased fuel costs.
The increase in sales, general and administrative expenses is primarily
due to bad debt expense associated with air services provided to Ritetime
Aviation and Travel Services.
The lower maintenance expenses were primarily due to a decrease in MD-11
engine overhauls, partially offset by higher maintenance reserve payments
to aircraft lessors based on aircraft usage. The increase in maintenance
reserve payments was directly related to the increase in flying in the
fourth quarter of 2003.
The increase in other expense was due to the $3.0 million non-cash charge
for debt extinguishment related to the restructuring of the Company`s
convertible senior subordinated debentures and $1.3 million of fees paid
to Wells Fargo Foothill, Inc. for the early termination of this credit
facility, as noted above.