US Airways Reports Quarterly Loss of $242 Million
US Airways Group, Inc. reported a net loss for its third quarter of $242 million or $2.35 per share which excluded special charges that totaled $623 million. Special charges in the third quarter 2008 included $488 million of unrealized losses resulting from mark-to-market adjustments on fuel hedging instruments.
On a GAAP basis, the company reported a net loss for its third quarter 2008 of $865 million, or $8.45 per share, compared to a net profit of $177 million, or $1.87 per diluted share for the same period last year. Mainline passenger revenue per available seat mile (PRASM) in the third quarter was 11.32 cents, up 4.4 percent over the same period last year. Express PRASM was 19.55 cents, up 1.3 percent over the third quarter 2007.
Total mainline and Express PRASM for US Airways Group was 12.71 cents, which was up 4.6 percent over the third quarter 2007 on a 0.4 percent increase in total available seat miles (ASMs). Mainline cost per available seat mile (CASM) was 16.01 cents, up 44.1 percent versus the same period last year on a decrease in mainline capacity of 1.4 percent versus the third quarter of 2007.
Fuel expense was the driver in the company’s increase in unit costs as the average mainline fuel price per gallon (excluding realized gains/losses on fuel hedging instruments) increased 68 percent year-over-year. Excluding fuel, unrealized and realized gains/losses on fuel hedging instruments, and special charges, mainline CASM was 8.08 cents, up 5.3 percent from the same period last year.
During the third quarter, the company recognized $623 million of special charges. These special charges included a $488 million, non-cash unrealized net loss associated with the change in fair value of the company’s outstanding fuel hedge contracts, of which approximately $320 million was a reversal of mark-to-market gains recognized in prior periods.
Other special charges included a $127 million impairment loss on certain available for sale auction rate securities, of which $103 million was previously recorded in other comprehensive income (a subset of stockholders’ equity), that is now considered to be other than temporary, and $8 million in charges related to involuntary furloughs as well as terminations of non-union administrative and management staff as a result of capacity reductions.
As of Sept. 30, 2008, the company had $2.3 billion in total cash and investments, of which $0.7 billion was restricted. Included in the company’s restricted cash balance was $159 million related to letters of credit collateralizing certain counterparties to the Company’s fuel hedging transactions. During the quarter, the company raised $179 million through an underwritten public stock offering. Proceeds from that offering are included in the total cash and investments balance reported above.
