US Airways swings to $240 million third-quarter profit

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US Airways swings to $240 million third-quarter profit

Unread post by bimjim » Thu Oct 21, 2010

http://atwonline.com/airline-finance-da ... =nl_atw_dn

US Airways swings to $240 million third-quarter profit
By Aaron Karp
October 21, 2010

US Airways posted third-quarter net income of $240 million, reversed from an $80 million net deficit in the year-ago period, saying the combination of "a modestly improving economy," capacity discipline and "moderate" fuel prices are creating an environment conducive to profitability.

Chairman and CEO Doug Parker noted the net profit was the highest ever in a third quarter for the company including past performances by both America West Airlines and the former US Airways. He said achieving "record results" despite the economy only "slowly and begrudgingly pulling out of a recession" is "concrete evidence that fundamental restructuring has taken place" in the US airline industry.

"We have to show our investors and ourselves that this is for real," he added, commenting that carriers can't "give into temptations" to raise capacity or spend too much capital. "Crises force discipline," he told analysts and reporters. "Unfortunately, when the crisis subsides, [in the past] we tended to give into temptation…[But] I think it's dramatically different this time through…We're coming out of the cycle a much more consolidated industry and I think CEOs have gotten the message [that cost and capacity management are critical]."

He continued, "There's never been a period when the industry is generating record results when other businesses are struggling [as is the case now]. The question is, 'Can it last?' Or will we fall back into the traps of the past."

He promised US will keep capacity growth tight. CFO Derek Kerr said US's 2011 mainline capacity will be up by "just under 2%" compared to 2010. "At this time, we expect [2011] domestic capacity to be flat" with 8% growth in international RPMs.

Third-quarter revenue lifted 16.9% to $3.18 billion while expenses increased 5.6% to $2.86 billion, producing operating income of $315 million, significantly widened from a $6 million operating profit in the 2009 September quarter. President Scott Kirby said the airline's rising revenue performance is "being driven largely by improved business demand," noting that "business-oriented markets significantly outperformed leisure markets." He said passenger traffic demand on flights to Florida and Hawaii is "essentially flat year-over-year."

US's third-quarter mainline traffic heightened 2.8% year-over-year to 16.16 billion RPMs on a 2.3% rise in capacity to 19.14 billion ASMs. Load factor was up 0.4 point to 84.4%. Yield increased 14.4% to 12.79 cents as PRASM rose 15% to 10.79 cents and CASM grew 3.1% to 11.34 cents. CASM ex-fuel was flat at 8.06 cents.

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