Attached files
file | filename |
---|---|
8-K - 8-K - US AIRWAYS GROUP INC | c20227e8vk.htm |
Exhibit 99.1
INVESTOR RELATIONS UPDATE
July 21, 2011
July 21, 2011
General Comments
| 2011 Capacity Guidance 2011 total system capacity is expected to be up approximately one percent vs. 2010. Domestic capacity is expected to be up slightly and international up approximately three percent. |
| Cash As of June 30, 2011, the Company had approximately $2.6 billion in total cash and investments, of which $388 million was restricted. |
During the second quarter, the Company completed an offering of 2011-1 Class A, B, and C enhanced
equipment trust certificates (EETCs) in the aggregate principal amount of approximately $471
million. The net proceeds from the offering were used in part to refinance five Airbus aircraft
currently owned by US Airways, and will otherwise be used to finance four Airbus aircraft
scheduled to be delivered in September 2011 and October 2011, and for general corporate purposes.
In addition, on June 30, the Company announced an offering of Class C EETCs in the aggregate
principal amount of approximately $53 million. This offering was an issuance of Class C
certificates under the Companys Series 2010-1 series of EETCs which originally closed in
December 2010. The net proceeds from the offering will be used for general corporate purposes.
This offering closed at the beginning of the third quarter and, accordingly, the proceeds will be
reflected in the Companys third quarter cash and investments balance.
In July, the Company monetized the remaining $19 million of its auction rate security position
(classified as short-term investments on the Companys 2Q balance sheet). As a result, the
Company no longer has an investment in these financial instruments.
| Fuel For the third quarter 2011, the Company anticipates paying between $3.20 and $3.25 per gallon of mainline jet fuel (including taxes). Forecasted volume and fuel prices are provided in the table below. |
| Profit Sharing / CASM Profit sharing equals approximately 10% of pre-tax earnings excluding special items up to a 10% pre-tax margin and 15% above the 10% margin. Profit sharing is excluded in the CASM guidance given below. |
| Cargo / Other Revenue Cargo revenue, ticket change fees, excess / overweight baggage fees, first and second bag fees, contract services, simulator rental, airport clubs, and inflight service revenues. |
| Taxes / NOL As of December 31, 2010, net operating losses (NOL) available for use by the Company is approximately $1.9 billion, all of which is expected to be available for use in 2011. The Companys net deferred tax asset, which includes the NOL, is subject to a full valuation allowance. As of December 31, 2010, the valuation allowances associated with Federal and state NOL are $368 million and $62 million, respectively. In accordance with generally accepted accounting principles, future utilization of the NOL will result in a corresponding decrease in the valuation allowance and offset the Companys tax provision dollar for dollar. As a result, income tax benefits are not currently recognized in the Companys statement of operations. |
The Company reported a loss in the six months ended June 30, 2011 and did not recognize a tax
provision in this period. To the extent profitable, the Company generally will use NOL to reduce
Federal and state taxable income in 2011. The Company also may be subject to AMT liability and
obligated to record and pay state income tax related to certain states where NOL may be limited
or not available to be used, if profitable in 2011.
In connection with the sale of the Companys final investment in auction rate securities in July
2011, the Company expects to record a $21 million special non-cash tax charge in the third
quarter of 2011. This recognizes in the statement of operations the tax provision recorded in
Other Comprehensive Income, a subset of stockholders equity, in the fourth quarter of 2009.
Please refer to the footnotes and the forward looking statements page of this document for additional information
MAINLINE UPDATE
July 21, 2011
July 21, 2011
Mainline Comments
| Mainline data includes US Airways operated flights and all operating expenses are for mainline operated flights only. Please refer to the following page for information pertaining to Express. |
Mainline Guidance | 1Q11A | 2Q11A | 3Q11E | 4Q11E | FY11E | |||||
Available Seat Miles (ASMs) (bil) |
17.0 | 19.1 | ~19.1 | ~17.3 | ~72.6 | |||||
CASM ex fuel, special items and profit sharing (YOY % change)1 |
8.76 | 8.16 | +1% to +3% | +2% to +4% | 0% to +2% | |||||
Cargo Revenues ($ mil) |
43 | 43 | ~43 | ~44 | ~173 | |||||
Other Revenues |
333 | 345 | ~325 | ~315 | ~1,318 | |||||
Percent Hedged |
| | | | | |||||
Fuel Price (incl. taxes) ($/gal) (as of 7/18/2011) |
2.87 | 3.29 | 3.20 3.25 | 3.27 3.32 | 3.15 3.20 | |||||
Fuel Gallons Consumed (mil) |
256 | 288 | ~286 | ~262 | ~1,091 | |||||
Interest Income ($ mil) |
(1) | (1) | ~(2) | ~(2) | ~(6) | |||||
Interest Expense ($ mil) |
77 | 79 | ~85 | ~88 | ~328 | |||||
Other Non-Operating (Income)/Expense ex special items ($ mil)2 |
(1) | (1) | ~1 | | (~1) | |||||
Cash Flow/Capital Update ($ mil) Inflow/(Outflow) | 1Q11A | 2Q11E | 3Q11E | 4Q11E | FY11E | |||||
Cash Capex (non-aircraft) |
(30) | (37) | ~(47) | ~(47) | ~(160) | |||||
Net new aircraft Capex and PDPs |
(10) | 4 | ~(7) | ~2 | ~(11) | |||||
Net Other Cash Flow Adjustments3 |
(88) | 37 | ~(1) | ~(62) | ~(114) |
Notes: | ||
1. | CASM ex fuel, special items and profit sharing is a non-GAAP financial measure. Please see the GAAP to non-GAAP reconciliation at the end of this document | |
2. | Other Non-Operating (Income)/Expense ex special items include primarily gains and losses from foreign currency and the disposition of assets | |
3. | Debt principal repayment, aircraft refinancing, non-cash bond discount amortization/interest deferrals (included in interest expense), and other non-cash items |
Please refer to the footnotes and the forward looking statements page of this document for additional information
EXPRESS UPDATE
July 21, 2011
July 21, 2011
Express Comments
| US Airways Express is a network of nine regional airlines (2 wholly owned) operating under code share and service agreements with US Airways. All operating expenses (including purchase agreements) associated with US Airways Express are included within the Express Non-Fuel Operating Expense line item on our income statement. |
| Express CASM excluding fuel and special items is forecasted to be up six to eight percent for the year primarily due to the timing of maintenance programs at the Companys wholly-owned subsidiary, PSA. The maintenance honeymoon for the CRJ-200 fleet ended in 2010. The additional PSA CRJ-200 maintenance expense increases Express CASM excluding fuel and special items by approximately 4 points on a year-over-year basis. |
Express Guidance | 1Q11A | 2Q11A | 3Q11E | 4Q11E | FY11E | |||||
Available Seat Miles (ASMs) (bil) |
3.49 | 3.69 | ~3.62 | ~3.31 | ~14.11 | |||||
CASM ex fuel and special items
(YOY % change) 1 |
15.10 | 14.21 | +9% to +11% | +7% to +9% | +6% to +8% | |||||
Fuel Price (incl taxes) ($/gal) |
2.92 | 3.28 | 3.26 3.31 | 3.31 3.36 | 3.18 3.23 | |||||
Fuel Gallons Consumed (mil) |
83 | 88 | ~85 | ~80 | ~336 |
Express Carriers
Air Wisconsin Airlines Corporation
|
Piedmont Airlines, Inc. 2 | |
Chautauqua Airlines, Inc.
|
PSA Airlines, Inc. 2 | |
Colgan Air, Inc. 4
|
Republic Airline Inc. | |
Mesa Airlines, Inc. 3
|
Trans States Airlines, Inc. 4 | |
Mesaba Airlines 4 |
Notes: | ||
1. | CASM ex fuel expense and special items is a non-GAAP financial measure. Please see the GAAP to non-GAAP reconciliation at the end of this document. | |
2. | Wholly owned subsidiary of US Airways Group, Inc. | |
3. | Subsidiary of Mesa Air Group, Inc. | |
4. | Pro-rate agreement. |
Please refer to the footnotes and the forward looking statements page of this document for additional information
FLEET UPDATE
July 21, 2011
July 21, 2011
Fleet Comments
| The Company expects to take delivery of 12 A321 aircraft in the second half of 2011, and an additional 12 A320 family aircraft in 2012. These 24 aircraft will be used to replace legacy 737 aircraft. The Company has financing commitments in place for these aircraft. |
Mainline Fleet Update (End of Period)
YE10A | 1Q11A | 2Q11A | 3Q11E | 4Q11E | ||||||||||||||||
Mainline |
||||||||||||||||||||
EMB-190 |
15 | 15 | 15 | 15 | 15 | |||||||||||||||
737-300 |
19 | 19 | 17 | 15 | 7 | |||||||||||||||
737-400 |
40 | 40 | 40 | 40 | 40 | |||||||||||||||
A319 |
93 | 93 | 93 | 93 | 93 | |||||||||||||||
A320 |
72 | 72 | 72 | 72 | 72 | |||||||||||||||
A321 |
51 | 51 | 51 | 54 | 63 | |||||||||||||||
A330 |
16 | 16 | 16 | 16 | 16 | |||||||||||||||
B757 |
23 | 24 | 24 | 24 | 24 | |||||||||||||||
B767 |
10 | 10 | 10 | 10 | 10 | |||||||||||||||
Total |
339 | 340 | 338 | 339 | 340 | |||||||||||||||
Express Fleet Update (End of Period)
YE10A | 1Q11A | 2Q11A | 3Q11E | 4Q11E | ||||||||||||||||
Express |
||||||||||||||||||||
DH8 |
50 | 50 | 50 | 50 | 50 | |||||||||||||||
CRJ-200 |
112 | 112 | 112 | 112 | 112 | |||||||||||||||
CRJ-700 |
14 | 14 | 14 | 14 | 14 | |||||||||||||||
CRJ-900 |
38 | 38 | 38 | 38 | 38 | |||||||||||||||
EMB-170 |
20 | 20 | 20 | 20 | 20 | |||||||||||||||
ERJ-145 |
9 | 9 | 9 | 9 | 9 | |||||||||||||||
EMB-175 |
38 | 38 | 38 | 38 | 38 | |||||||||||||||
Total |
281 | 281 | 281 | 281 | 281 | |||||||||||||||
Please refer to the footnotes and the forward looking statements page of this document for additional information
SHARES OUTSTANDING
July 21, 2011
July 21, 2011
| The estimated weighted average shares outstanding for the remainder of the year are listed below. The interest addback to net income for purposes of computing diluted earnings per share is net of the related effect of profit sharing. |
Shares Outstanding ($ and shares mil)1 | Basic | Diluted | Interest Addback | |||||||||
For Q3-Q4 |
||||||||||||
Earnings above $71 million |
162.1 | 202.4 | 7.0 | |||||||||
Earnings between $31 million and $71 million |
162.1 | 202.2 | 7.0 | |||||||||
Earnings up to $31 million |
162.1 | 164.5 | | |||||||||
Net Loss |
162.1 | 162.1 | | |||||||||
For FY 2011 (Average) |
||||||||||||
Earnings above $283 million |
162.0 | 202.3 | 27.0 | |||||||||
Earnings between $116 million and $283 million |
162.0 | 202.1 | 26.7 | |||||||||
Earnings up to $116 million |
162.0 | 164.3 | | |||||||||
Net Loss |
162.0 | 162.0 | |
Notes:
|
1. | Shares outstanding are based upon several estimates and assumptions, including average per share stock price, stock options, stock appreciation rights, restricted stock unit award activity, and conversion of outstanding senior convertible notes. The number of shares in the actual calculation of earnings per share will likely be different from those set forth above. |
Please refer to the footnotes and the forward looking statements page of this document for additional information
GAAP to Non-GAAP RECONCILIATION
July 21, 2011
July 21, 2011
Reconciliation of GAAP to Non-GAAP Financial Information
The Company is providing disclosure of the reconciliation of reported non-GAAP financial
measures to their comparable financial measures on a GAAP basis. The Company believes that the
non-GAAP financial measures provide investors the ability to measure financial performance
excluding special items and profit sharing, which is more indicative of the Companys ongoing
performance and is more comparable to measures reported by other major airlines. The Company
believes that the presentation of mainline CASM excluding fuel, special items & profit sharing and
Express CASM excluding fuel and special items is useful to investors as both the cost and
availability of fuel are subject to many economic and political factors beyond the Companys
control.
GAAP to Non-GAAP Reconciliation ($ mil except ASM and CASM data) | ||||||||||||||||||||||||||||||||
1Q11 | 2Q11 | 3Q11 Range | 4Q11 Range | FY11 Range | ||||||||||||||||||||||||||||
Actual | Actual | Low | High | Low | High | Low | High | |||||||||||||||||||||||||
Mainline |
||||||||||||||||||||||||||||||||
Mainline operating expenses excluding profit sharing |
$ | 2,230 | $ | 2,515 | $ | 2,445 | $ | 2,490 | $ | 2,337 | $ | 2,379 | $ | 9,480 | $ | 9,628 | ||||||||||||||||
Less mainline fuel (net of (gains)/losses from fuel hedges) |
734 | 948 | 915 | 930 | 857 | 870 | 3,454 | 3,481 | ||||||||||||||||||||||||
Less special items |
3 | 6 | | | | | 9 | 9 | ||||||||||||||||||||||||
Mainline operating expense excluding fuel, special items and profit sharing |
1,493 | 1,561 | 1,530 | 1,560 | 1,480 | 1,510 | 6,017 | 6,137 | ||||||||||||||||||||||||
Mainline CASM (excluding profit sharing) (cts) |
13.09 | 13.15 | 12.80 | 13.03 | 13.51 | 13.75 | 13.06 | 13.26 | ||||||||||||||||||||||||
Mainline CASM excluding fuel, special items and profit sharing (Non-GAAP)
(cts) |
8.76 | 8.16 | 8.01 | 8.17 | 8.56 | 8.73 | 8.30 | 8.47 | ||||||||||||||||||||||||
Mainline ASMs (bil) |
17.0 | 19.1 | 19.1 | 19.1 | 17.3 | 17.3 | 72.6 | 72.6 | ||||||||||||||||||||||||
Express |
||||||||||||||||||||||||||||||||
Express operating expenses |
$ | 770 | $ | 811 | $ | 803 | $ | 817 | $ | 754 | $ | 767 | $ | 3,133 | $ | 3,181 | ||||||||||||||||
Less express fuel expense |
242 | 287 | 277 | 281 | 265 | 269 | 1,071 | 1,079 | ||||||||||||||||||||||||
Less special items |
1 | | | | | | 1 | 1 | ||||||||||||||||||||||||
Express operating expenses excluding fuel and special items |
527 | 524 | 526 | 535 | 489 | 498 | 2,062 | 2,101 | ||||||||||||||||||||||||
Express CASM (cts) |
22.06 | 22.01 | 22.17 | 22.56 | 22.78 | 23.17 | 22.21 | 22.54 | ||||||||||||||||||||||||
Express CASM excluding fuel and special items (Non-GAAP) (cts) |
15.10 | 14.21 | 14.52 | 14.79 | 14.78 | 15.05 | 14.62 | 14.89 | ||||||||||||||||||||||||
Express ASMs (bil) |
3.49 | 3.69 | 3.62 | 3.62 | 3.31 | 3.31 | 14.11 | 14.11 | ||||||||||||||||||||||||
Other Non Operating (Income)/Expense |
||||||||||||||||||||||||||||||||
Reported other non-operating (income)/expense |
$ | (1 | ) | $ | 7 | $ | 1 | $ | 1 | $ | | $ | | $ | 7 | $ | 7 | |||||||||||||||
Less special items |
| 8 | | | | | 8 | 8 | ||||||||||||||||||||||||
Other non-operating (income)/expense excluding special items |
(1 | ) | (1 | ) | 1 | 1 | | | (1 | ) | (1 | ) |
Note: | Amounts may not recalculate due to rounding. |
Please refer to the footnotes and the forward looking statements page of this document for additional information
FORWARD LOOKING STATEMENTS
July 21, 2011
July 21, 2011
FORWARD-LOOKING STATEMENTS
Certain of the statements contained or referred to herein are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements may be identified by words such as may, will, expect, intend, anticipate,
believe, estimate, plan, project, could, should, and continue and similar terms used
in connection with statements regarding, among others, the outlook, expected fuel costs, revenue
and pricing environment, and expected financial performance and liquidity position of the Company.
Such statements include, but are not limited to, statements about future financial and operating
results, the Companys plans, objectives, expectations and intentions, and other statements that
are not historical facts. These statements are based upon the current beliefs and expectations of
the Companys management and are subject to significant risks and uncertainties that could cause
the Companys actual results and financial position to differ materially from these statements.
Such risks and uncertainties include, but are not limited to, the following: the impact of
significant operating losses in the future; downturns in economic conditions and their impact on
passenger demand and related revenues; increased costs of financing, a reduction in the
availability of financing and fluctuations in interest rates; the impact of the price and
availability of fuel and significant disruptions in the supply of aircraft fuel; our high level of
fixed obligations and our ability to fund general corporate requirements, obtain additional
financing and respond to competitive developments; any failure to comply with the liquidity
covenants contained in our financing arrangements; provisions in our credit card processing and
other commercial agreements that may affect our liquidity; the impact of union disputes, employee
strikes and other labor-related disruptions; our inability to maintain labor costs at competitive
levels; interruptions or disruptions in service at one or more of our hub airports; our reliance on
third-party regional operators or third-party service providers; our reliance on and costs of
third-party distribution channels, including those provided by global distribution systems and
online travel agents; changes in government legislation and regulation; our reliance on automated
systems and the impact of any failure or disruption of these systems; the impact of changes to our
business model; competitive practices in the industry, including the impact of industry
consolidation; the loss of key personnel or our ability to attract and retain qualified personnel;
the impact of conflicts overseas or terrorist attacks, and the impact of ongoing security concerns;
our ability to operate and grow our route network; the impact of environmental laws and
regulations; costs of ongoing data security compliance requirements and the impact of any data
security breach; the impact of any accident involving our aircraft or the aircraft of our regional
operators; delays in scheduled aircraft deliveries or other loss of anticipated fleet capacity; the
impact of weather conditions and seasonality of airline travel; the impact of possible future
increases in insurance costs and disruptions to insurance markets; the impact of global events that
affect travel behavior, such as an outbreak of a contagious disease; the impact of foreign currency
exchange rate fluctuations; our ability to use NOLs and certain other tax attributes; and other
risks and uncertainties listed from time to time in our reports to and filings with the Securities
and Exchange Commission (SEC). There may be other factors not identified above of which the
Company is not currently aware that may affect matters discussed in the forward-looking statements,
and may also cause actual results to differ materially from those discussed. The Company assumes no
obligation to publicly update or supplement any forward-looking statement to reflect actual
results, changes in assumptions or changes in other factors affecting such estimates other than as
required by law. Additional factors that may affect the future results of the Company are set forth
in the section entitled Risk Factors in the Companys Report on Form 10-Q for the quarter ended
June 30, 2011 and in the Companys other filings with the SEC, which are available at
www.usairways.com.
Please refer to the footnotes and the forward looking statements page of this document for additional information