https://www.wsj.com/articles/SB105225455381562700
US Air Posts $1.64 Billion Profit As It Emerges From Chapter 11
Susan CareyStaff Reporter of The Wall Street Journal
Updated May 7, 2003 12:01 am ET
US Airways Group Inc. reported first-quarter net income of $1.64 billion, a result driven by an unusual gain associated with its March 31 emergence from bankruptcy-court protection.
The company, which canceled its common stock when it stepped out of Chapter 11 and is no longer publicly traded, said its pretax operating loss in the quarter -- excluding gains and fresh-start accounting adjustments -- was $282 million. That compared with a year-earlier pretax loss of $435 million. The carrier posted a net loss of $269 million a year earlier. Revenue fell 10% to $1.53 billion from $1.71 billion.
The result caps a quarter marred by the war in Iraq, unrelenting fare wars and the soft economy. Excluding US Airways, eight of the nation's nine largest airlines produced a combined net loss of $3.55 billion. Only low-fare king Southwest Airlines , sixth largest of the 10 largest carriers, turned a small profit. David Siegel, US Airways' chief executive, said the poor economic environment and the war overshadowed the completion of the carrier's restructuring.
Although the war is over, Mr. Siegel predicted a lengthy industry recovery. He said if US Airways' traffic and fares don't improve during the peak summer season, the carrier will reduce its fleet modestly in September. During the latest quarter, US Airways' traffic fell more than 14% on a 13% reduction in capacity.
US Airways, Arlington, Va., said it ended the quarter with $1.84 billion, helped by a $1 billion loan backed in large part by the federal government and a $240 million equity investment from pension fund Retirement Systems of Alabama.
The carrier pared capacity after the September 2001 terrorist attacks on the U.S. and reduced labor and aircraft costs during its seven-month stay in Chapter 11. As a result, its expenses declined more than 16% during the latest quarter, despite a 39% increase in fuel prices. US Airways said it outperformed the industry in unit revenue, or the amount gained for each passenger flown one mile. The company said its domestic unit revenue rose nearly 1% compared with an industry decline of 3.8%.
Load factor, or percentage of seats filled, was 74.1% for the month, compared with 74.3% a year earlier, the air carrier said.
US Airways Group' s Allegheny Airlines Inc., Piedmont Airlines Inc. and PSA Inc. units reported April traffic declined 23.3% to 108.7 million revenue passenger miles from 141.7 million last year. Load factor for the month fell to 53.5% from 55.6%.
As part of its strategy to better match the airline to its demand, US Airways is expected shortly to place a larger order for regional jets.
Write to Susan Carey at susan.carey@wsj.com
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