US Airways Group, Inc. Reports Fourth Quarter and Full Year 2005 Results

[Paul]

Background Information for the New US Airways Group, Inc. Fourth Quarter and Full Year 2005 Results:

* The former US Airways Group ("Old Group") and America West Holdings
Corporation ("America West") merged on Sept. 27, 2005. Although the
merger was structured so that America West became a wholly owned
subsidiary of the new US Airways Group, America West is treated as the
acquiring company for accounting purposes under Statement of Financial
Accounting Standards No. 141 "Business Combinations." Therefore, the
full year 2005 results of the new US Airways Group contain 269 days of
America West's results, and 96 days of consolidated US Airways Group's
results (US Airways and America West). This is being compared to the
full year 2004 results, which contain 366 days of America West's data
only. In addition, the fourth quarter 2005 is comprised of the full
period America West and US Airways data; while the fourth quarter 2004
period contains only America West's data.

TEMPE, Ariz., Feb. 21 /PRNewswire-FirstCall/ -- The new US Airways Group, Inc. (NYSE: LCC) today reported a fourth quarter 2005 net loss of $261 million or $3.26 per diluted share. This compares to a net loss of $69 million or $4.66 per diluted share for the same period last year. The Company's fourth quarter 2005 results include a $69 million unrealized loss related to the airline's fuel hedges; $36 million of special charges, which primarily includes merger related transition expenses; and $18 million in charges partially related to the remarketing and warrant repurchase associated with America West's prior Airline Transportation Stabilization Board (ATSB) loan. Excluding these items, the Company reported a fourth quarter 2005 net loss of $138 million or $1.72 per diluted share versus a net loss excluding special items of $58 million or $3.89 per diluted share in the fourth quarter of 2004.

The increase in the year-over-year net loss excluding special items is due to the fact that the 2004 results include only America West's data. Standalone fourth quarter net losses excluding special items at both America West and US Airways improved versus the fourth quarter 2004. See the accompanying notes in the Financial Tables section of this press release for a reconciliation of Generally Accepted Accounting Principles (GAAP) financial information to non-GAAP financial information.

PR Newswire

 

[autofixer]

Well! It seems the numbers are in line with the customary massive losses we Easters are used to.

 

[john john]

The Company's fourth quarter 2005 results include a $69 million unrealized loss related to the airline's fuel hedges;

WN makes money hedging we lose money hedging??????

 

[RICflyer]

Well! It seems the numbers are in line with the customary massive losses we Easters are used to.

I am very happy with the results, this is much better then expected by Wall Street. If you read the article it states, “Looking forward, we continue to believe that excluding one-time merger-related transition costs, the new US Airways will be profitable in 2006 — even at today’s projected fuel prices.â€￾ To be profitable at today's oil price would be a huge step forward.

As someone who has stuck by US through the highes and lows, as a flyer, I think we are headed the right way!!!

 

[AIRWOMAN]

WN makes money hedging we lose money hedging??????

WN hedged better than we did. They've hedged better than anyone, historically.

 

[john john]

WN hedged better than we did. They've hedged better than anyone, historically.

Good management. I guess it is the over paid agents fault again.

 

[AIRWOMAN]

Good management. I guess it is the over paid agents fault again.

More like a credit score.........who has a better one.

 

[Bluesky]

These guys must be bigger thieves and liars than I thought or maybe they are just not the talent they think they are. (I'll bank on the former) Any company who can cut salaries in half, steal pensions, eliminate perks, use bankruptcy to wipe out creditors, outsouce work and still report a loss yet always find blame have got to be kidding.
The extra fuel costs are a drop in the bucket compared to what they've paid their buddies handling the bankruptcy, (like the Seabury crooks) as well as their handpicked thieves running the regionals. No mention of record growth at those companies. Money trails usually smell, and this one stinks to high heaven!

 

[PhxRanchHand]

Accordin gto the full release, the pilots, Flight Attendants and CSR's/Res all have transition agreements in place
that leaves M&R and fleet
my ? is How long before this is all settled

 

[FWAAA]

WN makes money hedging we lose money hedging??????

Doesn't surprise me. WN's most favorable hedging positions were entered into two-three years ago, before oil spiked.

USAir's hedging transactions, OTOH, were much more recent, after oil had already skyrocketed. And now that oil has moderated from its $70 peak, makes sense that hedges put in place during the past year or so aren't in the money, and represent paper losses at this point.

If oil climbs back to $70 or higher, perhaps USAir's hedges will represent profitable positions instead of losing propositions.

 

[sfb]

WN makes money hedging we lose money hedging??????

It's actually because of the way America West has been accounting for its hedges when compared to the way Southwest does it. AWA puts its all of its mark-to-market gains and losses in the operating numbers -- which means that you see the effect of the changes in expected value for the hedges for the current quarter and for future quarters. AWA was able to post a relatively hefty 1Q2005 operating profit largely thanks to $49 million in mark-to-market gains. Southwest puts mark-to-market hedge gains for future periods (i.e. how much the hedges would be worth in future at current crude/heating oil/gasoline prices) in the non-operating numbers. Everything ends up being the same on the balance sheet; it's just where the numbers get entered from quarter to quarter. If AWA hadn't been putting mark-to-market numbers under operating income in the past, this quarter's numbers would have looked better, but can't change the accounting treatment without restating the numbers for past quarters.

You can see how the hedges for the current quarter offset fuel costs by looking at the "Realized" gains from hedging.

 

[javaboy]

Doesn't surprise me. WN's most favorable hedging positions were entered into two-three years ago, before oil spiked.

USAir's hedging transactions, OTOH, were much more recent, after oil had already skyrocketed. And now that oil has moderated from its $70 peak, makes sense that hedges put in place during the past year or so aren't in the money, and represent paper losses at this point.

If oil climbs back to $70 or higher, perhaps USAir's hedges will represent profitable positions instead of losing propositions.

actually the majority of WN hedges are approximately 7 years into a 10 year program.
thats why most of them up to this year were sub 30 now currently in low 30s.

as for LCC what are usually termmed non-performaning derivatives means they may have guessed wrong 5with more than likely COLLARS where there is a range (like 65-55) where as sub 55 LCC would PAY addtional fees but be protected above 65.. just an example thats all not meant to be indicative of actual hedges.

Jetfuel has been dropping of late (most of JAN) i would suspect this to continue as the refinaries increase jetfuel production and decrease home heating oil production due to (except last 5 days) unseasonably warm winter thus far. Most airline companies are projecting costs in the 1.90-1.99 range (hedges would produce an equivalent lower price) and recent spot fuel checks found most of jan about 1.85 area. and mid feb saw 1.75 area.

for 2/14 NY jetfuel was 1.68
http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm

i would suspect upgrades for airlines are coming shortly as a group. fuel is dropping loads are holding high or higher costs are slashed, we are about to enter spring break when loads traditionally pick up.. i would say trading buys on most will last til about mid summer.

good luck to all

 

[EricLv2Fish]

WN makes money hedging we lose money hedging??????

The hedge back when oil was 25 bucks a barrel out 4 years because they had the capital that investors were willing to allow them to project out that far. Good gamble by SW. Fact is we didn't do as good as SW, but we did better than most.

 

[ringmaruf]

Accordin gto the full release, the pilots, Flight Attendants and CSR's/Res all have transition agreements in place
that leaves M&R and fleet
my ? is How long before this is all settled

They can't negotiate a transition agreement until they know which union (if any) will be representing the combined groups. Since ALPA, AFA, and CWA/IBT were representing their groups at both airlines, they could negotiate their transition agreements already. With the other two groups, US has to wait to see if it'll be dealing with IAM or IBT, and IAM or TWU, before the transition agreements can be negotiated.

 

[usair_begins_with_u]

Does anyone not get that “Looking forward, we continue to believe that excluding one-time merger-related transition costs, the new US Airways will be profitable in 2006 — even at today’s projected fuel prices.â€￾ means USAir expects to post a net loss for 2006?

LCC is not a high tech company, revenue cannot grow much faster than the growth in the economy unless LCC stops paying its employees. LCC priced above $30 is absurd based on any kind of fundemental valuation.