US Airways third quarter profit more than tripled compared to the same quarter a year ago, as the carrier was boosted by revenue from a prior deal with Delta Air Lines, falling fuel prices, and higher demand.
US Airways released its quarterly results Wednesday. The company reported a profit of $245 million, compared to $76 million during the same time period last year. Revenue rose 2.8 percent, to $3.5 billion. Much of that was driven by capacity increases, as the airline expanded its capacity by 2.7 percent.
Were very happy with these results, said US Airways CEO Doug Parker during a conference call with analysts and media.
US Airways is still attempting to engineer a merger with American Airlines while the larger carrier works its way through bankruptcy court. The companies have signed a non-disclosure agreement, and are examining each others finances.
Parker told analysts and media that he was unable to discuss the potential merger at all on Wednesday.
US Airways has entered into a non-disclosure agreement with American Airlines that precludes us from discussing any potential combination, so we will not be able to answer any questions today about American or consolidation in general, he said. AMR went into Chapter 11 bankruptcy last year.
AMR and its unsecured creditors committee recently requested another one-month extension to its bankruptcy process, which would give it until the end of January to present a reorganization plan. Earlier this week, the union representing Americans pilots, which supports a merger, said while the process seems interminable, it believes the extension heightens the chances of a merger and a merger where Parker takes the controls.
Our advisers believe that prolonging the restructuring process increases the likelihood of a change of control...the most obvious beneficiary of an extension to the exclusivity period would be US Airways management, said Allied Pilots Association president Keith Wilson, in a message to members.
Last week, AMR posted a $238 million loss for the third quarter, up from a $162 million loss the same quarter last year. The company was weighed down by restructuring costs as it moves through the bankruptcy process, including $348 million in employee severance and other restructuring charges.
Improved quarter for US Airways
Tempe, Ariz.-based US Airways has its busiest hub at Charlotte Douglas International Airport, where the carrier operates about 90 percent of daily flights.
Operating expenses at the airline rose only 0.3 percent, to about $3.3 billion. Fuel prices fell 2.4 percent, to $3.07 per gallon, from the third quarter last year. US Airways actual fuel expense fell 1.1 percent, even as fuel use increased 1.3 percent, to 380 million gallons.
US Airways also recorded a $69 million gain during the quarter, related to a prior transaction in which US Airways and Delta swapped take-off and landing spots at Washington Reagan National Airport and La Guardia Airport.
Ancillary revenue, an airline term for fees and other charges, rose $10 million in the quarter, to $146 million. US Airways said much of the increase was attributable to its Choice Seats program, which lets passengers pay extra to reserve certain seats, such as window or aisle seats near the front of the plane.
The number of passengers flown on US Airways increased to 21 million, up from 20.6 million during the same time last year. US Airways load factor, the percentage of seats filled on each plane, averaged 84.9 percent, down 0.1 percent from last year.
The company has also been building its cash reserves. By the end of the third quarter, US Airways had $2.4 billion worth of cash and cash equivalents, up 24 percent from the same time last year.
Labor relations with two of US Airways key unions remain stalled, however. The airlines flight attendants narrowly rejected a contract for the second time this year. And a federal court ruling in a pilot seniority dispute didnt resolve issues US Airways said it needs to clear up before negotiating a pilot contract.
We dont appear to be any closer to a joint contract, said Parker.
Looking ahead, US Airways executives said demand for air travel remains strong, but still somewhat uncertain, with negative headlines briefly depressing demand and positive headlines boosting it.
Corporate and business travel still seem like theyre waiting on some resolution of the election and the fiscal cliff, said president Scott Kirby. However, he said that uncertainty doesnt appear to be affecting Charlotte, where performance remains strong. Charlotte is one of the best hubs in the country, he said.