<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the quarterly period ended March 31, 1997 or
________ Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________________ to ________________
Commission file number 1-12649
AMERICA WEST HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 86-0847214
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
51 WEST THIRD STREET TEMPE, ARIZONA 85281
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 693-0800
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes XX No
---- ----
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes XX No (Not Applicable)
---- ----
The Company has 1,200,000 shares of Class A Common Stock and 44,675,910 shares
of Class B Common Stock outstanding as of April 30, 1997.
<PAGE> 2
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICA WEST HOLDINGS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- ----------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 136,323 $ 137,499
Short-term investments 29,385 39,131
Accounts receivable, less allowance for doubtful
accounts of $3,056 in 1997 and $3,091 in 1996 93,346 106,215
Expendable spare parts and supplies, less allowance for
obsolescence of $1,911 in 1997 and $1,713 in 1996 21,735 21,423
Prepaid expenses 56,917 47,545
---------- ----------
Total current assets 337,706 351,813
---------- ----------
Property and equipment:
Flight equipment 704,346 669,654
Other property and equipment 112,749 107,993
Equipment purchase deposits 68,355 56,665
---------- ----------
885,450 834,312
Less accumulated depreciation and amortization 189,265 163,718
---------- ----------
Total property and equipment 696,185 670,594
---------- ----------
Other assets:
Restricted cash 28,638 26,433
Reorganization value in excess of amounts allocable to
identifiable assets, net 435,789 447,044
Deferred income taxes 74,700 74,700
Other assets, net 27,364 27,066
---------- ----------
Total other assets 566,491 575,243
---------- ----------
$1,600,382 $1,597,650
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE> 3
AMERICA WEST HOLDINGS CORPORATION
Condensed Consolidated Balance Sheets
(in thousands except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 44,211 $ 46,238
Accounts payable 132,621 115,458
Air traffic liability 232,984 214,056
Accrued compensation and vacation benefits 26,269 30,085
Accrued taxes 46,479 72,047
Other accrued liabilities 43,120 44,836
----------- ------------
Total current liabilities 525,684 522,720
----------- ------------
Long-term debt, less current maturities 333,685 330,148
Deferred credits and other liabilities 117,153 122,029
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 48,800,000
shares; no shares issued -- --
Class A common stock, $.01 par value. Authorized
1,200,000 shares; issued and outstanding 1,200,000 shares 12 12
Class B common stock, $.01 par value. Authorized
100,000,000 shares; issued and outstanding 44,674,490
shares at March 31, 1997 and 44,626,056 shares at
December 31, 1996 447 446
Additional paid-in capital 564,419 577,267
Retained earnings 84,091 70,137
----------- ------------
648,969 647,862
Less: cost of Class B Common Stock in treasury, 1,353,899
shares in 1997 and 1,353,911 shares in 1996 (25,109) (25,109)
----------- ------------
Total stockholders' equity 623,860 622,753
----------- ------------
$ 1,600,382 $ 1,597,650
=========== ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
AMERICA WEST HOLDINGS CORPORATION
Condensed Consolidated Statements of Income
(in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1997 1996
--------- ---------
<S> <C> <C>
Operating revenues:
Passenger $ 435,540 $ 387,802
Cargo 12,756 10,757
Other 13,891 14,591
--------- ---------
Total operating revenues 462,187 413,150
--------- ---------
Operating expenses:
Salaries and related costs 101,017 94,702
Aircraft rents 54,932 47,272
Other rents and landing fees 30,816 26,567
Aircraft fuel 69,116 49,176
Agency commissions 38,312 32,599
Aircraft maintenance materials and repairs 31,312 27,025
Depreciation and amortization 12,077 13,232
Amortization of excess reorganization value 6,255 6,549
Other 84,887 81,710
--------- ---------
Total operating expenses 428,724 378,832
--------- ---------
Operating income 33,463 34,318
--------- ---------
Nonoperating income (expenses):
Interest income 2,567 3,170
Interest expense (10,389) (12,268)
Other, net 296 200
--------- ---------
Total nonoperating expenses, net (7,526) (8,898)
--------- ---------
Income before income taxes 25,937 25,420
--------- ---------
Income taxes 11,983 11,693
--------- ---------
Net income $ 13,954 $ 13,727
========= =========
Earnings per share:
Primary $ 0.32 $ 0.28
========= =========
Fully diluted $ 0.31 $ 0.27
========= =========
Shares used for computation:
Primary 43,959 49,710
========= =========
Fully diluted 45,505 50,658
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
AMERICA WEST HOLDINGS CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 13,954 $ 13,727
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,077 13,232
Amortization of capitalized maintenance 14,434 6,602
Amortization of excess reorganization value 6,255 6,549
Amortization of deferred credits (2,793) (2,901)
Other 1,131 520
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net 12,869 (29,622)
Decrease (increase) in spare parts and supplies, net (312) 244
Increase in prepaid expenses (9,372) (4,852)
Decrease (increase) in other assets, net 2,497 (2,341)
Increase in accounts payable 17,163 11,004
Increase in air traffic liability 18,928 67,936
Decrease in accrued compensation and vacation benefits (3,816) (19,570)
Decrease in accrued taxes (25,568) (430)
Increase (decrease) in other accrued liabilities (1,716) 121
Decrease in other liabilities (2,564) (1,542)
--------- ---------
Net cash provided by operating activities 53,167 58,677
Cash flows from investing activities:
Purchases of property and equipment (41,062) (32,795)
Decrease in short-term investments 9,746 --
Other 91 (69)
--------- ---------
Net cash used in investing activities (31,225) (32,864)
Cash flows from financing activities:
Repayment of debt (10,271) (15,812)
Issuance of common stock 495 2,174
Repurchase of America West Airlines' warrants (13,342) --
--------- ---------
Net cash used in financing activities (23,118) (13,638)
--------- ---------
Net increase (decrease) in cash and cash equivalents (1,176) 12,175
--------- ---------
Cash and cash equivalents at beginning of period 137,499 224,367
--------- ---------
Cash and cash equivalents at end of period $ 136,323 $ 236,542
========= =========
Cash, cash equivalents and short-term investments at end
of period $ 165,708 $ 236,542
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
AMERICA WEST HOLDINGS CORPORATION
Notes To Condensed Consolidated Financial Statements
March 31, 1997
1. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements include the accounts
of America West Holdings Corporation ("Holdings" or the "Company") and its
wholly-owned subsidiary, America West Airlines, Inc. ("AWA"), and have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission but do not include all information and footnotes required by
generally accepted accounting principles. In the opinion of management, the
condensed consolidated financial statements reflect all adjustments, which are
of a normal recurring nature, necessary for a fair presentation. Certain prior
year amounts have been reclassified to conform with current year presentation.
The accompanying condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and related notes
thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.
2. PER SHARE DATA
Primary earnings per share is based upon the weighted average number of shares
of common stock outstanding and dilutive common stock equivalents (stock
options and warrants). Primary earnings per share reflects net income adjusted
for interest on borrowings effectively reduced by the proceeds from the
assumed exercise of common stock equivalents, but only if the effects of such
adjustments are dilutive.
Fully diluted earnings per share is based on the weighted average number of
shares of common stock outstanding and dilutive common stock equivalents
(stock options and warrants). Fully diluted earnings per share reflects net
income adjusted for interest on borrowings effectively reduced by the proceeds
from the assumed exercise of common stock equivalents, but only if the effects
of such adjustments are dilutive.
In February 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128"). This
statement simplifies the standards for computing earnings per share (EPS) and
replaces the presentation of primary and fully diluted EPS pursuant to
Accounting Principles Board Opinion No. 15 "Earnings per Share" with a
presentation of basic and diluted EPS, as defined. This statement is effective
for financial statements issued for periods ending after December 15, 1997,
including interim periods. Under SFAS 128, the Company's basic and diluted EPS
for the three months ended March 31, 1997 were $.32 and $.31, respectively.
3. INCOME TAXES
The Company recorded income tax expense as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1997 1996
------- -------
<S> <C> <C>
(in thousands)
Current taxes:
Federal $ 546 $ 364
State 488 326
------- -------
1,034 690
Deferred taxes -- --
Income tax expense allocable
to reorganization items 10,949 11,003
------- -------
Total income tax expense $11,983 $11,693
======= =======
</TABLE>
6
<PAGE> 7
AMERICA WEST HOLDINGS CORPORATION
Notes To Condensed Consolidated Financial Statements
March 31, 1997
As reflected in the above table, for the three months ended March 31, 1997 and
1996, income tax expense pertains both to income from operations as well as to
certain adjustments necessitated by the Company's emergence from bankruptcy in
1994 and the resultant fresh start adjustments to the Company's financial
statements. The Company's reorganization gave rise to significant items of
expense for financial reporting purposes that are not deductible for income
tax purposes. In large measure, it is these nondeductible (for income tax
purposes) expenses that result in income tax expense (for financial reporting
purposes) significantly greater than taxes computed at the current U.S.
corporate statutory rate of 35 percent. Nevertheless, the Company's actual
cash income tax liability (i.e., income taxes payable) is considerably lower
than income tax expense shown for financial reporting purposes.
4. SUPPLEMENTAL INFORMATION TO CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1997 1996
------- -------
(in thousands)
<S> <C> <C>
Cash paid for interest and income taxes:
Interest, net of amounts capitalized
($606 in 1996) $10,612 $13,312
Income taxes 40 16
Non-cash financing activities:
Notes payable issued for equipment
purchase deposits 11,690 7,814
</TABLE>
5. STOCK OPTIONS
In 1994, the Company adopted the America West 1994 Incentive Equity Plan,
("Plan"), pursuant to which the Company's Board of Directors may grant stock
options to officers and key employees. The Plan authorized grants of options
to purchase up to 3.5 million shares of authorized but unissued Holdings Class
B Common Stock. In May 1997, the stockholders approved an increase from 3.5
million to 7.5 million in the maximum number of Holdings Class B Common Stock
available under the Plan. Stock options are granted with an exercise price
equal to the stock's fair market value at the date of grant, generally become
exercisable over a three-year period and expire if unexercised at the end of
10 years.
6. WARRANTS
In March 1997, AWA repurchased 1.91 million of its publicly traded warrants
from TPG Partners, L.P. and certain of its affiliates for approximately $13.3
million.
7. COMMITMENTS AND CONTINGENCIES
(a) Leases
In February 1997, AWA entered into an agreement to lease one A320 aircraft for
a term of 50 months with rents payable monthly.
7
<PAGE> 8
AMERICA WEST HOLDINGS CORPORATION
Notes To Condensed Consolidated Financial Statements
March 31, 1997
(b) Contingent Legal Obligations
Certain administrative and priority tax claims are pending against AWA which,
if ultimately allowed by the bankruptcy court, would represent general
obligations of AWA. Such claims include claims of various state and local tax
authorities and certain potential contractual indemnification obligations. AWA
is also a defendant in various lawsuits. Management cannot reasonably predict
the outcome of the pending lawsuits and administrative and priority tax
claims. However, management believes, after considering a number of factors,
including the advice of outside counsel, the nature of the contingencies to
which AWA is subject and its prior experience, that although the outcome of
those matters could adversely affect future operating results, the resolution
of these actions will not have a material adverse effect on the Company's
financial condition.
8
<PAGE> 9
AMERICA WEST HOLDINGS CORPORATION
MARCH 31, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Holdings became the holding company for AWA effective midnight, December 31,
1996. Holdings' primary business activity is ownership of all the capital stock
of AWA. Management's Discussion and Analysis of Financial Condition and Results
of Operations presented below relates to the condensed consolidated financial
statements of Holdings. The Company's results of operations for interim periods
are not necessarily indicative of such results for an entire year due to
seasonal factors as well as competitive and general economic conditions.
The table below sets forth selected operating data for the wholly-owned
subsidiary, AWA.
<TABLE>
<CAPTION>
Three Months Percent
Ended March 31, Change
---------------------- ---------
1997 1996 1997-1996
---- ---- ---------
<S> <C> <C> <C>
Available seat miles
(in millions) 5,791 4,955 16.9
Revenue passenger miles
(in millions) 3,982 3,504 13.6
Load factor (percent) 68.8 70.7 (2.7)
Yield per revenue passenger mile
(cents) 10.94 11.07 (1.2)
Revenue per available seat mile:
Passenger (cents) 7.52 7.83 (4.0)
Total (cents) 7.98 8.34 (4.3)
Passenger enplanements
(in thousands) 4,590 4,305 6.6
Average stage length (miles) 768 700 9.7
Average passenger journey (miles) 1,088 968 12.4
Aircraft (end of period) 101 95 6.3
Average daily aircraft
utilization (hours) 12.4 11.5 7.8
Average full-time equivalent
employees 9,792 8,796 11.3
Fuel price (cents per gallon) 75.03 60.15 24.7
Fuel consumption (gallons in
millions) 92.1 81.8 12.6
</TABLE>
The table below sets forth the major components of operating cost per available
seat mile ("CASM") for the wholly-owned subsidiary, AWA.
<TABLE>
<CAPTION>
Three Months Percent
Ended March 31, Change
--------------------- ---------
1997 1996 1997-1996
---- ---- ---------
<S> <C> <C> <C>
(in cents)
Salaries and related costs 1.74 1.91 (8.9)
Aircraft rents .95 .95 --
Other rents and landing fees .53 .54 (1.9)
Aircraft fuel 1.19 .99 20.2
Agency commissions .66 .66 --
Aircraft maintenance materials
and repairs .54 .55 (1.8)
Depreciation and amortization .21 .27 (22.2)
Amortization of excess
reorganization value .11 .13 (15.4)
Other 1.47 1.65 (10.9)
----- -----
7.40 7.65 (3.3)
===== =====
</TABLE>
9
<PAGE> 10
AMERICA WEST HOLDINGS CORPORATION
MARCH 31, 1997
RESULTS OF OPERATIONS
For the three months ended March 31, 1997 and 1996, the Company realized net
income of $13.9 million and $13.7 million, respectively. Net income for the
three month period in 1997 included income tax expense for financial reporting
purposes of $12.0 million compared to $11.7 million in 1996.
Passenger revenues increased $47.7 million or 12.3 percent to $435.5 million
during the three months ended March 31, 1997 due primarily to a 13.6 percent
increase in revenue passenger miles. Yield decreased 1.2 percent to 10.94 cents
from 11.07 cents due primarily to a 9.7 percent increase in stage length.
Capacity, as measured by available seat miles ("ASMs"), increased 16.9 percent
in the 1997 first quarter as compared to 1996 due to the effect of the Company's
strategic growth plan which was initiated in February 1996. Load factor
decreased by 1.9 points to 68.8 percent. Passenger revenue per available seat
mile ("RASM") decreased to 7.52 cents from 7.83 cents. Cargo and other revenues
increased 5.1 percent to $26.6 million for the first quarter of 1997 as a result
of higher available capacity.
CASM decreased 3.3 percent to 7.40 cents in the first quarter of 1997 from 7.65
cents for the 1996 period, despite a 24.7 percent increase in the average price
per gallon of fuel. Excluding fuel and related taxes, CASM declined 6.7 percent
when compared with the first quarter of 1996. The changes in the components of
operating expense per ASM are explained as follows:
- - Salaries and related costs per ASM decreased 8.9 percent due to continued
improvement in productivity as full-time equivalent headcount increased 11.3
percent versus a 16.9 percent increase in ASMs.
- - Aircraft fuel expense per ASM increased 20.2 percent due to a 24.7 percent
increase in the average price per gallon of fuel from 60.15 cents in the 1996
quarter to 75.03 cents in 1997.
- - Depreciation and amortization expense per ASM decreased 22.2 percent due in
part to lower 1997 depreciation expense as certain ramp equipment was
depreciated to net realizable value in 1996.
- - Amortization of excess reorganization value per ASM decreased 15.4 percent
primarily due to the 16.9 percent increase in ASMs.
- - Other operating expenses per ASM decreased 10.9 percent to 1.47 cents from
1.65 cents as increases in passenger traffic-related costs such as CRS
booking fees, catering costs, and credit card discount fees, and fuel taxes
were more than offset by the 16.9 percent increase in ASMs.
Net nonoperating expenses decreased $1.4 million to $7.5 million in the first
quarter of 1997 from $8.9 million in 1996 due primarily to a net decrease in
interest expense as the Company reduced outstanding debt by $42.3 million year
over year.
Income tax expense for financial reporting purposes for the three months ended
March 31, 1997 was relatively unchanged when compared to the 1996 quarter.
LIQUIDITY AND CAPITAL RESOURCES
Unrestricted cash and cash equivalents and short-term investments decreased to
$165.7 million at March 31, 1997 from $176.6 million at December 31, 1996
primarily due to the repurchase of 1.91 million AWA warrants for approximately
$13.3 million by AWA. (See Note 6, "Warrants" in Notes to Condensed Consolidated
Financial Statements.) Net cash provided from operating activities decreased to
$53.2 million for the quarter ended March 31, 1997 from $58.7 million in 1996
due principally to the payment in 1997 of approximately $43 million in federal
air transportation excise taxes. Net cash used in investing activities decreased
to $31.2 million for the 1997 period from $32.9 million for the 1996 period. Net
cash used in financing activities was $23.1 million for the first quarter
compared to $13.6 million in the 1996 period primarily due to the warrant
repurchase.
10
<PAGE> 11
AMERICA WEST HOLDINGS CORPORATION
MARCH 31, 1997
The Company has a working capital deficiency which increased to $188 million at
March 31, 1997 from $170.9 million at December 31, 1996. Operating with a
working capital deficiency is typical in the airline industry as tickets sold
for transportation which has not yet been provided are classified as a current
liability while the related income producing assets, the aircraft, are
classified as non-current Despite the working capital deficiency, the Company
expects to meet all of its obligations as they become due.
Long-term debt maturities through 1999 consist primarily of principal
amortization of notes payable secured by certain of AWA's aircraft. Such
maturities are $36 million, $43.2 million and $70.4 million, respectively, for
the remainder of 1997, 1998 and 1999. Management expects to fund these
requirements with cash from operations.
At March 31, 1997, the Company had net operating loss carryforwards ("NOL") and
general business tax credit carryforwards of approximately $471.8 million and
$12.7 million, respectively. Under Section 382 of the Internal Revenue Code of
1986, as amended, if a loss corporation has an "ownership change" within a
designated testing period, its ability to use its NOL and tax credit
carryforwards is subject to certain limitations. The Company is a loss
corporation within the meaning of Section 382. The issuance of certain common
stock by the Company pursuant to the plan of reorganization and emergence from
bankruptcy in 1994 resulted in an ownership change within the meaning of Section
382. This ownership change has resulted in an annual limitation (the "Section
382 Limitation") upon the Company's ability to offset any post-change taxable
income with pre-change NOL. Should the Company generate insufficient taxable
income in any post-change taxable year to fully utilize the Section 382
Limitation of that year, any excess limitation will be carried forward for use
in subsequent tax years, provided the pre-change NOL has not been exhausted nor
has the carryforward period expired.
The Company's reorganization and the associated implementation of fresh start
reporting gave rise to significant items of expense for financial reporting
purposes that are not deductible for income tax purposes. In large measure, it
is these nondeductible expenses that result in an effective tax rate (for
financial reporting purposes) significantly greater than the current U.S.
corporate statutory rate of 35 percent. Nevertheless, the Company's actual
income tax liability (i.e., income taxes payable) is considerably lower than
income tax expense shown for financial reporting purposes. This difference in
financial expense compared to actual income tax liability is in part
attributable to tax attributes (including NOLs, subject to certain limitations)
of the pre-reorganization Company that serve to reduce the Company's actual
income tax liability. To the extent the tax attributes of the pre-reorganization
Company reduce the Company's actual income tax liability below the amount of
expense reflected in the financial statements, that difference is applied to
reduce the carrying balance of the Company's Reorganization Value in Excess of
Amounts Allocable to Identifiable Assets.
At March 31, 1997, AWA had firm commitments to AVSA S.A.R.L., an affiliate of
Airbus Industrie ("AVSA"), for a total of 17 Airbus A320-200 aircraft with
delivery beginning in 1999. The aggregate net cost of such aircraft is based on
formulae that include certain price indices (including indices for various
aircraft components such as metal products) for periods preceding the various
delivery dates. Based on an assumed 5 percent annual price escalation, AWA
estimates such aggregate net cost to be approximately $850 million. AWA has
arranged for financing for up to one-half of the commitment relating to such
aircraft and will require substantial capital from external sources to meet its
remaining financial commitment. There can be no assurance that AWA will be able
to obtain such capital in sufficient amounts or on acceptable terms and a
default by AWA under the AVSA agreement or any such commitment could have a
material adverse effect on the Company.
As of March 31, 1997, AWA's fleet consisted of 101 aircraft of which 20 aircraft
meet the FAA's Stage II (but not Stage III) noise reduction requirements and
must be retired or significantly modified prior to the year 2000. Management is
currently considering its options regarding such aircraft. If AWA determines to
modify such aircraft to comply with Stage III, the required capital expenditures
for such modifications are currently estimated to be approximately $2 million
per aircraft. There can be no assurance that AWA will be able to obtain such
capital in sufficient amounts or on favorable terms.
11
<PAGE> 12
AMERICA WEST HOLDINGS CORPORATION
MARCH 31, 1997
Capital expenditures for the quarters ended March 31, 1997 and 1996 were
approximately $41 million and $32.8 million, respectively. Included in these
amounts are capital expenditures for capitalized maintenance of approximately
$22.4 million for the first quarter of 1997 and $11.6 million for the first
quarter of 1996.
Certain of AWA's long-term debt agreements contain minimum cash balance
requirements, leverage ratios, coverage ratios and other financial covenants
with which AWA was in compliance at March 31, 1997.
The federal air transportation excise taxes, which expired December 31, 1996,
have been reenacted effective March 7, 1997 through September 30, 1997. Such
taxes (a 10% domestic ticket tax, a 6.25% air cargo tax and a $6.00
international departure tax) generate a substantial portion of funding for the
Federal Aviation Administration. A coalition of the seven largest U.S. airlines
is proposing a user fee as a replacement for the excise taxes. A fuel tax is
also being considered. The National Aviation Civilian Review Commission (the
"Review Commission") has announced its intention to conduct an independent
review of possible funding mechanisms to replace the excise taxes and is
scheduled to release a report in September 1997. Implementation by Congress of a
user fee as proposed by the seven airlines which would favor AWA's larger
competitors, or other proposals recommended by the Review Commission, could
significantly increase the cost of AWA's airline operations and could have a
material adverse impact on the Company's operating results.
In February 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128"). This
statement simplifies the standards for computing earnings per share (EPS) and
replaces the presentation of primary and fully diluted EPS pursuant to
Accounting Principles Board Opinion No. 15 "Earnings per Share" with a
presentation of basic and diluted EPS, as defined. This statement is effective
for financial statements issued for periods ending after December 15, 1997,
including interim periods. Under SFAS 128, the Company's basic and diluted EPS
for the three months ended March 31, 1997 were $.32 and $.31, respectively.
This report contains various forward-looking statements and information that are
based on management's beliefs as well as assumptions made by and information
currently available to management. Whether such forward-looking statements and
information ultimately prove to be accurate depends on various uncertainties and
future developments that cannot be predicted. For a discussion of certain of the
principal risks and uncertainties that may affect the Company's business and
future operating results, please refer to the Company's Annual Report on Form
10-K for the year ended December 31, 1996, which is on file with the Securities
and Exchange Commission.
12
<PAGE> 13
Part II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
EXHIBIT
NUMBER DESCRIPTION AND METHOD OF FILING
*11.1 Computation of Earnings Per Share
*27 Financial Data Schedule
--------------------
*Filed herewith
b. Reports on Form 8-K
None
13
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICA WEST HOLDINGS CORPORATION
By /s/ W. Douglas Parker
----------------------------
W. Douglas Parker
Senior Vice President and
Chief Financial Officer
DATED: May 14, 1997
14
<PAGE> 1
AMERICA WEST HOLDINGS CORPORATION
Computation of Net Income Per Common Share
(in thousands except per share amount)
Exhibit 11.1
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
----------- -----------
<S> <C> <C>
Primary Earnings Per Share:
Computation for Statements of Income:
Net income .................................... $ 13,954 $ 13,727
Adjustment for interest on debt reduction,
net of taxes ................................ -- --
----------- -----------
Net income applicable to common stock ......... $ 13,954 $ 13,727
=========== ===========
Weighted average number of common shares
outstanding ................................. 43,959,439 45,580,812
Assumed exercise of stock options and
warrants (a) ................................. -- 4,128,841
----------- -----------
Weighted average number of common shares
outstanding as adjusted ....................... 43,959,439 49,709,653
=========== ===========
Primary earnings per common share:
Net income .................................... $ 0.32 $ 0.28
=========== ===========
</TABLE>
15
<PAGE> 2
AMERICA WEST HOLDINGS CORPORATION
Computation of Net Income Per Common Share
(in thousands except per share amount)
Exhibit 11.1
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
----------- -----------
<S> <C> <C>
Fully Diluted Earnings Per Share:
Computation for Statements of Operations:
Net income .................................... $ 13,954 $ 13,727
Adjustment for interest on debt reduction,
net of taxes ................................ -- --
----------- -----------
Net income applicable to common stock ......... $ 13,954 $ 13,727
=========== ===========
Weighted average number of common shares
outstanding ................................. 43,959,439 45,580,812
Assumed exercise of stock options and
warrants (a) ............................... 1,545,573 5,076,824
----------- -----------
Weighted average number of common shares
outstanding as adjusted ..................... 45,505,012 50,657,636
=========== ===========
Fully diluted earnings per common share:
Net income .................................... $ 0.31 $ 0.27
=========== ===========
</TABLE>
(a) The stock options and warrants are included only in the periods in
which they are dilutive.
16
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001029863
<NAME> AMERICA WEST HOLDINGS CORPORATION
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 136,323
<SECURITIES> 29,385
<RECEIVABLES> 96,402
<ALLOWANCES> 3,056
<INVENTORY> 21,735
<CURRENT-ASSETS> 337,706
<PP&E> 885,450
<DEPRECIATION> 189,265
<TOTAL-ASSETS> 1,600,382
<CURRENT-LIABILITIES> 525,684
<BONDS> 0
0
0
<COMMON> 459
<OTHER-SE> 623,401
<TOTAL-LIABILITY-AND-EQUITY> 1,600,382
<SALES> 0
<TOTAL-REVENUES> 462,187
<CGS> 0
<TOTAL-COSTS> 428,724
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 750
<INTEREST-EXPENSE> 10,389
<INCOME-PRETAX> 25,937
<INCOME-TAX> 11,983
<INCOME-CONTINUING> 13,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,954
<EPS-PRIMARY> .32
<EPS-DILUTED> .31
</TABLE>
