<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report: October 21, 1996
USAir Group, Inc.
(Commission file number: 1-8444)
and
USAir, Inc.
(Commission file number: 1-8442)
(Exact names of registrants as specified in their charters)
Delaware USAir Group, Inc. 54-1194634
(State of Incorporation USAir, Inc. 53-0218143
of both registrants) (I.R.S. Employer Identification Nos.)
USAir Group, Inc.
2345 Crystal Drive, Arlington, VA 22227
(Address of principal executive offices)
(703) 418-5306
(Registrant's telephone number)
USAir, Inc.
2345 Crystal Drive, Arlington, VA 22227
(Address of principal executive offices)
(703) 418-7000
(Registrant's telephone number)
<PAGE>
Item 5. Other Events
On October 21, 1996, USAir Group, Inc. ("USAir Group" or the
"Company") and USAir, Inc. ("USAir") issued a news release
disclosing results of operations for both companies for the three
months and nine months ended September 30, 1996, and select
operating and financial statistics for USAir for the same periods
(see Exhibit 99 to this report).
USAir's Executive Vice President of Marketing, W. Thomas
Lagow, Lawrence M. Nagin, Executive Vice President of Corporate
Affairs and General Counsel for both USAir Group and USAir and
John W. Harper, Senior Vice President of Finance and Chief
Financial Officer for both companies, spoke with industry analysts
on a conference call following the news release.
Mr. Harper announced that the Company's Board of Directors
had approved at their September 25, 1996 meeting the payment of
dividends of $40 million on the Company's outstanding senior
preferred stock (which includes the Company's Series A, Series F
and Series T Preferred Stock).
Mr. Harper discussed the profit sharing component of the 1992
Salary Reduction Plan noting the Company recognized expense of
$41.1 million related to this plan during the third quarter of
1996 and expected to record a similar expense amount for the
fourth quarter of 1996, subject to actual results for that period.
Once the fourth quarter amount has been expensed, all commitments
under this plan would be satisfied and the plan would cease.
Mr. Harper said that unit cost (operating cost per available
seat mile) - excluding fuel expense - is expected to increase by
approximately 2% to 3% for the fourth quarter of 1996 versus the
fourth quarter of 1995. Mr. Harper commented that the year-over-
year increase is primarily due to increased profit sharing and
benefit-related expenses. Mr. Harper's estimate of the change in
unit cost quarter-over-quarter including fuel expense is an
increase in the 5% range, but he added that significant
uncertainty surrounds any estimates of future fuel prices.
Mr. Lagow advised the analysts that USAir's yield and load
factor are expected to be flat to slightly up for the fourth
quarter of 1996 versus the comparable quarter in 1995. Mr. Lagow
also remarked that capacity (as measured by available seat miles)
would be approximately 8% higher quarter-over-quarter for the
fourth quarter of 1996. Mr. Lagow mentioned that there has been no
significant difference between USAir's bookings for the fourth
quarter of 1996 compared to the third quarter of 1996, considering
seasonality. When asked about the impact on the Company's results
of the increased Florida service offered by Delta Air Lines, Inc.
and Southwest Airlines, Inc., Mr. Lagow stated that USAir's yield
in those markets is expected to decline, the degree of which is
uncertain.
Mr. Nagin, when questioned about the status of the Company's
relationship with British Airway Plc ("British Airways"),
reiterated the Company's position that it does not oppose the
proposed British Airways-American Airlines, Inc. alliance.
<PAGE>
Certain of Mr. Harper's and Mr. Lagow's comments should be
considered "forward-looking information." Forward-looking
information requires the use of estimates of future revenues,
expenses, activity levels and economic and market conditions,
among other factors. Some of these factors, such as the cost of
aviation fuel and general economic conditions, are outside of the
Company's control. The Company's estimates are subject to change.
Actual results may differ from the Company's estimates. The
Company assumes no obligation to update such estimates to reflect
actual results, changes in assumptions or changes in other factors
affecting such estimates.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Designation Description
- ----------- -----------
99 News release dated October 21, 1996 of USAir
Group, Inc. and USAir, Inc., with consolidated
statements of operations for both companies for
the three months and nine months ended September
30, 1996, and select operating and financial
statistics for USAir, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrants have duly caused this report to be
signed on their behalf by the undersigned thereunto duly
authorized.
USAir Group, Inc.
Date: October 23, 1996 By: /s/ James A. Hultquist
---------------------------------
James A. Hultquist
Controller
(Chief Accounting Officer)
USAir, Inc.
Date: October 23, 1996 By: /s/ James A. Hultquist
---------------------------------
James A. Hultquist
Controller
(Chief Accounting Officer)
<PAGE>
Exhibit 99
USAIR GROUP EARNS $67.7 MILLION IN 3RD QUARTER
ARLINGTON, Va., October 21, 1996 -- USAir Group Inc.
reported a net profit of $67.7 million for the third quarter of
1996, after setting aside $41.1 million toward covering 1992
profit-sharing plan obligations. Operating revenues of $2.1
billion set a record for any third quarter in the history of the
company.
USAir Group's board of directors also has declared a
dividend of $40 million to be paid toward arrearages owed to
holders of the company's senior preferred stock.
Without the provision for profit sharing, USAir Group's
third quarter net profit would have been $108.5 million, almost
double the earnings for the comparable quarter of 1995. With
this year's payments, all obligations under the 1992 profit-
sharing plan will be completed.
"While the industry generally continues to benefit from
positive economic conditions, our employees also have done much
to begin an across-the-board improvement in product quality,"
said USAir Chairman and CEO Stephen M. Wolf. "And, our customers
are clearly benefiting from these improvements."
Wolf noted, however, that while USAir now has been
profitable for five of the last six quarters, "we nevertheless
must successfully address the long-term challenges facing the
company."
Under the 1992 profit-sharing plan, employees who took pay
cuts in 1992 and 1993 were to be part of a profit-sharing program
when the airline returned to profitability. Approximately $73.7
million was paid out this past March under the plan as a result
of 1995's profits. The amount of profit-sharing payments for
1996 is expected to be $122 million, completing all obligations
under the plan.
After provision for preferred dividends, USAir Group's
income per common share for the quarter was $0.69 ($0.60 fully
diluted). This compares to $0.35 in the comparable quarter of
1995.
The quarterly results include two unusual items: the expense
item for the profit-share plan and an expense item of $9.8
million in relation to settlement of a lawsuit brought by travel
agents against several airlines in connection with commissions.
- -more-
<PAGE>
PAGE TWO
September 21, 1996
USAir Group Earns $67.7
Million in Third Quarter
On an operating basis, the quarterly profit of $131.4
million was 42 percent higher than the 1995 figure of $92.6
million, while revenues were higher by $199.2 million. Operating
expenses of $1.94 billion were up by 9.0 percent, or $160.4
million over the comparable 1995 figure.
For the first nine months of 1996, USAir Group's net income
was $236.2 million on operating revenues of $6.1 billion. This
is well ahead of the comparable 1995 figures of $59.0 million in
profits on operating revenues of $5.6 billion. On a per-share
basis, after provision for preferred dividends, net income for
the first nine months of 1996 was $2.58 ($2.15 fully diluted) as
compared to a loss of $0.06 in 1995.
Traffic continued to be strong in the third quarter,
especially on international routes. Total traffic in scheduled
service was up 6.3 percent on a capacity increase of 1.3 percent.
International traffic was up 56.6 percent on a capacity increase
of 47.3 percent, reflecting new service between Philadelphia and
Munich, Rome and Madrid. System load factor for the quarter was
69.8 percent, up 3.3 percentage points over the preceding year.
(continued on following page)
<PAGE>
USAir Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
Three Months Ended
September 30,
----------------------- %
1996 1995(Note) Change
---- --------- ------
Operating Revenues
Passenger Transportation $1,885,792 $1,687,824 11.7
Cargo and Freight 39,701 37,889 4.8
Other 147,074 147,704 (0.4)
--------- ---------
Total Operating Revenues 2,072,567 1,873,417 10.6
Operating Expenses
Personnel Costs 769,134 714,970 7.6
Profit Sharing 41,148 15,175 -
Aviation Fuel 188,321 154,223 22.1
Commissions 147,088 135,400 8.6
Aircraft Rent 116,378 108,718 7.0
Other Rent and Landing Fees 105,839 105,308 0.5
Aircraft Maintenance 75,446 83,287 (9.4)
Depreciation and Amortization 77,411 87,912 (11.9)
Other Expenses, Net 420,450 375,775 11.9
--------- ---------
Total Operating Expenses 1,941,215 1,780,768 9.0
--------- ---------
Operating Income (Loss) 131,352 92,649 41.8
Other Income (Expense)
Interest Income 21,732 13,562 60.2
Interest Expense (66,456) (75,065) (11.5)
Interest Capitalized 2,280 758 -
Equity in Earnings (Loss) of Affiliates 9,791 9,234 6.0
Other, Net (19,486) 8,332 -
--------- ---------
Other Income (Expense), Net (52,139) (43,179) 20.8
--------- ---------
Income (Loss) Before Taxes 79,213 49,470 60.1
Provision (Credit) for Income Taxes 11,475 6,414 78.9
--------- ---------
Net Income (Loss) 67,738 43,056 57.3
Preferred Dividend Requirement (22,338) (21,415) 4.3
--------- ---------
Net Income (Loss) Applicable to
Common Stockholders $ 45,400 $ 21,641 -
========= =========
Income (Loss) per Common Share
Primary $ 0.69 $ 0.35 97.1
Fully Diluted $ 0.60 N/A -
Shares Used for Computation (000)
Primary 65,838 62,571
Fully Diluted 95,754 N/A
Note: Certain 1995 amounts have been reclassified to conform with
1996 classifications.
<PAGE>
USAir Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS - Continued
(unaudited)
(in thousands, except per share amounts)
Nine Months Ended
September 30,
---------------------- %
1996 1995(Note) Change
---- --------- ------
Operating Revenues
Passenger Transportation $5,520,502 $5,078,439 8.7
Cargo and Freight 117,944 118,306 (0.3)
Other 452,030 423,063 6.8
--------- ---------
Total Operating Revenues 6,090,476 5,619,808 8.4
Operating Expenses
Personnel Costs 2,269,468 2,163,891 4.9
Profit Sharing 82,358 15,175 -
Aviation Fuel 532,394 477,666 11.5
Commissions 440,225 431,222 2.1
Aircraft Rent 321,641 329,738 (2.5)
Other Rent and Landing Fees 311,539 310,506 0.3
Aircraft Maintenance 265,903 264,928 0.4
Depreciation and Amortization 238,072 263,978 (9.8)
Other Expenses, Net 1,240,793 1,148,937 8.0
--------- ---------
Total Operating Expenses 5,702,393 5,406,041 5.5
--------- ---------
Operating Income (Loss) 388,083 213,767 81.5
Other Income (Expense)
Interest Income 51,409 32,553 57.9
Interest Expense (201,409) (228,521) (11.9)
Interest Capitalized 5,702 7,730 (26.2)
Equity in Earnings (Loss) of Affiliates 31,102 27,781 12.0
Other, Net (20,091) 12,137 -
--------- ---------
Other Income (Expense), Net (133,287) (148,320) (10.1)
--------- ---------
Income (Loss) Before Taxes 254,796 65,447 -
Provision (Credit) for Income Taxes 18,576 6,414 -
--------- ---------
Net Income (Loss) 236,220 59,033 -
Preferred Dividend Requirement (67,134) (63,044) 6.5
--------- ---------
Net Income (Loss) Applicable to
Common Stockholders $ 169,086 $ (4,011) -
========= =========
Income (Loss) per Common Share
Primary $ 2.58 $ (0.06) -
Fully Diluted $ 2.15 N/A -
Shares Used for Computation (000)
Primary 65,457 62,143
Fully Diluted 95,373 N/A
Note: Certain 1995 amounts have been reclassified to conform with
1996 classifications.
<PAGE>
NEWS RELEASE
USAir, Inc.
(A Wholly-Owned Subsidiary of USAir Group, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands)
Three Months Ended
September 30,
----------------------- %
1996 1995(Note) Change
---- --------- ------
Operating Revenues
Passenger Transportation $1,739,074 $1,561,583 11.4
Cargo and Freight 38,671 36,923 4.7
Other 146,312 144,300 1.4
--------- ---------
Total Operating Revenues 1,924,057 1,742,806 10.4
Operating Expenses
Personnel Costs 730,131 676,750 7.9
Profit Sharing 41,148 15,175 -
Aviation Fuel 178,260 146,811 21.4
Commissions 137,090 126,110 8.7
Aircraft Rent 103,009 98,295 4.8
Other Rent and Landing Fees 101,263 101,428 (0.2)
Aircraft Maintenance 62,099 70,306 (11.7)
Depreciation and Amortization 73,511 84,007 (12.5)
Other Expenses, Net 400,779 357,626 12.1
--------- ---------
Total Operating Expenses 1,827,290 1,676,508 9.0
--------- ---------
Operating Income (Loss) 96,767 66,298 46.0
Other Income (Expense)
Interest Income 22,041 13,385 64.7
Interest Expense (71,255) (75,931) (6.2)
Interest Capitalized 2,280 758 -
Equity in Earnings (Loss) of Affiliates 9,791 9,234 6.0
Other, Net (19,931) 6,220 -
--------- ---------
Other Income (Expense), Net (57,074) (46,334) 23.2
--------- ---------
Income (Loss) Before Taxes 39,693 19,964 98.8
Provision (Credit) for Income Taxes 11,646 3,365 -
--------- ---------
Net Income (Loss) $ 28,047 $ 16,599 69.0
========= =========
Note: Certain 1995 amounts have been reclassified to conform with
1996 classifications.
<PAGE>
NEWS RELEASE
USAir, Inc.
(A Wholly-Owned Subsidiary of USAir Group, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS - Continued
(unaudited)
(dollars in thousands)
Nine Months Ended
September 30,
----------------------- %
1996 1995(Note) Change
---- --------- ------
Operating Revenues
Passenger Transportation $5,093,175 $4,724,470 7.8
Cargo and Freight 115,066 115,658 (0.5)
Other 449,028 419,627 7.0
--------- ---------
Total Operating Revenues 5,657,269 5,259,755 7.6
Operating Expenses
Personnel Costs 2,154,956 2,062,653 4.5
Profit Sharing 82,358 15,175 -
Aviation Fuel 504,728 456,319 10.6
Commissions 410,854 404,269 1.6
Aircraft Rent 285,931 300,500 (4.8)
Other Rent and Landing Fees 298,417 299,146 (0.2)
Aircraft Maintenance 222,710 226,497 (1.7)
Depreciation and Amortization 226,508 252,157 (10.2)
Other Expenses, Net 1,176,383 1,092,326 7.7
--------- ---------
Total Operating Expenses 5,362,845 5,109,042 5.0
--------- ---------
Operating Income (Loss) 294,424 150,713 95.4
Other Income (Expense)
Interest Income 51,522 32,158 60.2
Interest Expense (213,323) (225,526) (5.4)
Interest Capitalized 5,702 7,730 (26.2)
Equity in Earnings (Loss) of Affiliates 31,102 27,781 12.0
Other, Net (20,302) 9,930 -
--------- ---------
Other Income (Expense), Net (145,299) (147,927) (1.8)
--------- ---------
Income (Loss) Before Taxes 149,125 2,786 -
Provision (Credit) for Income Taxes 15,440 3,365 -
--------- ---------
Net Income (Loss) $ 133,685 $ (579) -
========= =========
Note: Certain 1995 amounts have been reclassified to conform with
1996 classifications.
<PAGE>
NEWS RELEASE
USAir, Inc.
(A Wholly-Owned Subsidiary of USAir Group, Inc.)
AIRLINE OPERATING AND FINANCIAL STATISTICS (Note 1)
(unaudited)
Three Months Ended
September 30,
---------------------- %
1996 1995 Change
---- ---- ------
Revenue Passengers
(Thousands)* 14,329 14,020 2.2
Total Revenue Passenger Miles
(Millions) 10,267 9,711 5.7
Revenue Passenger Miles
(Millions)* 10,201 9,592 6.3
Total Available Seat Miles
(Millions) 14,685 14,560 0.9
Available Seat Miles
(Millions)* 14,610 14,428 1.3
Passenger Load Factor* 69.8 % 66.5 % 3.3 pts
Break Even Load Factor
(Note 2) 68.8 % 66.2 % 2.6 pts
Yield* 17.05 c 16.28 c 4.7
Passenger Revenue per Available
Seat Mile* 11.90 c 10.82 c 10.0
Revenue per Available Seat Mile
(Note 2) 13.10 c 11.86 c 10.5
Cost per Available Seat Mile
(Note 2) 12.44 c 11.40 c 9.1
Average Passenger Journey
(Miles)* 712 684 4.1
Average Stage Length (Miles)* 584 573 1.9
Revenue Aircraft Miles
(Millions)* 109 109 -
Cost of Aviation Fuel Per Gallon 63.21 c 52.84 c 19.6
Gallons of Aviation Fuel Consumed
(Millions) 282 278 1.4
(continued on next page)
<PAGE>
NEWS RELEASE
USAir, Inc.
(A Wholly-Owned Subsidiary of USAir Group, Inc.)
AIRLINE OPERATING AND FINANCIAL STATISTICS (Note 1)
(unaudited)
Nine Months Ended
September 30,
--------------------- %
1996 1995 Change
---- ---- ------
Revenue Passengers
(Thousands)* 42,228 42,986 (1.8)
Total Revenue Passenger Miles
(Millions) 29,186 29,024 0.6
Revenue Passenger Miles
(Millions)* 28,955 28,658 1.0
Total Available Seat Miles
(Millions) 42,491 44,955 (5.5)
Available Seat Miles
(Millions)* 42,225 44,549 (5.2)
Passenger Load Factor* 68.6 % 64.3 % 4.3 pts
Break Even Load Factor
(Note 2) 67.6 % 64.8 % 2.8 pts
Yield* 17.59 c 16.49 c 6.7
Passenger Revenue per Available
Seat Mile* 12.06 c 10.60 c 13.8
Revenue per Available Seat Mile
(Note 2) 13.28 c 11.59 c 14.6
Cost per Available Seat Mile
(Note 2) 12.66 c 11.26 c 12.4
Average Passenger Journey
(Miles)* 686 667 2.8
Average Stage Length (Miles)* 578 561 3.0
Revenue Aircraft Miles
(Millions)* 317 341 (7.0)
Cost of Aviation Fuel Per Gallon 61.28 c 52.53 c 16.7
Gallons of Aviation Fuel Consumed
(Millions) 824 869 (5.2)
* Denotes scheduled service only (excludes charter service).
c = cents
Note 1. All operating statistics exclude flights operated by USAir, Inc.
("USAir") under a wet lease arrangement with British Airways ("wet
lease"). The wet lease arrangement expired May 31, 1996.
Note 2. Financial statistics exclude the revenue and expense (which amounts
net to zero) generated under the wet lease arrangement and non-
recurring items. Wet lease amounts of $12.6 million, $16.2 million
and $47.6 million have been excluded from year-to-date results for
1996, third quarter results for 1995 and year-to-date results
for 1995, respectively, from both Other Operating Revenues and
Other Operating Expenses for purposes of financial statistic
calculation. The wet lease arrangement expired May 31, 1996. No
non-recurring items are included in USAir's results for the 3rd
quarter of 1996, the third quarter of 1995 or the first nine months
of 1995. USAir's year-to-date 1996 results included non-recurring
expense credits of $29.5 million related to its non-operating BAe-
146 aircraft.
