<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 22, 1997
US Airways Group, Inc.
(Commission file number: 1-8444)
and
US Airways, Inc.
(Commission file number: 1-8442)
(Exact names of registrants as specified in their charters)
Delaware US Airways Group, Inc. 54-1194634
(State of Incorporation US Airways, Inc. 53-0218143
of both registrants) (I.R.S. Employer Identification Nos.)
US Airways Group, Inc.
2345 Crystal Drive, Arlington, VA 22227
(Address of principal executive offices)
(703) 872-5306
(Registrant's telephone number)
US Airways, Inc.
2345 Crystal Drive, Arlington, VA 22227
(Address of principal executive offices)
(703) 872-7000
(Registrant's telephone number)
<PAGE>
Item 5. Other Events
On October 22, 1997, US Airways Group, Inc. ("US Airways
Group" or the "Company") and US Airways, Inc. ("US Airways") issued
a news release disclosing the results of operations for both
companies for the three months and nine months ended September 30,
1997, and select operating and financial statistics for US Airways
for the same periods (see Exhibit 99.1 to this report).
Lawrence M. Nagin, Executive Vice President of Corporate
Affairs and General Counsel for both US Airways Group and US
Airways, John W. Harper, Senior Vice President of Finance and Chief
Financial Officer for both companies and Robert L. Fornaro, Senior
Vice President of Planning for US Airways, spoke with industry
analysts on a conference call following the news release.
Certain "forward-looking information" was disclosed during
this conference call: US Airways' unit operating cost (operating
cost per available seat mile or "ASM") is expected to decrease
approximately 1-2% for fourth quarter 1997 as compared to fourth
quarter 1996; and, US Airways' capacity (ASMs) is expected to
decrease approximately 4% for fourth quarter 1997 versus fourth
quarter 1996. As compared to expected capacity for full year 1997,
US Airways' capacity for 1998 is expected to decrease less than the
3 1/2% - 4% decrease previously announced.
US Airways also announced that it has reached an agreement
with CFM International ("CFMI") for the purchase of CFM56 engines
to power as many as 400 Airbus narrowbody aircraft. The engine
order and the previously announced aircraft order are dependent
upon ratification of a new labor contract by US Airways' pilots. In
addition, General Electric ("GE"), joint owner of CFMI, will
provide US Airways with delivery positions for nine Airbus aircraft
scheduled for delivery to GE's leasing subsidiary GECAS in the
years 1999 and 2000 (see Exhibit 99.2 to this report).
Certain of the information discussed on the conference call,
including the information set forth above, should be considered
"forward-looking information" which is subject to a number of risks
and uncertainties. The preparation of forward-looking information
requires the use of estimates of future revenues, expenses,
activity levels and economic and market conditions, many of which
are outside of the Company's control. Among the specific factors
that could cause actual results to differ materially from those set
forth in the forward-looking information are the following:
economic conditions, labor costs, aviation fuel costs, competitive
pressures from lower cost competition, weather conditions,
government legislation, consumer perception of the Company's
product, demand for air transportation in the markets in which the
Company operates and other risks and uncertainties listed from time
to time in the Company's reports to Securities and Exchange
Commission. Other factors and assumptions not identified above are
also involved in the preparation of forward-looking information,
and the failure of such other factors and assumptions to be
realized may also cause actual results to differ materially from
those discussed. The Company assumes no obligation to update such
estimates to reflect actual results, changes in assumptions or
changes in other factors affecting such estimates.
<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits
Designation Description
- ----------- -----------
99.1 News release dated October 22, 1997 of US Airways
Group, Inc. and US Airways, Inc., with consolidated
statements of operations for both companies for the
three months and nine months ended September 30,
1997, and select operating and financial statistics
for US Airways, Inc.
99.2 News release dated October 22, 1997 of US Airways
Group, Inc. announcing that the company has reached
an agreement with CFM International ("CFMI") for
the purchase of CFM56 engines for up to 400 Airbus
narrowbody aircraft. In addition, General Electric
("GE"), joint owner of CFMI, will provide US
Airways with delivery positions for nine Airbus
aircraft scheduled for delivery to GE's leasing
subsidiary GECAS in the years 1999 and 2000.
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.
US Airways Group, Inc.
Date: October 22, 1997 By: /s/ James A. Hultquist
---------------------------------
James A. Hultquist
Controller (Chief Accounting Officer)
US Airways, Inc.
Date: October 22, 1997 By: /s/ James A. Hultquist
---------------------------------
James A. Hultquist
Controller (Chief Accounting Officer)
<PAGE>
Exhibit 99.1
US AIRWAYS EARNS $116.7 MILLION BEFORE ONE-TIME ITEMS
ARLINGTON, Va. Oct. 22, 1997 -- US Airways Group, Inc.
reported today that it had a net profit for the third quarter of
$116.7 million, or $1.14 per share (fully diluted), prior to non-
recurring and unusual gains and expenses.
"These outstanding results are a tribute to our employees'
hard work and professionalism and their dedication to making US
Airways the carrier of choice. The strength of their commitment
bodes well for our company's future," said Chairman and CEO
Stephen M. Wolf.
After including a non-recurring gain of $179.6 million (pre-
tax) relating to the sale of its stake in Apollo Travel Services
and non-recurring and unusual expenses of $97.7 million (pre-
tax), the company said it had a net profit for the quarter of
$187.0 million, or $1.82 per share (fully diluted). Operating
revenues for the period were $2.1 billion.
After provision for preferred dividends, US Airways Group's
income per common share was $1.82 (fully diluted) as compared to
$0.60 per common share (fully diluted) in the third quarter of
1996. The one-time gain relating to the sale in 1997 of the stake
in Apollo Travel Services, less non-recurring and unusual
expenses, is included in this comparison.
Included among the non-recurring and unusual expenses for
the quarter were $59.3 million in relation to the decision to
retire the airline's DC-9 fleet over time, $22.5 million in
relation to the closing of maintenance and other facilities,
$11.7 million in relation to the write-off of maintenance spares
and $4.2 million in miscellaneous expenses.
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<PAGE>
US AIRWAYS EARNS $116.7 MILLION
BEFORE ONE-TIME ITEMS
Oct. 22, 1997
Page 2
The $179.6 million (pre-tax) gain included profit from the
sale of US Airways' interest in Apollo Travel Services to Galileo
International and the subsequent sale of some of its shares in
Galileo, which became a public company as part of the Apollo
Travel Services transaction.
After tax, the non-recurring gain from the sale of Apollo
Travel Services and shares in Galileo was $149.1 million and the
non-recurring and unusual expense items totaled $78.8 million,
resulting in a net gain of $70.3 million, or $0.68 per share
(fully diluted) as a result of non-recurring and unusual items.
On an operating basis, revenues for the quarter were $2.12
billion, an increase of $42.6 million over the $2.07 billion in
1996. Operating expenses were $2.0 billion, up by $90.8 million
over 1996, including $97.7 million in unusual expense items. The
quarterly operating profit of $83.2 million was lower than the
comparable 1996 figure by $48.2 million, reflecting the unusual
expenses recorded for the quarter.
For the first nine months of 1997, pre-tax income was $629.1
million as compared to $254.8 million in the first nine months of
1996. Net profit was $545.3 million compared to $236.2 million
in 1996. Operating revenues were $6.4 billion compared to $6.1
billion and operating expenses were $5.9 billion compared to $5.7
billion. On a per-share basis, earnings for the first nine months
of 1997 were $6.48 per common share ($5.18 fully diluted)
compared to $2.58 ($2.15 fully diluted).
Traffic continued to be strong in the third quarter. Revenue
passenger miles were up by 7.2 percent in scheduled service over
1996 while available seat miles increased by 2.0 percent. The
passenger load factor of 73.4 percent was up by 3.6 percentage
points. The average passenger journey increased 2.0 percent to
726 miles.
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Number: 3318
<PAGE>
US Airways Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts and notes)
Three Months Ended September 30,
1997 1996(Note 1) % Change
--------- ----------- --------
Operating Revenues
Passenger transportation $1,917,119 $1,885,792 1.7
Cargo and freight 46,193 39,701 16.4
Other 151,860 147,074 3.3
--------- ---------
Total Operating Revenues 2,115,172 2,072,567 2.1
Operating Expenses
Personnel costs 763,718 769,134 (0.7)
Profit sharing -- 41,148 --
Aviation fuel 193,970 207,360 (6.5)
Commissions 151,047 147,088 2.7
Aircraft rent 124,715 116,378 7.2
Other rent and landing fees 116,218 105,839 9.8
Aircraft maintenance 126,748 75,446 68.0
Depreciation and amortization 155,013 77,411 --
Other, net 400,580 401,411 (0.2)
--------- ---------
Total Operating Expenses 2,032,009 1,941,215 4.7
--------- ---------
Operating Income 83,163 131,352 (36.7)
Other Income (Expense)
Interest income 27,964 21,732 28.7
Interest expense (63,957) (66,456) (3.8)
Interest capitalized 3,189 2,280 39.9
Equity in earnings of
affiliates 3,513 9,791 (64.1)
Gains on sales of interests
in affiliates 179,625 -- --
Other, net (1,743) (19,486) (91.1)
--------- ---------
Other Income (Expense), Net 148,591 (52,139) --
--------- ---------
Income Before Taxes 231,754 79,213 --
Provision for Income Taxes 44,724 11,475 --
--------- ---------
Net Income 187,030 67,738 --
Preferred Dividend Requirement (10,612) (22,338) (52.5)
--------- ---------
Net Income Applicable to
Common Stockholders $ 176,418 $ 45,400 --
========= =========
Income per Common Share
Primary $ 2.04 $ 0.69 --
Fully diluted $ 1.82 $ 0.60 --
Shares Used for Computation (000)
Primary (Note 2) 86,685 65,838
Fully diluted 102,835 95,754
Note 1. Certain 1996 amounts have been reclassified to conform
with 1997 classifications.
Note 2. During the third quarter of 1997, most of the Series B
Preferred Stock was converted into 10.6 million shares
of Common Stock. On a weighted average basis, the
transaction had the effect of increasing Common Shares
outstanding by approximately 3.9 million shares for the
third quarter of 1997.
<PAGE>
US Airways Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts and notes)
Nine Months Ended September 30,
1997 1996(Note 1) % Change
--------- ----------- --------
Operating Revenues
Passenger transportation $5,825,937 $5,520,502 5.5
Cargo and freight 135,238 117,944 14.7
Other 467,685 452,030 3.5
--------- ---------
Total Operating Revenues 6,428,860 6,090,476 5.6
Operating Expenses
Personnel costs 2,306,347 2,269,468 1.6
Profit sharing -- 82,358 --
Aviation fuel 617,054 588,133 4.9
Commissions 460,846 440,225 4.7
Aircraft rent 359,432 321,641 11.7
Other rent and landing fees 315,905 311,539 1.4
Aircraft maintenance 328,502 265,903 23.5
Depreciation and amortization 326,796 238,072 37.3
Other, net 1,199,643 1,185,054 1.2
--------- ---------
Total Operating Expenses 5,914,525 5,702,393 3.7
--------- ---------
Operating Income 514,335 388,083 32.5
Other Income (Expense)
Interest income 75,241 51,409 46.4
Interest expense (192,642) (201,409) (4.4)
Interest capitalized 8,825 5,702 54.8
Equity in earnings of
affiliates 30,423 31,102 (2.2)
Gains on sales of interests
in affiliates 179,625 -- --
Other, net 13,285 (20,091) --
--------- ---------
Other Income (Expense), Net 114,757 (133,287) --
--------- ---------
Income Before Taxes 629,092 254,796 --
Provision for Income Taxes 83,818 18,576 --
--------- ---------
Net Income 545,274 236,220 --
Preferred Dividend Requirement (54,983) (67,134) (18.1)
--------- ---------
Net Income Applicable to
Common Stockholders $ 490,291 $ 169,086 --
========= =========
Income per Common Share
Primary $ 6.48 $ 2.58 --
Fully diluted $ 5.18 $ 2.15 --
Shares Used for Computation (000)
Primary (Note 2) 75,620 65,457
Fully diluted 104,210 95,373
Note 1. Certain 1996 amounts have been reclassified to conform
with 1997 classifications.
Note 2. During the third quarter of 1997, most of the Series B
Preferred Stock was converted into 10.6 million shares
of Common Stock. During the second quarter of 1997,
most of the Series F Preferred Stock was converted into
14.5 million shares of Common Stock. On a weighted
average basis, these transactions had the effect of
increasing Common Shares outstanding by approximately
8.4 million shares for the first nine months of 1997.
<PAGE>
US Airways, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of US Airways Group, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)
Three Months Ended September 30,
1997 1996(Note) % Change
--------- --------- --------
Operating Revenues
Passenger transportation $1,767,554 $1,739,074 1.6
Cargo and freight 45,174 38,671 16.8
US Airways Express
transportation revenues 150,986 -- --
Other 151,596 146,312 3.6
--------- ---------
Total Operating Revenues 2,115,310 1,924,057 9.9
Operating Expenses
Personnel costs 722,232 730,131 (1.1)
Profit sharing -- 41,148 --
Aviation fuel 183,401 196,197 (6.5)
Commissions 140,477 137,090 2.5
Aircraft rent 109,938 103,009 6.7
Other rent and landing fees 111,549 101,263 10.2
Aircraft maintenance 109,297 62,099 76.0
Depreciation and amortization 150,999 73,511 --
US Airways Express capacity
purchases 122,486 -- --
Other, net 379,879 382,842 (0.8)
--------- ---------
Total Operating Expenses 2,030,258 1,827,290 11.1
--------- ---------
Operating Income 85,052 96,767 (12.1)
Other Income (Expense)
Interest income 29,754 22,041 35.0
Interest expense (64,471) (71,255) (9.5)
Interest capitalized 3,189 2,280 39.9
Equity in earnings of
affiliates 3,513 9,791 (64.1)
Gains on sales of interests
in affiliates 179,625 -- --
Other, net (1,718) (19,931) (91.4)
--------- ---------
Other Income (Expense), Net 149,892 (57,074) --
--------- ---------
Income Before Taxes 234,944 39,693 --
Provision for Income Taxes 48,038 11,646 --
--------- ---------
Net Income $ 186,906 $ 28,047 --
========= =========
Note: Certain 1996 amounts have been reclassified to conform with
1997 classifications.
<PAGE>
US Airways, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of US Airways Group, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)
Nine Months Ended September 30,
1997 1996(Note) % Change
--------- --------- --------
Operating Revenues
Passenger transportation $5,377,365 $5,093,175 5.6
Cargo and freight 132,126 115,066 14.8
US Airways Express
transportation revenues 452,453 -- --
Other 452,186 449,028 0.7
--------- ---------
Total Operating Revenues 6,414,130 5,657,269 13.4
Operating Expenses
Personnel costs 2,182,859 2,154,956 1.3
Profit Sharing -- 82,358 --
Aviation fuel 583,852 557,037 4.8
Commissions 429,327 410,854 4.5
Aircraft rent 315,184 285,931 10.2
Other rent and landing fees 301,842 298,417 1.1
Aircraft maintenance 279,615 222,710 25.6
Depreciation and amortization 315,138 226,508 39.1
US Airways Express capacity
purchases 364,946 -- --
Other, net 1,123,237 1,124,074 (0.1)
--------- ---------
Total Operating Expenses 5,896,000 5,362,845 9.9
--------- ---------
Operating Income 518,130 294,424 76.0
Other Income (Expense)
Interest income 77,253 51,522 49.9
Interest expense (196,637) (213,323) (7.8)
Interest capitalized 8,825 5,702 54.8
Equity in earnings of
affiliates 30,423 31,102 (2.2)
Gains on sales of interests
in affiliates 179,625 -- --
Other, net 13,436 (20,302) --
--------- ---------
Other Income (Expense), Net 112,925 (145,299) --
--------- ---------
Income Before Taxes 631,055 149,125 --
Provision for Income Taxes 98,734 15,440 --
--------- ---------
Net Income $ 532,321 $ 133,685 --
========= =========
Note: Certain 1996 amounts have been reclassified to conform with
1997 classifications.
<PAGE>
US Airways, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of US Airways Group, Inc.)
SELECT AIRLINE OPERATING AND FINANCIAL STATISTICS (Note 1)
(unaudited)
Three Months Ended September 30,
1997 1996 % Change
------- ------- --------
Revenue passengers (thousands)* 15,080 14,329 5.2
Total revenue passenger miles
(millions) 10,979 10,267 6.9
Revenue passenger miles
(millions)* 10,940 10,201 7.2
Total available seat miles
(millions) 14,957 14,685 1.9
Available seat miles(millions)* 14,908 14,610 2.0
Passenger load factor* 73.4% 69.8% 3.6 pts
Break-even load factor (Note 2) 70.0% 68.8% 1.2 pts
Yield* 16.16c 17.05c (5.2)
Passenger revenue per available
seat mile* 11.86c 11.90c (0.3)
Revenue per available seat mile
(Note 2) 13.13c 13.10c 0.2
Cost per available seat mile
(Note 2) 12.27c 12.44c (1.4)
Average passenger journey (miles)* 726 712 2.0
Average stage length (miles)* 599 584 2.6
Revenue aircraft miles (millions)* 111 109 1.8
Cost of aviation fuel per gallon
(Note 3) 63.96c 69.57c (8.1)
Cost of aviation fuel per gallon
(excluding fuel taxes) 58.23c 63.21c (7.9)
Gallons of aviation fuel consumed
(millions) 287 282 1.8
Number of aircraft in operating
fleet at period-end 377 391 (3.6)
Full-time equivalent employees at
period-end 39,857 40,047 (0.5)
* Scheduled service only (excludes charter service).
c cents
Note 1. Operating statistics for certain periods exclude flights
operated by US Airways, Inc. under a wet lease
arrangement with British Airways Plc. (the "wet lease
arrangement," which ended May 31, 1996).
Note 2. Financial statistics exclude the effects of nonrecurring
items and the revenues and expenses associated with the
US Airways Express capacity purchase program and the wet
lease arrangement. Net nonrecurring expenses of $72.3
million have been excluded from the financial results for
the third quarter 1997 for purposes of calculating
financial statistics. In addition, the calculation of
break-even load factor excludes Gains on sales of
interests in affiliates.
Note 3. Results for periods in 1996 have been restated to include
fuel taxes (which were previously recognized as an
element of the operating expense Other, net).
<PAGE>
US Airways, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of US Airways Group, Inc.)
SELECT AIRLINE OPERATING AND FINANCIAL STATISTICS (Note 1)
(unaudited)
Nine Months Ended September 30,
1997 1996 % Change
------- ------- --------
Revenue passengers (thousands)* 44,480 42,228 5.3
Total revenue passenger miles
(millions) 31,930 29,186 9.4
Revenue passenger miles
(millions)* 31,793 28,955 9.8
Total available seat miles
(millions) 44,418 42,491 4.5
Available seat miles(millions)* 44,254 42,225 4.8
Passenger load factor* 71.8% 68.6% 3.2 pts
Break-even load factor (Note 2) 66.7% 67.6% (0.9)pts
Yield* 16.91c 17.59c (3.9)
Passenger revenue per available
seat mile* 12.15c 12.06c 0.7
Revenue per available seat mile
(Note 2) 13.42c 13.28c 1.1
Cost per available seat mile
(Note 2) 12.23c 12.66c (3.4)
Average passenger journey (miles)* 715 686 4.2
Average stage length (miles)* 592 578 2.4
Revenue aircraft miles (millions)* 330 317 4.1
Cost of aviation fuel per gallon
(Note 3) 68.15c 67.63c 0.8
Cost of aviation fuel per gallon
(excluding fuel taxes) 61.95c 61.28c 1.1
Gallons of aviation fuel consumed
(millions) 857 824 4.0
Number of aircraft in operating
fleet at period-end 377 391 (3.6)
Full-time equivalent employees at
period-end 39,857 40,047 (0.5)
* Scheduled service only (excludes charter service).
c cents
Note 1. Operating statistics for certain periods exclude flights
operated by US Airways, Inc. under a wet lease
arrangement with British Airways Plc. (the "wet lease
arrangement," which ended May 31, 1996).
Note 2. Financial statistics exclude the effects of nonrecurring
items and the revenues and expenses associated with the
US Airways Express capacity purchase program and the wet
lease arrangement. Net nonrecurring expenses of $99.1
million have been excluded from the financial results for
the first nine months of 1997, and net nonrecurring
expense credits of $29.5 million have been excluded from
the financial results for the first nine months of 1996
for purposes of calculating financial statistics.
Revenues of $12.6 million and expenses of $12.6 million
associated with the wet lease arrangement have also been
excluded from the financial results for the first nine
months of 1996 for purposes of calculating financial
statistics. In addition, the calculation of break-even
load factor excludes Gains on sales of interests in
affiliates.
Note 3. Results for periods in 1996 have been restated to include
fuel taxes (which were previously recognized as an
element of the operating expense Other, net).
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<PAGE>
Exhibit 99.2
US AIRWAYS PICKS CFM56 ENGINES, ADDS MORE PLANES
ARLINGTON, Va., Oct. 22, 1997 - US Airways Group, Inc. said
today that it has reached agreement with CFM International, a
joint venture of General Electric and Snecma of France, for the
purchase of CFM56 engines to power as many as 400 Airbus
narrowbody aircraft. The engine and aircraft orders, both of
which are dependent upon ratification of a new labor accord by US
Airways pilots, will give the airline one of the most modern
fleets in the world.
As part of the contract, GE Engine Services will provide
maintenance for the engines under a 20-year agreement.
In addition to engines for new aircraft from CFMI, GE's
aircraft leasing arm, GECAS, will provide US Airways with
delivery positions for two Airbus A319 aircraft and three A320s
in 1999 and four A319s in the year 2000. These aircraft are in
addition to 21 A319s and A320s Airbus has said would be available
in 1998 and 1999, if the order is affirmed.
"Assuming ratification of the pilot contract, we would have
both the aircraft and engines to build a state-of-the-art fleet
that will offer all the efficiencies of a common aircraft type.
We would have the flexibility as well to add aircraft as we
develop our domestic service patterns," said US Airways Chairman
and CEO Stephen M. Wolf.
"We also will enter into discussions immediately for new
widebody aircraft for our transatlantic service. We will talk to
Boeing about its 777 and to Airbus Industrie about its A330,"
Wolf said.
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<PAGE>
US AIRWAYS PICKS CFM56 ENGINES,
ADDS MORE PLANES
Oct. 22, 1997
Page 2
US Airways currently flies between Philadelphia and the
European destinations of Frankfurt, Madrid, Munich, Paris and
Rome and between Pittsburgh and Frankfurt. Service between
Philadelphia and London is scheduled to begin in April and the
airline applied yesterday to begin service between Pittsburgh and
Paris.
CFM International is a 50/50 joint venture of General
Electric and Snecma of France and is the world's largest aircraft
engine manufacturer with more than 10,000 engines in service or
on order. The CFM56 is used on 40 percent of all aircraft
worldwide with more than 100 seats, including all US Airways
Boeing 737-300 and 737-400 aircraft.
The CFM56 is known as one of the quietest engines in service
with major airlines and also as an engine that is highly advanced
in terms of minimizing harmful pollutants. The engine meets or
exceeds all present or anticipated emission standards.
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NUMBER: 3319
