[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: January 22, 1997
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 January 22, 1997, 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 year ended December 31, 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 earlier in the day the Company's
board of directors had approved the payment of dividends of $50
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 disclosed that the Company's capital surplus
(as calculated under Delaware General Corporation Law based on the
Company's balance sheet) was estimated to be at least $75 million
as of December 31, 1996. Mr. Harper added that this estimate was
subject to the Company finalizing its year-end balance sheet and
does not reflect the announced dividend payment.
Mr. Harper said that USAir's unit operating cost (operating
expenses per available seat mile) for the first quarter of 1997 -
considering fuel costs of approximately 72 cents per gallon - was
expected to decrease slightly versus the first quarter 1996 level,
but his estimate was heavily dependent on weather conditions
through the remainder of the quarter. Mr. Harper added that
significant uncertainty surrounds any estimate of future fuel
costs.
Mr. Lagow advised the analysts that USAir's yield would be
relatively unchanged first quarter 1997 versus first quarter 1996.
Mr. Lagow also remarked that capacity (as measured by available
seat miles) for 1997 is expected to be approximately 2.5% - 3%
higher then for 1996 including a 6% increase in the first quarter,
primarily due to the effects of inclement weather in the first
quarter of 1996. Capacity in international markets for 1997 is
anticipated to be 19% higher than in 1996, primarily due to the
international expansion that occurred in mid-1996.
Certain of the information discussed on the conference call,
including certain of 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
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differ materially from those set forth in the forward-looking
information are the following: labor costs, aviation fuel costs,
competitive pressures on pricing particularly from low cost
carriers, weather conditions, consumer perception of the Company's
product, demand for air transportation in the markets in which the
Company operates and the risks listed from time to time in the
Company's Securities and Exchange Commission reports. Other
factors and assumptions not identified above were also involved in
the preparation of this 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 News release dated January 22, 1997 of USAir
Group, Inc. and USAir, Inc., with consolidated
statements of operations for both companies for
the three months and twelve months ended December
31, 1996, and select operating and financial
statistics for USAir, Inc.
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: January 30, 1997 By: /s/ James A. Hultquist
---------------------------------
James A. Hultquist
Controller
(Chief Accounting Officer)
USAir, Inc.
Date: January 30, 1997 By: /s/ James A. Hultquist
---------------------------------
James A. Hultquist
Controller
(Chief Accounting Officer)
[PAGE]
Exhibit 99
USAir Reports Profit of $263.4 Million For 1996
ARLINGTON, Va., January 22, 1997 -- USAir Group, Inc. reported a
net profit of $263.4 million for 1996 as compared to 1995's
profit of $119.3 million. On a per-share basis, the profit for
1996 was $2.69 ($2.33 fully diluted) after preferred
dividend requirements, as compared to $0.55 for 1995.
USAir Group's board of directors also decided today that a
payment of $50 million will be made toward dividend arrearages
to holders of senior preferred stock.
Operating revenues for the year were $8.14 billion, an increase
of $668 million over 1995. Operating expenses were $7.70
billion, $552 million more than the preceding year. Operating
revenues, operating income and net income all were records for
the company. Excluding expenses for stock appreciation rights
(SARs) and the special profit-sharing program, which were
designed to compensate employees whose wages were reduced in
1992-93, net profit for the year would have been approximately
$426.5 million, or $5.20 per share ($4.04 fully diluted) after
preferred dividend requirement.
For the fourth quarter of 1996, net profit was $27.2 million, or
$0.08 per share ($0.08 fully diluted), as compared to $60.3
million, or $0.61 per share ($0.54 fully diluted) after preferred
dividend requirement, in the fourth quarter of 1995. Excluding
expenses for stock appreciation rights and the special profit-
sharing program, net profit for the quarter would have been
approximately $108 million, or $1.32 per share ($1.03 fully
diluted) after preferred dividend requirement.
"A tremendous effort by employees throughout USAir led to the
outstanding results we are reporting today," said USAir
Chairman and CEO Stephen M. Wolf. "We leapt into the industry's
top tier for on-time performance while increasing consumer
confidence. We successfully more than doubled our international
operations. And employee task forces are diligently working
on issues as wide-ranging as quality of in-flight services and
reservations. Our financial results prove that this focus on
quality counts and the employees of USAir should take great pride
in what they accomplished this past year."
"For all the superlatives we can report in our operations and our
financial results, there is one number we are reporting today
that remains very troubling. Our unit costs remain the highest in
the industry and seriously restrict our ability to compete with
expanding low-cost carriers. During 1996, Southwest and Delta
Express added 223,000 seats per week in our markets," Wolf
added.
- -more-
[PAGE]
PAGE TWO
January 22, 1997
USAir Reports Profit Of
$263.4 Million For 1996
"There is a lesson and a warning in this for all of us at USAir:
If we put in place a competitive cost structure, our investments
in the future will prove to be wise beyond measure. If we do not,
all our hard work will have been for naught."
Under the special 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
$121.6 million has been set aside this year for payment under
the plan. When these payments are made to employees this spring,
our full obligations under the plan will have been met.
In addition, $41.6 million was expensed in the fourth quarter to
cover stock appreciation rights granted to employees under the
1992 stock option plan. Most of the SARs expire by the end of the
second quarter of 1997. The SAR expense appears as part of
personnel costs.
FULL YEAR RESULTS
USAir Group's net profit of $263.4 million came on revenues of
$8.14 billion and compared to a net profit of $119.3 million on
revenues of $7.47 billion in 1995. Operating profit for the year
was $437.5 million, compared to $321.7 million in 1995. After
preferred dividends requirements of $88.8 million, the earnings
for 1996 were $174.6 million, compared to $34.4 million in
1995 after a preferred dividend requirement of $84.9 million.
Regular preferred stock dividends currently are not being paid
but financial accounting principles require that they be
reflected in statements of operations. A special payment of $50
million will be made toward preferred dividend arrearages to
holders of senior preferred stock.
Earnings per common share were $2.69 ($2.33 fully diluted), based
on 64.9 million shares outstanding (95.5 million fully diluted),
compared to $0.55 in 1995, based on 62.4 million shares
outstanding.
USAir flew 38.9 billion revenue passenger miles in 1996 and 56.9
billion available seat miles. This was an increase of 3.5 percent
in RPMs and a decrease of 2.2 percent in ASMs, as compared to
1995. The load factor was 68.5 percent, up 3.8 percentage points
from 1995. The break-even load factor for the year was 67.9
percent. The average passenger journey increased 3.6 percent to
688 miles.
QUARTERLY RESULTS
For the fourth quarter of 1996, the net profit of $27.2 million
came on revenues of $2.05 billion. This compares to a profit of
$60.3 million on revenues of $1.85 billion in 1995. Operating
profit for the quarter was $49.4 million compared to $107.9
million in 1995.
[PAGE]
PAGE THREE
January 22, 1997
USAir Reports Profit Of
$263.4 Million For 1996
The per share earnings for the quarter, after provision for
preferred dividend requirements, were $0.08 ($0.08 fully diluted)
based on 65.4 million shares outstanding as compared to a profit
of $0.61 based on 63.1 million shares outstanding in 1995.
USAir flew 10.0 billion revenue passenger miles and 14.7 billion
available seat miles in the quarter. This was an increase in
RPMs of 11.5 percent and an increase in ASMs of 7.7 percent as
compared to the fourth quarter of 1995. The load factor
was 68.1 percent, up 2.3 percentage points over the comparable
quarter of 1995. Break-even load factor was 68.7 percent.
The average passenger journey increased 5.8 percent to 693 miles.
(continued on following page)
[PAGE]
USAir Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
Three Months Ended December 31,
1996 1995(Note) %Change
------- ---------- --------
Operating Revenues
Passenger Transportation $ 1,850,386 $ 1,670,125 10.8
Cargo and Freight 44,760 38,956 14.9
Other 156,791 145,459 7.8
--------- --------
Total Operating Revenues 2,051,937 1,854,540 10.6
Operating Expenses
Personnel Costs 804,392 673,554 19.4
Profit Sharing 39,245 34,495 13.8
Aviation Fuel 216,725 156,654 38.3
Commissions 146,001 131,815 10.8
Aircraft Rent 115,232 107,911 6.8
Other Rent and Landing Fees 100,736 93,652 7.6
Aircraft Maintenance 107,094 81,926 30.7
Depreciation and
Amortization 77,971 88,469 (11.9)
Other Expenses, Net 395,131 378,144 4.5
--------- ---------
Total Operating Expenses 2,002,527 1,746,620 14.7
--------- ---------
Operating Income 49,410 107,920 (54.2)
Other Income (Expense)
Interest Income 23,410 19,071 22.8
Interest Expense (65,713) (74,072) (11.3)
Interest Capitalized 2,696 1,051 -
Equity in Earnings (Loss)
of Affiliates 5,500 6,765 (18.7)
Other, Net 5,383 2,090 -
--------- ---------
Other Income (Expense), Net (28,724) (45,095) (36.3)
--------- ---------
Income Before Taxes 20,686 62,825 (67.1)
Provision (Credit) for
Income Taxes (6,467) 2,571 -
--------- ---------
Net Income 27,153 60,254 (54.9)
Preferred Dividend
Requirement (21,641) (21,860) (1.0)
--------- ---------
Net Income Applicable to
Common Stockholders $ 5,512 $ 38,394 (85.6)
========= =========
Income per Common Share
Primary $ 0.08 $ 0.61 (86.9)
Fully Diluted $ 0.08 $ 0.54 (85.2)
Shares Used for Computation
(000)
Primary 65,410 63,143
Fully Diluted 65,822 93,063
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)
Twelve Months Ended December 31,
1996 1995(Note) %Change
--------- ---------- -------
Operating Revenues
Passenger Transportation $ 7,370,888 $ 6,748,564 9.2
Cargo and Freight 162,704 157,262 3.5
Other 608,821 568,522 7.1
--------- ---------
Total Operating Revenues 8,142,413 7,474,348 8.9
Operating Expenses
Personnel Costs 3,073,860 2,837,445 8.3
Profit Sharing 121,603 49,670 -
Aviation Fuel 749,119 634,320 18.1
Commissions 586,226 563,037 4.1
Aircraft Rent 436,873 437,649 (0.2)
Other Rent and Landing Fees 412,275 404,158 2.0
Aircraft Maintenance 372,997 346,854 7.5
Depreciation and
Amortization 316,043 352,447 (10.3)
Other Expenses, Net 1,635,924 1,527,081 7.1
--------- ----------
Total Operating Expenses 7,704,920 7,152,661 7.7
--------- ----------
Operating Income 437,493 321,687 36.0
Other Income (Expense)
Interest Income 74,819 51,624 44.9
Interest Expense (267,122) (302,593) (11.7)
Interest Capitalized 8,398 8,781 (4.4)
Equity in Earnings (Loss)
of Affiliates 36,602 34,546 6.0
Other, Net (14,708) 14,227 -
--------- ----------
Other Income (Expense), Net (162,011) (193,415) (16.2)
--------- ---------
Income Before Taxes 275,482 128,272 -
Provision (Credit) for
Income Taxes 12,109 8,985 34.8
--------- ---------
Net Income 263,373 119,287 -
Preferred Dividend
Requirement (88,775) (84,904) 4.6
--------- ----------
Net Income Applicable to
Common Stockholders $ 174,598 $ 34,383 -
========= =========
Income per Common Share
Primary $ 2.69 $ 0.55 -
Fully Diluted $ 2.33 $ 0.55 -
Shares Used for Computation
(000)
Primary 64,919 62,430
Fully Diluted 95,516 62,526
Note: Certain 1995 amounts have been reclassified to conform with
1996 classifications.
[PAGE]
USAir, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of USAir Group, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands)
Three Months Ended December 31,
1996 1995(Note) %Change
---------- ---------- -------
Operating Revenues
Passenger Transportation $ 1,706,245 $ 1,543,292 10.6
Cargo and Freight 43,833 37,993 15.4
USAir Express
Transportation Revenues 145,118 - -
Other 151,592 143,836 5.4
--------- ---------
Total Operating Revenues 2,046,788 1,725,121 18.6
Operating Expenses
Personnel Costs 764,123 639,114 19.6
Profit Sharing 39,245 34,495 13.8
Aviation Fuel 204,777 148,708 37.7
Commissions 136,194 122,789 10.9
Aircraft Rent 101,381 97,563 3.9
Other Rent and Landing Fees 96,014 89,720 7.0
Aircraft Maintenance 89,191 69,097 29.1
Depreciation and
Amortization 74,100 84,909 (12.7)
USAir Express Capacity
Purchases 93,042 - -
Other Expenses, Net 374,477 354,788 5.5
--------- ---------
Total Operating Expenses 1,972,544 1,641,183 20.2
--------- ---------
Operating Income 74,244 83,938 (11.5)
Other Income (Expense)
Interest Income 24,383 18,964 28.6
Interest Expense (70,613) (76,397) (7.6)
Interest Capitalized 2,696 1,051 -
Equity in Earnings (Loss)
of Affiliates 5,500 6,765 (18.7)
Other, Net 5,708 291 -
--------- ---------
Other Income (Expense), Net (32,326) (49,326) (34.5)
--------- ---------
Income Before Taxes 41,918 34,612 21.1
Provision (Credit) for
Income Taxes (7,629) 1,043 -
--------- ---------
Net Income $ 49,547 $ 33,569 47.6
========= =========
Note: Certain 1995 amounts have been reclassified to conform with
1996 classifications.
[PAGE]
USAir, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of USAir Group, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS - Continued
(unaudited)
(dollars in thousands)
Twelve Months Ended December 31,
1996 1995(Note) %Change
---------- ---------- -------
Operating Revenues
Passenger Transportation $ 6,799,420 $ 6,267,762 8.5
Cargo and Freight 158,899 153,651 3.4
USAir Express
Transportation Revenues 145,118 - -
Other 600,620 563,463 6.6
--------- ---------
Total Operating Revenues 7,704,057 6,984,876 10.3
Operating Expenses
Personnel Costs 2,919,079 2,701,767 8.0
Profit Sharing 121,603 49,670 -
Aviation Fuel 709,505 605,027 17.3
Commissions 547,048 527,058 3.8
Aircraft Rent 387,312 398,063 (2.7)
Other Rent and Landing Fees 394,431 388,866 1.4
Aircraft Maintenance 311,901 295,594 5.5
Depreciation and
Amortization 300,608 337,066 (10.8)
USAir Express Capacity
Purchases 93,042 - -
Other Expenses, Net 1,550,860 1,447,114 7.2
--------- ---------
Total Operating Expenses 7,335,389 6,750,225 8.7
--------- ---------
Operating Income 368,668 234,651 57.1
Other Income (Expense)
Interest Income 75,905 51,122 48.5
Interest Expense (283,936) (301,923) (6.0)
Interest Capitalized 8,398 8,781 (4.4)
Equity in Earnings (Loss)
of Affiliates 36,602 34,546 6.0
Other, Net (14,594) 10,221 -
--------- ---------
Other Income (Expense), Net (177,625) (197,253) (10.0)
--------- ---------
Income Before Taxes 191,043 37,398 -
Provision (Credit) for
Income Taxes 7,811 4,408 77.2
--------- ---------
Net Income $ 183,232 $ 32,990 -
========= =========
Note: Certain 1995 amounts have been reclassified to conform with
1996 classifications.
[PAGE]
USAir, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of USAir Group, Inc.)
AIRLINE OPERATING AND FINANCIAL STATISTICS (Note 1)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
1996 1995 %Change 1996 1995 %Change
---- ---- ------- ---- ---- ------
Revenue Passengers
(Thousands)* 14,412 13,688 5.3 56,640 56,674 (0.1)
Total Revenue
Passenger Miles
(Millions) 10,033 9,054 10.8 39,220 38,079 3.0
Revenue Passenger
Miles (Millions)* 9,989 8,960 11.5 38,943 37,618 3.5
Total Available Seat
Miles (Millions) 14,717 13,723 7.2 57,208 58,678 (2.5)
Available Seat Miles
(Millions)* 14,660 13,613 7.7 56,885 58,163 (2.2)
Passenger Load
Factor* 68.1% 65.8% 2.3 pts 68.5% 64.7% 3.8 pts
Break Even Load
Factor (Note 2) 68.7% 65.0% 3.7 pts 67.9% 64.9% 3.0 pts
Yield* 17.08c 17.22c (0.8) 17.46c 16.66c 4.8
Passenger Revenue
per Available Seat
Mile* 11.64c 11.34c 2.6 11.95c 10.78c 10.9
Revenue per Available
Seat Mile (Note 2) 12.92c 12.45c 3.8 13.19c 11.80c 11.8
Cost per Available
Seat Mile (Note 2) 12.77c 11.87c 7.6 12.69c 11.40c 11.3
Average Passenger
Journey (Miles)* 693 655 5.8 688 664 3.6
Average Stage Length
(Miles)* 580 558 3.9 578 560 3.2
Revenue Aircraft
Miles (Millions)* 109 103 5.8 426 444 (4.1)
Cost of Aviation Fuel
per Gallon 72.28c 55.50c 30.2 64.09c 53.23c 20.4
Gallons of Aviation
Fuel Consumed
(Millions) 283 268 5.6 1,107 1,137 (2.6)
* Denotes scheduled service only (excludes charter service)
c = cents
[PAGE]
Note 1. All operating statistics exclude flights operated by USAir,
Inc. ("USAir") under a wet lease arrangement with British Airways Plc
("wet lease"). The wet lease arrangement expired May 31, 1996.
Note 2. Financial statistics exclude non-recurring items as well as
the revenues and expenses generated by the USAir Express capacity
purchase program and the wet lease arrangement. No non-recurring
items are included in USAir's results for the fourth quarter of 1996.
USAir's year-to-date 1996 results include non-recurring expense
credits of $29.5 million related to its non-operating BAe-146
aircraft. Fourth quarter and year-to-date results for 1995 include
non-recurring expense credits of $4.1 million related to USAir's non-
operating BAe-146 aircraft. Wet lease amounts of $12.6 million, $16.1
million and $63.6 million have been excluded from year-to-date results
for 1996, fourth 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
(revenues and expenses generated by the wet lease arrangement net to
zero).
