FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported)
October 21, 1998
US AIRWAYS GROUP, INC.
(Exact name of registrant as specified in its charter)
State of Incorporation: Delaware
2345 Crystal Drive, Arlington, Virginia 22227
(Address of principal executive offices)
(703) 872-5306
(Registrant's telephone number, including area code)
(Commission file number: 1-8444)
(I.R.S. Employer Identification No: 54-1194634)
US AIRWAYS, INC.
(Exact name of registrant as specified in its charter)
State of Incorporation: Delaware
2345 Crystal Drive, Arlington, Virginia 22227
(Address of principal executive offices)
(703) 872-7000
(Registrant's telephone number, including area code)
(Commission file number: 1-8442)
(I.R.S. Employer Identification No: 53-0218143)
Item 5. Other Events
On October 21, 1998, 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, 1998, and
selected operating and financial statistics for US Airways for the
same periods (see Exhibit 99 to this report).
Rakesh Gangwal, President and Chief Operating Officer of
US Airways Group and President and Chief Executive Officer of
US Airways, Lawrence M. Nagin, Executive Vice President, Corporate
Affairs and General Counsel of both US Airways Group and
US Airways, Terry L. Hall, Senior Vice President of Finance and
Chief Financial Officer of both companies and N. Bruce Ashby,
Senior Vice President of Planning for US Airways, spoke with
industry analysts on a conference call following the news release.
During the call, additional information related to the
Company's purchases of its common stock was provided. With respect
to the two common stock purchase plans the Company completed
during the third quarter of 1998, one authorized for 2.3 million
shares to offset stock options granted to US Airways' pilots and
one authorized for $500 million, the Company purchased 9.46
million shares for $654.3 million. As of September 30, 1998, the
Company had also purchased 4.36 million shares of the 5.0 million
shares authorized under a third plan announced on September 2,
1998. Purchases under this plan totaled $234.7 million as of
September 30, 1998.
Certain of the information discussed on the conference call
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.
Specific factors that could cause actual results to differ
materially from those set forth in the forward-looking information
include: economic conditions, labor costs, aviation fuel costs,
competitive pressures on pricing-particularly from lower-cost
competitors, weather conditions, government legislation, consumer
perceptions of the Company's products, 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 the United States 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.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Designation Description
- ----------- -----------
99 News release dated October 21, 1998 of US Airways
Group, Inc. and US Airways, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrants have duly caused this report to be signed
on their behalf by the undersigned hereunto duly authorized.
US Airways Group, Inc. (REGISTRANT)
Date: October 21, 1998 By: /s/ Terry L. Hall
---------------------------------
Terry L. Hall
Senior Vice President, Finance
Chief Financial Officer
US Airways, Inc. (REGISTRANT)
Date: October 21, 1998 By: /s/ Terry. L. Hall
---------------------------------
Terry L. Hall
Senior Vice President, Finance
Chief Financial Officer
(this space intentionally left blank)
Exhibit 99
US AIRWAYS 3rd QUARTER NET INCOME IS $141.9 MILLION
ARLINGTON, Va., Oct. 21, 1998 - US Airways Group, Inc.
reported a net income for the third quarter today of $141.9
million, or $1.51 per share, and a record third quarter operating
income of $270.2 million.
"This continues to be a year of dramatic change for US
Airways, and within this context of change the employees of this
company are singularly focused on providing the level of quality
service that produces the stellar results we are reporting today.
We have been on time and on course, and customers increasingly
recognize us as the carrier of choice," said Stephen M. Wolf,
chairman and CEO of US Airways Group, Inc.
Rakesh Gangwal, US Airways, Inc. president and CEO, said
that in addition to keeping operational performance at a first
tier level while carrying record loads during the quarter, "US
Airways has implemented its new marketing agreement with American
Airlines, continued to expand MetroJet, paid down debt and
repurchased stock. Looking to the future, we also expect to
derive significant benefits from the efficiencies and consumer
enhancements of our new Airbus aircraft as well as from new SABRE
system technologies."
Excluding non-recurring and unusual items taken in the 1998
and 1997 third quarters, 1998 operating income of $267.2 million
was $86.3 million, or 47.7 percent higher than in 1997; net
income of $140.1 million was $23.2 million, or 19.8 percent
higher than in the prior year, and earnings per share increased
from $1.14 to $1.49.
The corporate tax rate in the third quarter of 1998 was 40.3
percent as compared to 19.3 percent in 1997.
Including the non-recurring and unusual items, 1997 third
quarter net income was $187.0 million, or $1.82 per share, and
third quarter operating income was $83.2 million.
- more -
US Airways 3rd Quarter Income
Oct. 21, 1998
Page Two
During the third quarter of 1998, US Airways prepaid $324
million of long-term debt, incurring debt prepayment penalties of
$15.0 million. Since Sept. 30, 1997, US Airways has retired or
redeemed more than $945.9 million in long-term debt and preferred
shares.
Also during the quarter, the company repurchased 7.86
million shares of its common stock at an average price of $61.36
per share, for a total expenditure of $482 million. In the first
nine months of 1998, the company repurchased 13.8 million common
shares at a total cost of $889 million.
The non-recurring and unusual gains and expenses in the
third quarter of 1997 consisted of a $179.6 million gain related
to the sale of US Airways' stake in Apollo Travel Services,
partially offset by expenses of $97.7 million, primarily related
to fleet and facilities restructuring.
For the third quarter of 1998, there was a non-recurring
gain of $3 million relating to the sale of two BAe 146 aircraft.
Excluding this gain, net income for the third quarter of 1998 was
$140.1 million, and operating income was $267.2 million.
Cost per available seat mile for the third quarter of 1998
declined 0.1 percent from 12.27 cents to 12.26 cents. Revenue per
available seat mile rose 4.7 percent from 13.13 cents to 13.75
cents.
For the first nine months of 1998, operating revenues were
$6.6 billion, an increase of 2.2 percent over the first nine
months of 1997, while operating expenses of $5.7 billion were
down by 3.1 percent. Operating income for the nine months was
$835.8 million, an increase of 62.5 percent over 1997. Net income
was $434.5 million, a decrease of 20.3 percent from 1997,
reflecting the increase in corporate tax from 13.3 percent to
40.3 percent as well as the non-recurring gain recorded in 1997
relating to the sale of Apollo Travel Services. Earnings per
common share were $4.40, down 15.5 percent, also reflecting the
company's changed tax status.
Traffic for the third quarter of 1998 remained strong, with
monthly load factor records being set each month. The number of
revenue passengers increased 0.6 percent over the comparable
number in 1997 to 15.2 million. Available seat miles for the
quarter were down 3.3 percent compared to 1997 while revenue
passenger miles were down 0.2 percent. The load factor for the
quarter was 75.8 percent, up 2.4 percentage points. Cost of
aviation fuel per gallon, excluding fuel taxes, was 42.87 cents,
down 26.4 percent.
-30-
NUMBER: 3516
US Airways Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
Three Months Ended September 30,
1998(Note 1) 1997 % Change
--------- --------- --------
Operating Revenues
Passenger transportation $1,987,780 $1,917,119 3.7
Cargo and freight 38,898 46,193 (15.8)
Other 181,205 151,860 19.3
--------- ---------
Total Operating Revenues 2,207,883 2,115,172 4.4
Operating Expenses
Personnel costs 785,597 763,718 2.9
Aviation fuel 149,807 193,970 (22.8)
Commissions 132,420 151,047 (12.3)
Aircraft rent 107,671 124,715 (13.7)
Other rent and landing fees 106,555 116,218 (8.3)
Aircraft maintenance 109,602 126,748 (13.5)
Depreciation and amortization 82,934 155,013 (46.5)
Other 463,134 400,580 15.6
--------- ---------
Total Operating Expenses 1,937,720 2,032,009 (4.6)
--------- ---------
Operating Income 270,163 83,163 --
Other Income (Expense)
Interest income 25,999 27,964 (7.0)
Interest expense (51,060) (63,957) (20.2)
Interest capitalized 4,614 3,189 44.7
Equity in earnings of
affiliates 397 3,513 (88.7)
Gains on sales of
interests in affiliates -- 179,625 --
Other, net (12,278) (1,743) --
--------- ---------
Other Income (Expense), Net (32,328) 148,591 --
--------- ---------
Income Before Taxes 237,835 231,754 2.6
Provision (Credit) for
Income Taxes 95,909 44,724 --
--------- ---------
Net Income 141,926 187,030 (24.1)
Preferred Dividend Requirement -- (10,612) --
--------- ---------
Earnings Applicable to
Common Stockholders $ 141,926 $ 176,418 (19.6)
========= =========
Earnings per Common
Share (Note 2)
Basic $ 1.54 $ 2.10 (26.7)
Diluted $ 1.51 $ 1.82 (17.0)
Shares Used for Computation
Basic 91,908 84,198
Diluted 93,844 102,637
Note 1. Results for 1998 include the results of Shuttle, Inc.,
which was acquired on December 30, 1997.
Note 2. Earnings per Common Share amounts for 1997 have been
restated to conform with Statement of Financial
Accounting Standards No. 128.
US Airways Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
Nine Months Ended September 30,
1998(Note 1) 1997 % Change
--------- --------- --------
Operating Revenues
Passenger transportation $5,923,601 $5,825,937 1.7
Cargo and freight 124,479 135,238 (8.0)
Other 519,224 467,685 11.0
--------- ---------
Total Operating Revenues 6,567,304 6,428,860 2.2
Operating Expenses
Personnel costs 2,308,675 2,306,347 0.1
Aviation fuel 474,488 617,054 (23.1)
Commissions 393,849 460,846 (14.5)
Aircraft rent 329,544 359,432 (8.3)
Other rent and landing fees 307,683 315,905 (2.6)
Aircraft maintenance 338,181 328,502 2.9
Depreciation and amortization 235,744 326,796 (27.9)
Other 1,343,346 1,199,643 12.0
--------- ---------
Total Operating Expenses 5,731,510 5,914,525 (3.1)
--------- ---------
Operating Income 835,794 514,335 62.5
Other Income (Expense)
Interest income 86,621 75,241 15.1
Interest expense (174,091) (192,642) (9.6)
Interest capitalized (8,227) 8,825 --
Equity in earnings of
affiliates 850 30,423 (97.2)
Gains on sales of
interests in affiliates -- 179,625 --
Other, net (12,952) 13,285 --
--------- ---------
Other Income (Expense), Net (107,799) 114,757 --
--------- ---------
Income Before Taxes 727,995 629,092 15.7
Provision (Credit) for
Income Taxes 293,528 83,818 --
--------- ---------
Net Income 434,467 545,274 (20.3)
Preferred Dividend Requirement (6,623) (54,983) (88.0)
--------- ---------
Earnings Applicable to
Common Stockholders $ 427,844 $ 490,291 (12.7)
========= =========
Earnings per Common
Share (Note 2)
Basic $ 4.53 $ 6.66 (32.0)
Diluted $ 4.40 $ 5.21 (15.5)
Shares Used for Computation
Basic 94,429 73,572
Diluted 98,749 103,573
Note 1. Results for 1998 include the results of Shuttle, Inc.,
which was acquired on December 30, 1997.
Note 2. Earnings per Common Share amounts for 1997 have been
restated to conform with Statement of Financial
Accounting Standards No. 128.
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,
1998 1997 % Change
--------- --------- --------
Operating Revenues
Passenger transportation $1,784,570 $1,767,554 1.0
US Airways Express
transportation revenues 188,356 150,986 24.8
Cargo and freight 37,799 45,174 (16.3)
Other 166,050 151,596 9.5
--------- ---------
Total Operating Revenues 2,176,775 2,115,310 2.9
Operating Expenses
Personnel costs 731,995 722,232 1.4
Aviation fuel 137,718 183,401 (24.9)
Commissions 121,294 140,477 (13.7)
Aircraft rent 92,673 109,938 (15.7)
Other rent and landing fees 97,618 111,549 (12.5)
Aircraft maintenance 85,456 109,297 (21.8)
Depreciation and amortization 76,152 150,999 (49.6)
US Airways Express capacity
purchases 144,067 122,486 17.6
Other 426,369 379,879 12.2
--------- ---------
Total Operating Expenses 1,913,342 2,030,258 (5.8)
--------- ---------
Operating Income 263,433 85,052 --
Other Income (Expense)
Interest income 47,978 29,754 61.2
Interest expense (51,263) (64,471) (20.5)
Interest capitalized 959 3,189 (69.9)
Equity in earnings of
affiliates 397 3,513 (88.7)
Gains on sales of interests
in affiliates -- 179,625 --
Other, net (12,309) (1,718) --
--------- ---------
Other Income (Expense), Net (14,238) 149,892 --
--------- ---------
Income Before Taxes 249,195 234,944 6.1
Provision (Credit) for
Income Taxes 100,313 48,038 --
--------- ---------
Net Income $ 148,882 $ 186,906 (20.3)
========= =========
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,
1998 1997 % Change
--------- --------- --------
Operating Revenues
Passenger transportation $5,331,085 $5,377,365 (0.9)
US Airways Express
transportation revenues 520,070 452,453 14.9
Cargo and freight 121,039 132,126 (8.4)
Other 496,451 452,186 9.8
--------- ---------
Total Operating Revenues 6,468,645 6,414,130 0.8
Operating Expenses
Personnel costs 2,153,484 2,182,859 (1.3)
Aviation fuel 437,351 583,852 (25.1)
Commissions 360,651 429,327 (16.0)
Aircraft rent 285,236 315,184 (9.5)
Other rent and landing fees 281,489 301,842 (6.7)
Aircraft maintenance 270,261 279,615 (3.3)
Depreciation and amortization 215,461 315,138 (31.6)
US Airways Express capacity
purchases 403,060 364,946 10.4
Other 1,243,092 1,123,237 10.7
--------- ---------
Total Operating Expenses 5,650,085 5,896,000 (4.2)
--------- ---------
Operating Income 818,560 518,130 58.0
Other Income (Expense)
Interest income 130,001 77,253 68.3
Interest expense (174,256) (196,637) (11.4)
Interest capitalized (16,728) 8,825 --
Equity in earnings of
affiliates 850 30,423 (97.2)
Gains on sales of interests
in affiliates -- 179,625 --
Other, net (12,953) 13,436 --
--------- ---------
Other Income (Expense), Net (73,086) 112,925 --
--------- ---------
Income Before Taxes 745,474 631,055 18.1
Provision (Credit) for
Income Taxes 300,128 98,734 --
--------- ---------
Net Income $ 445,346 $ 532,321 (16.3)
========= =========
US Airways, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of US Airways Group, Inc.)
SELECTED AIRLINE OPERATING AND FINANCIAL STATISTICS (Note 1)
(unaudited)
Three Months Ended September 30,
1998 1997 % Change
------- ------- --------
Revenue passengers (thousands)* 15,177 15,080 0.6
Total revenue passenger miles
(millions) 10,961 10,979 (0.2)
Revenue passenger miles
(millions)* 10,937 10,940 --
Total available seat miles
(millions) 14,458 14,957 (3.3)
Available seat miles(millions)* 14,430 14,908 (3.2)
Passenger load factor* 75.8% 73.4% 2.4 pts.
Break-even load factor (Note 2) 68.2% 70.0% (1.8)pts.
Yield* 16.32c 16.16c 1.0
Passenger revenue per available
seat mile* 12.37c 11.86c 4.3
Revenue per available seat mile
(Note 2) 13.75c 13.13c 4.7
Cost per available seat mile
(Note 2) 12.26c 12.27c (0.1)
Average passenger journey (miles)* 721 726 (0.7)
Average stage length (miles)* 597 599 (0.3)
Revenue aircraft miles (millions)* 107 111 (3.6)
Cost of aviation fuel per gallon 48.83c 63.96c (23.7)
Cost of aviation fuel per gallon
(excluding fuel taxes) 42.87c 58.23c (26.4)
Gallons of aviation fuel consumed
(millions) 282 287 (1.7)
Number of aircraft in operating
fleet at period-end 368 377 (2.4)
Full-time equivalent employees at
period-end 38,188 39,857 (4.2)
* Scheduled service only (excludes charter service).
c cents
Note 1. Includes US Airways "mainline" operations as well as
the operations of its low-fare product, MetroJet.
Note 2. Financial statistics exclude "nonrecurring items"
and the revenues and expenses generated under the
capacity purchase arrangements US Airways has with
certain US Airways Express air carriers.
US Airways, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of US Airways Group, Inc.)
SELECTED AIRLINE OPERATING AND FINANCIAL STATISTICS (Note 1)
(unaudited)
Nine Months Ended September 30,
1998 1997 % Change
------- ------- --------
Revenue passengers (thousands)* 43,788 44,480 (1.6)
Total revenue passenger miles
(millions) 31,358 31,930 (1.8)
Revenue passenger miles
(millions)* 31,263 31,793 (1.7)
Total available seat miles
(millions) 42,371 44,418 (4.6)
Available seat miles(millions)* 42,260 44,254 (4.5)
Passenger load factor* 74.0% 71.8% 2.2 pts.
Break-even load factor (Note 2) 66.3% 66.7% (0.4)pts.
Yield* 17.05c 16.91c 0.8
Passenger revenue per available
seat mile* 12.61c 12.15c 3.8
Revenue per available seat mile
(Note 2) 14.04c 13.42c 4.6
Cost per available seat mile
(Note 2) 12.39c 12.23c 1.3
Average passenger journey (miles)* 714 715 (0.1)
Average stage length (miles)* 595 592 0.5
Revenue aircraft miles (millions)* 315 330 (4.5)
Cost of aviation fuel per gallon 52.87c 68.15c (22.4)
Cost of aviation fuel per gallon
(excluding fuel taxes) 46.87c 61.95c (24.3)
Gallons of aviation fuel consumed
(millions) 827 857 (3.5)
Number of aircraft in operating
fleet at period-end 368 377 (2.4)
Full-time equivalent employees at
period-end 38,188 39,857 (4.2)
* Scheduled service only (excludes charter service).
c cents
Note 1. Includes US Airways "mainline" operations as well as
the operations of its low-fare product, MetroJet.
Note 2. Financial statistics exclude "nonrecurring items"
and the revenues and expenses generated under the
capacity purchase arrangements US Airways has with
certain US Airways Express air carriers.
