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)
July 22, 1998
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, including area code)
US Airways, Inc.
2345 Crystal Drive, Arlington, VA 22227
(Address of principal executive offices)
(703) 872-7000
(Registrant's telephone number, including area code)
Item 5. Other Events
On July 22, 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 six months ended June 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, disclosure of the following capacity-related
estimates were made: US Airways' capacity (as measured by
available seat miles) is expected to decrease 2 1/2% for the third
quarter of 1998 compared to the third quarter of 1997; increase
3 1/2% for the fourth quarter of 1998 compared to the fourth
quarter of 1997; and decrease 2 1/2% for full-year 1998 compared
to full-year 1997.
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.
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 July 22, 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: July 22, 1998 By: /s/ James A. Hultquist
---------------------------------
James A. Hultquist
Controller (Chief Accounting Officer)
US Airways, Inc. (REGISTRANT)
Date: July 22, 1998 By: /s/ James. A. Hultquist
---------------------------------
James A. Hultquist
Controller (Chief Accounting Officer)
(this space intentionally left blank)
Exhibit 99
US AIRWAYS SETS RECORD OPERATING PROFIT AND REVENUES
ARLINGTON, Va., July 22, 1998 -- US Airways Group, Inc.
reported an operating profit for the second quarter today of
$373.6 million on revenues of $2.3 billion. Both figures are
records for any quarter in the history of the company. Earnings
per common share were $1.95, up from $1.92 in 1997.
Net profit for the quarter was $194.3 million, down 5.5%
from $205.6 million in the second quarter of 1997. The second
quarter net profit outcome was adversely affected by the increase
in the company's book tax rate from 11.4 % in the second quarter
of 1997 to 40.3 % in 1998.
"Record revenues, record operating profits, record load
factors and stable yields -- all during a quarter when capacity
was down and when we faced unusually disruptive weather patterns
- -- are a credit to the employees of this company. Their efforts
have kept us on target to begin seeing the results of our
rebuilding efforts by the fourth quarter of this year. The
building blocks now are in place for a new future for US
Airways," said Stephen M. Wolf, chairman and CEO of US Airways
Group, Inc.
Wolf noted that the company ended the quarter with more than
$2 billion in cash, after repurchasing 5.97 million shares of
stock at a cost of $407 million. He also said that repayment of
high-cost debt is continuing, with the early retirement of some
$324 million just after the end of the quarter. The company also
settled its lawsuit with Boeing during the quarter.
"The second quarter was a significant marker on US Airways'
path to building a platform for future growth," said Rakesh
Gangwal, president and CEO of US Airways, Inc. "We launched
MetroJet, our new low-cost strategic response. We announced a
major marketing relationship with American Airlines. Our pilots
began training to fly our new Airbus A320 aircraft family.
Thousands of employees began learning new SABRE technologies. And
we made the decision to move ahead with a new order for Airbus
A330 widebody aircraft."
- more -
US Airways Sets Record Operating Profit And Revenues
July 22, 1998
Page Two
"By late this year, MetroJet's continued growth and the
introduction of 120-seat A319s into the fleet should allow us to
meet strong passenger demand. The fact that we have consistently
run record monthly load factors while maintaining steady yields
suggests there is room for economical growth," Gangwal added.
Gangwal noted that mainline unit costs were up only 2.9 %
while capacity for the period was down 4.9 %, reflecting an
improved cost picture in several key categories, including
personnel, commissions and fuel.
The operating margin for US Airways Group for the quarter
was 16.3 %. The operating profit of $373.6 million was an
increase of 46.2% over the second quarter of 1997 while the
revenues of $2.3 billion were up 3.8 % over last year. Operating
expenses were $1.9 billion, a decrease of 1.7 %. Pre-tax income
of $325.4 million was 40.3 % higher than the second quarter of
1997.
For the first half of 1998, revenues were $4.4 billion, an
increase of 1.1 % over the first half of 1997, while operating
expenses were $3.8 billion, a decrease of 2.3%. Operating profit
was $565.6 million, up 31.2 %. Pre-tax income was $490.2 million,
up 23.4 %, while net income was $292.5 million, down 18.3 %,
again reflecting the change in the company's tax status.
On a per-share basis, the profit for the first six months of
the year was $2.89, as compared to $3.39 last year.
While specific financial results for MetroJet are included
in the company's overall results, Gangwal said that the new
venture has had a very successful launch. He said that on-time
performance to date has been 86 percent and that load factors are
similar to those of US Airways' mainline operations and are ahead
of forecast. As of September 9, MetroJet will be serving 12
cities and additional destinations are expected to be announced
shortly. Eventually, as much as 25 percent of the US Airways
system can be flown by MetroJet.
On the operating side, revenue passenger miles and available
seat miles continued to decline, by 0.7 % and 4.9 % respectively,
as compared to the second quarter of 1997, while the passenger
load factor for the quarter was 77.0 %, an increase of 3.3
percentage points. The break-even load factor was 66.8 %, up 0.8
percentage points, and yield was up 1.4 % to 17.18 cents. Revenue
per available seat mile was 14.66 cents, an increase of 6.6 %,
while cost per available seat mile was 12.42 cents, up 2.9 %. The
cost of aviation fuel for the quarter, excluding fuel taxes, was
46.35 cents per gallon, down 21.1 %.
- 30 -
NUMBER: 3465
US Airways Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts and notes)
Three Months Ended June 30,
1998(Note 1) 1997 % Change
--------- --------- --------
Operating Revenues
Passenger transportation $2,078,238 $2,011,963 3.3
Cargo and freight 42,126 44,714 (5.8)
Other 176,455 155,933 13.2
--------- ---------
Total Operating Revenues 2,296,819 2,212,610 3.8
Operating Expenses
Personnel costs 774,495 785,938 (1.5)
Aviation fuel 157,748 198,055 (20.4)
Commissions 137,647 165,208 (16.7)
Aircraft rent 110,954 113,784 (2.5)
Other rent and landing fees 93,307 99,344 (6.1)
Aircraft maintenance 114,416 104,873 9.1
Depreciation and amortization 80,790 94,772 (14.8)
Other 453,904 395,092 14.9
--------- ---------
Total Operating Expenses 1,923,261 1,957,066 (1.7)
--------- ---------
Operating Income 373,558 255,544 46.2
Other Income (Expense)
Interest income 30,512 23,435 30.2
Interest expense (60,236) (64,177) (6.1)
Interest capitalized (17,632) 2,861 --
Equity in earnings of
affiliates 236 13,492 (98.3)
Other, net (1,034) 809 --
--------- ---------
Other Income (Expense), Net (48,154) (23,580) --
--------- ---------
Income Before Taxes 325,404 231,964 40.3
Provision (Credit) for
Income Taxes 131,138 26,378 --
--------- ---------
Net Income 194,266 205,586 (5.5)
Preferred Dividend Requirement -- (23,507) --
--------- ---------
Earnings Applicable to
Common Stockholders $ 194,266 $ 182,079 6.7
========= =========
Earnings per Common
Share (Note 2)
Basic $ 1.99 $ 2.53 (21.3)
Diluted $ 1.95 $ 1.92 1.6
Shares Used for Computation
Basic 97,689 71,887
Diluted 99,694 104,147
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 and notes)
Six Months Ended June 30,
1998(Note 1) 1997 % Change
--------- --------- --------
Operating Revenues
Passenger transportation $3,935,821 $3,908,818 0.7
Cargo and freight 85,581 89,045 (3.9)
Other 338,019 315,825 7.0
--------- ---------
Total Operating Revenues 4,359,421 4,313,688 1.1
Operating Expenses
Personnel costs 1,523,078 1,542,629 (1.3)
Aviation fuel 324,681 423,084 (23.3)
Commissions 261,429 309,799 (15.6)
Aircraft rent 221,873 234,717 (5.5)
Other rent and landing fees 201,128 199,687 0.7
Aircraft maintenance 228,579 201,754 13.3
Depreciation and amortization 152,810 171,783 (11.0)
Other 880,212 799,063 10.2
--------- ---------
Total Operating Expenses 3,793,790 3,882,516 (2.3)
--------- ---------
Operating Income 565,631 431,172 31.2
Other Income (Expense)
Interest income 60,622 47,277 28.2
Interest expense (123,031) (128,685) (4.4)
Interest capitalized (12,841) 5,636 --
Equity in earnings of
affiliates 453 26,910 (98.3)
Other, net (674) 15,028 --
--------- ---------
Other Income (Expense), Net (75,471) (33,834) --
--------- ---------
Income Before Taxes 490,160 397,338 23.4
Provision (Credit) for
Income Taxes 197,619 39,094 --
--------- ---------
Net Income 292,541 358,244 (18.3)
Preferred Dividend Requirement (6,623) (44,371) (85.1)
--------- ---------
Earnings Applicable to
Common Stockholders $ 285,918 $ 313,873 (8.9)
========= =========
Earnings per Common
Share (Note 2)
Basic $ 2.99 $ 4.60 (35.0)
Diluted $ 2.89 $ 3.39 (14.7)
Shares Used for Computation
Basic 95,710 68,171
Diluted 101,317 104,050
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)
(dollars in thousands)
Three Months Ended June 30,
1998 1997 % Change
--------- --------- --------
Operating Revenues
Passenger transportation $1,869,727 $1,856,497 0.7
US Airways Express
transportation revenues 182,452 156,896 16.3
Cargo and freight 40,954 43,651 (6.2)
Other 167,792 151,423 10.8
--------- ---------
Total Operating Revenues 2,260,925 2,208,467 2.4
Operating Expenses
Personnel costs 723,999 744,648 (2.8)
Aviation fuel 145,602 187,512 (22.4)
Commissions 125,979 153,149 (17.7)
Aircraft rent 96,259 99,039 (2.8)
Other rent and landing fees 84,637 94,711 (10.6)
Aircraft maintenance 92,690 88,956 4.2
Depreciation and amortization 74,005 90,967 (18.6)
US Airways Express capacity
purchases 133,971 121,537 10.2
Other 418,095 369,007 13.3
--------- ---------
Total Operating Expenses 1,895,237 1,949,526 (2.8)
--------- ---------
Operating Income 365,688 258,941 41.2
Other Income (Expense)
Interest income 43,095 23,740 81.5
Interest expense (60,219) (64,916) (7.2)
Interest capitalized (20,212) 2,861 --
Equity in earnings of
affiliates 236 13,492 (98.3)
Other, net (1,048) 1,107 --
--------- ---------
Other Income (Expense), Net (38,148) (23,716) 60.9
--------- ---------
Income Before Taxes 327,540 235,225 39.2
Provision (Credit) for
Income Taxes 131,835 33,439 --
--------- ---------
Net Income $ 195,705 $ 201,786 (3.0)
========= =========
US Airways, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of US Airways Group, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands)
Six Months Ended June 30,
1998 1997 % Change
--------- --------- --------
Operating Revenues
Passenger transportation $3,546,515 $3,609,811 (1.8)
US Airways Express
transportation revenues 331,714 301,467 10.0
Cargo and freight 83,240 86,952 (4.3)
Other 330,401 300,590 9.9
--------- ---------
Total Operating Revenues 4,291,870 4,298,820 (0.2)
Operating Expenses
Personnel costs 1,421,489 1,460,627 (2.7)
Aviation fuel 299,633 400,451 (25.2)
Commissions 239,357 288,850 (17.1)
Aircraft rent 192,563 205,246 (6.2)
Other rent and landing fees 183,871 190,293 (3.4)
Aircraft maintenance 184,805 170,318 8.5
Depreciation and amortization 139,309 164,139 (15.1)
US Airways Express capacity
purchases 258,993 242,460 6.8
Other 816,723 743,358 9.9
--------- ---------
Total Operating Expenses 3,736,743 3,865,742 (3.3)
--------- ---------
Operating Income 555,127 433,078 28.2
Other Income (Expense)
Interest income 82,023 47,499 72.7
Interest expense (122,993) (132,166) (6.9)
Interest capitalized (17,687) 5,636 --
Equity in earnings of
affiliates 453 26,910 (98.3)
Other, net (644) 15,154 --
--------- ---------
Other Income (Expense), Net (58,848) (36,967) 59.2
--------- ---------
Income Before Taxes 496,279 396,111 25.3
Provision (Credit) for
Income Taxes 199,815 50,696 --
--------- ---------
Net Income $ 296,464 $ 345,415 (14.2)
========= =========
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 June 30,
1998 1997 % Change
------- ------- --------
Revenue passengers (thousands)* 15,302 15,533 (1.5)
Total revenue passenger miles
(millions) 10,916 11,003 (0.8)
Revenue passenger miles
(millions)* 10,881 10,953 (0.7)
Total available seat miles
(millions) 14,179 14,922 (5.0)
Available seat miles(millions)* 14,138 14,865 (4.9)
Passenger load factor* 77.0% 73.7% 3.3 pts.
Break-even load factor (Note 2) 66.8% 66.0% 0.8 pts.
Yield* 17.18c 16.95c 1.4
Passenger revenue per available
seat mile* 13.22c 12.49c 5.8
Revenue per available seat mile
(Note 2) 14.66c 13.75c 6.6
Cost per available seat mile
(Note 2) 12.42c 12.07c 2.9
Average passenger journey (miles)* 711 705 0.9
Average stage length (miles)* 596 592 0.7
Revenue aircraft miles (millions)* 105 111 (5.4)
Cost of aviation fuel per gallon 52.35c 65.18c (19.7)
Cost of aviation fuel per gallon
(excluding fuel taxes) 46.35c 58.71c (21.1)
Gallons of aviation fuel consumed
(millions) 278 288 (3.5)
Number of aircraft in operating
fleet at period-end 370 390 (5.1)
Full-time equivalent employees at
period-end 38,276 40,246 (4.9)
* 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)
Six Months Ended June 30,
1998 1997 % Change
------- ------- --------
Revenue passengers (thousands)* 28,610 29,400 (2.7)
Total revenue passenger miles
(millions) 20,397 20,951 (2.6)
Revenue passenger miles
(millions)* 20,326 20,853 (2.5)
Total available seat miles
(millions) 27,913 29,460 (5.3)
Available seat miles(millions)* 27,831 29,346 (5.2)
Passenger load factor* 73.0% 71.1% 1.9 pts.
Break-even load factor (Note 2) 65.4% 65.1% 0.3 pts.
Yield* 17.45c 17.31c 0.8
Passenger revenue per available
seat mile* 12.74c 12.30c 3.6
Revenue per available seat mile
(Note 2) 14.19c 13.57c 4.6
Cost per available seat mile
(Note 2) 12.46c 12.21c 2.0
Average passenger journey (miles)* 710 709 0.1
Average stage length (miles)* 594 589 0.8
Revenue aircraft miles (millions)* 208 219 (5.0)
Cost of aviation fuel per gallon 54.96c 70.26c (21.8)
Cost of aviation fuel per gallon
(excluding fuel taxes) 48.94c 63.83c (23.3)
Gallons of aviation fuel consumed
(millions) 545 570 (4.4)
Number of aircraft in operating
fleet at period-end 370 390 (5.1)
Full-time equivalent employees at
period-end 38,276 40,246 (4.9)
* 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.
