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)
April 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 April 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 ended March 31, 1998, and select operating
and financial statistics for US Airways for the same period (see
Exhibit 99 to this report).
Terry L. Hall, Senior Vice President of Finance and Chief
Financial Officer of both US Airways Group and US Airways, and
N. Bruce Ashby, Senior Vice President of Planning for US Airways,
spoke with industry analysts on a conference call following the
news release. Mr. Hall disclosed that US Airways' unit costs
(operating expenses per available seat mile) are expected to
increase approximately 2.5% for the second quarter of 1998
compared to the second quarter of 1997 and increase approximately
1% - 1.5% for full-year 1998 compared to full-year 1997 (excluding
any nonrecurring items as identified in the Company's quarterly
news releases). Mr. Hall noted that the unit cost estimates
include aviation fuel expenses (including fuel taxes) of 54.00
cents per gallon for the second quarter of 1998 and 57.20 cents
per gallon for full-year 1998.
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
differ materially from those set forth in the forward-looking
information are the following: 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 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
reports to the United States Securities and Exchange Commission.
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.
(this space intentionally left blank)
Item 7. Financial Statements and Exhibits
(c) Exhibits
Designation Description
- ----------- -----------
99 News release dated April 22, 1998 of US Airways
Group, Inc. and US Airways, Inc., with consolidated
statements of operations for both companies for the
three months ended March 31, 1998, and select
operating and financial statistics for US Airways,
Inc. for the same period.
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: April 22, 1998 By: /s/ James A. Hultquist
---------------------------------
James A. Hultquist
Controller (Chief Accounting Officer)
US Airways, Inc. (REGISTRANT)
Date: April 22, 1998 By: /s/ James A. Hultquist
---------------------------------
James A. Hultquist
Controller (Chief Accounting Officer)
(this space intentionally left blank)
Exhibit 99
US AIRWAYS POSTS RECORD 1ST QUARTER OPERATING PROFIT
ARLINGTON, Va., April 22, 1998 -- US Airways Group today
reported a record first quarter operating profit of $192.1
million, an increase of 9.4 percent compared to the first quarter
of 1997. Net income of $98.3 million was down 35.6 percent,
reflecting a corporate income tax rate of 40 percent compared to
8 percent for last year's quarter.
Earnings applicable to common stockholders were 96 cents per
share (diluted) compared to $1.45 (diluted) for the first quarter
of 1997.
"For a year of major strategic positioning, these results
are reflective of the underlying strength upon which we are
building for an even more dynamic future. With such major events
as the introduction of MetroJet, our new Airbus aircraft and
SABRE technologies yet to come, it's safe to say that 1998 is off
to a superb start," said US Airways Chairman and CEO Stephen M.
Wolf.
President and COO Rakesh Gangwal said the company is pleased
with its operating performance. "Our employees are doing a
spectacular job in attracting new customers to US Airways. We
reported an industry-leading record domestic load factor of 68.6
percent for the quarter and look forward to capacity growth with
the delivery of new Airbus aircraft later in the year."
Wolf also expressed satisfaction at the recent decision by
Standard & Poor's to upgrade its credit ratings on US Airways
debt, with a positive outlook. The rating agency's announcement
said that its upgrade is based "on sharply improved operating
performance and prospects for further earnings and cash flow
gains as US Airways uses a new pilot contract to reduce operating
expenses and launch a low-cost operation."
-more-
US AIRWAYS POSTS RECORD 1ST QUARTER OPERATING PROFIT
Page 2
April 22, 1998
The company's cash position was in excess of $2 billion at
the end of a quarter during which it retired early approximately
$80 million in secured debt and called the last of its preferred
stock, the Series H, which was converted into common shares.
Operating revenues for the quarter were $2.1 billion, down
1.8 percent from last year, reflecting a capacity reduction at US
Airways, Inc., of 5.4 percent in 1998. Comparisons with 1997 also
are complicated by the absence of the federal excise tax on air
travel for most of the first quarter of 1997. Operating expenses
of $1.9 billion were down 2.9 percent from last year.
For US Airways, Inc., available seat miles were down 5.4
percent compared to the first quarter of 1997, while revenue
passenger miles were down 4.6 percent and revenue passengers
carried were down 4 percent. The system passenger load factor of
69 percent was higher by 0.6 percentage points while the break-
even load factor was 63.8 percent, a decrease of 0.2 percentage
points. Yield was up by 0.2 percent. The average passenger
journey was 710 miles, a decrease of 0.6 percent.
-30-
NUMBER: 3412
US Airways Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts and notes)
Three Months Ended March 31,
1998(Note 1) 1997 % Change
--------- --------- --------
Operating Revenues
Passenger transportation $1,857,583 $1,896,855 (2.1)
Cargo and freight 43,455 44,331 (2.0)
Other 161,564 159,892 1.0
--------- ---------
Total Operating Revenues 2,062,602 2,101,078 (1.8)
Operating Expenses
Personnel costs 748,583 756,691 (1.1)
Aviation fuel 166,933 225,029 (25.8)
Commissions 123,782 144,591 (14.4)
Aircraft rent 110,919 120,933 (8.3)
Other rent and landing fees 107,821 100,343 7.5
Aircraft maintenance 114,163 96,881 17.8
Depreciation and amortization 72,020 77,011 (6.5)
Other, net 426,308 403,971 5.5
--------- ---------
Total Operating Expenses 1,870,529 1,925,450 (2.9)
--------- ---------
Operating Income 192,073 175,628 9.4
Other Income (Expense)
Interest income 30,110 23,842 26.3
Interest expense (62,795) (64,508) (2.7)
Interest capitalized 4,791 2,775 72.6
Equity in earnings of
affiliates 217 13,418 (98.4)
Other, net 360 14,219 (97.5)
--------- ---------
Other Income (Expense), Net (27,317) (10,254) --
--------- ---------
Income Before Taxes 164,756 165,374 (0.4)
Provision (Credit) for
Income Taxes 66,481 12,716 --
--------- ---------
Net Income 98,275 152,658 (35.6)
Preferred Dividend Requirement (6,623) (20,864) (68.3)
--------- ---------
Earnings Applicable to
Common Stockholders $ 91,652 $ 131,794 (30.5)
========= =========
Earnings per Common
Share (Note 2)
Basic $ 0.98 $ 2.05 (52.2)
Diluted $ 0.96 $ 1.45 (33.8)
Shares Used for Computation
Basic (Note 3) 93,710 64,413
Diluted 102,781 104,932
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 the first quarter
of 1997 have been restated to conform with Statement of
Financial Accounting Standards No. 128.
Note 3. During the first quarter of 1998, the Series H Preferred
Stock was converted into 9.2 million shares of Common
Stock. On a weighted average basis, this transaction
had the effect of increasing Common Shares outstanding
by 2.1 million shares.
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 March 31,
1998 1997 % Change
--------- --------- --------
Operating Revenues
Passenger transportation $1,676,788 $1,753,314 (4.4)
US Airways Express
transportation revenues 149,262 144,571 3.2
Cargo and freight 42,286 43,301 (2.3)
Other 162,609 149,167 9.0
--------- ---------
Total Operating Revenues 2,030,945 2,090,353 (2.8)
Operating Expenses
Personnel costs 697,490 715,979 (2.6)
Aviation fuel 154,031 212,939 (27.7)
Commissions 113,378 135,701 (16.5)
Aircraft rent 96,304 106,207 (9.3)
Other rent and landing fees 99,234 95,582 3.8
Aircraft maintenance 92,115 81,362 13.2
Depreciation and amortization 65,304 73,172 (10.8)
US Airways Express capacity
purchases 125,022 120,923 3.4
Other, net 398,628 374,351 6.5
--------- ---------
Total Operating Expenses 1,841,506 1,916,216 (3.9)
--------- ---------
Operating Income 189,439 174,137 8.8
Other Income (Expense)
Interest income 38,928 23,759 63.8
Interest expense (62,774) (67,250) (6.7)
Interest capitalized 2,525 2,775 (9.0)
Equity in earnings of
affiliates 217 13,418 (98.4)
Other, net 404 14,047 (97.1)
--------- ---------
Other Income (Expense), Net (20,700) (13,251) 56.2
--------- ---------
Income Before Taxes 168,739 160,886 4.9
Provision (Credit) for
Income Taxes 67,980 17,257 --
--------- ---------
Net Income $ 100,759 $ 143,629 (29.8)
========= =========
US Airways, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of US Airways Group, Inc.)
SELECT AIRLINE OPERATING AND FINANCIAL STATISTICS
(unaudited)
Three Months Ended March 31,
1998 1997 % Change
------- ------- --------
Revenue passengers (thousands)* 13,308 13,867 (4.0)
Total revenue passenger miles
(millions) 9,481 9,948 (4.7)
Revenue passenger miles
(millions)* 9,445 9,900 (4.6)
Total available seat miles
(millions) 13,734 14,539 (5.5)
Available seat miles(millions)* 13,692 14,481 (5.4)
Passenger load factor* 69.0% 68.4% 0.6 pts.
Break-even load factor (Note 1) 63.8% 64.0% (0.2)pts.
Yield* 17.75c 17.71c 0.2
Passenger revenue per available
seat mile* 12.25c 12.11c 1.2
Revenue per available seat mile
(Note 1) 13.70c 13.38c 2.4
Cost per available seat mile
(Note 1) 12.50c 12.35c 1.2
Average passenger journey (miles)* 710 714 (0.6)
Average stage length (miles)* 591 587 0.7
Revenue aircraft miles (millions)* 102 108 (5.6)
Cost of aviation fuel per gallon 57.66c 75.44c (23.6)
Cost of aviation fuel per gallon
(excluding fuel taxes) 51.63c 69.04c (25.2)
Gallons of aviation fuel consumed
(millions) 267 282 (5.3)
Number of aircraft in operating
fleet at period-end 371 391 (5.1)
Full-time equivalent employees at
period-end 38,625 40,308 (4.2)
* Scheduled service only (excludes charter service).
c cents
Note 1. Financial statistics exclude revenues and expenses
generated under the capacity purchase arrangements
US Airways has with certain US Airways Express air
carriers.
