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 21, 1999
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 July 21, 1999, 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, 1999, and
selected operating and financial statistics for US Airways for the
same periods (see Exhibit 99 to this report).
Rakesh Gangwal, President and Chief Executive Officer of both
US Airways Group and US Airways, Lawrence M. Nagin, Executive Vice
President--Corporate Affairs and General Counsel of both
companies, Thomas A. Mutryn, Senior Vice President--Finance and
Chief Financial Officer of both companies and N. Bruce Ashby,
Senior Vice President--Corporate Development for US Airways, spoke
with industry analysts on a conference call following the news
release.
During the call, an update to the status of the Company's
common stock purchase programs was provided. From January 1998,
the date the Company's first common stock purchase program was
authorized, through June 30, 1999, the Company had purchased a
total of 30.4 million shares of its common stock at a total cost
of $1.75 billion. The Company purchased 5.8 million shares of its
common stock for $311 million in the second quarter of 1999. The
Company had cash, cash equivalents and short-term investments
totaling $1.16 billion as of June 30, 1999.
Also disclosed during the call, US Airways' capacity
(available seat miles) is expected to increase approximately 6.5%
in the third quarter of 1999 and approximately 6.0% in the fourth
quarter of 1999 versus the comparable periods in 1998. In
addition, US Airways' capacity is expected to increase
approximately 5.0% for full-year 1999 compared to full-year 1998.
The year-over-year increase in capacity will be driven largely by
MetroJet, which will contribute approximately 4 percentage points
of the expected increase, with transatlantic operations making up
the majority of the remainder of the increase. The capacity growth
estimates for US Airways for the remainder of 1999 and full-year
1999 are lower than previously disclosed estimates primarily due
to pilot training constraints and delays in returning aircraft to
service from scheduled maintenance visits.
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 July 21, 1999 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)
/s/ Anita P. Beier
Date: July 21, 1999 By: --------------------------------
Anita P. Beier
Vice President and Controller
Chief Accounting Officer
US Airways, Inc. (REGISTRANT)
/s/ Anita P. Beier
Date: July 21, 1999 By: --------------------------------
Anita P. Beier
Vice President and Controller
Chief Accounting Officer
Exhibit 99
US AIRWAYS GROUP 2nd QUARTER NET INCOME IS $317 MILLION,
INCLUDING $181 MILLION IN NON-RECURRING GAINS
ARLINGTON, Va., July 21, 1999 - US Airways Group, Inc.
reported net profit for the second quarter today of $317 million
on revenues of $2.3 billion, including non-recurring after-tax
gains of $181 million. The operating profit for the quarter was
$279 million. Earnings per common share were $4.26 and excluding
non-recurring gains were $1.83.
"Despite significant challenges in operations, US Airways
recorded an operating profit of $279 million, underscoring the
gains the company has made in its long-term strategy of securing
its domestic core market while building its overall route
network," said President and CEO Rakesh Gangwal.
"US Airways' employees are to be congratulated for the
successful entry into service of increasing numbers of Airbus
aircraft, for the continued growth of MetroJet and for staying
focused on taking care of our customers," Gangwal said.
US Airways Chairman Stephen M. Wolf said that the airline's
international operations continue to show strength with the
introduction of the new Charlotte-London route and a load factor
on transatlantic flights of more than 85 percent for the quarter.
"US Airways has set its course to become a major presence in
transatlantic air travel, and the second quarter has given
considerable momentum to this goal. By this time next year, we
will have the first of our new Airbus A330-300 aircraft in the
fleet, giving us an even greater competitive presence in the
market," Wolf said.
"From regional jets, to new Airbus aircraft, to the success
of MetroJet, to growth in international traffic, US Airways is
demonstrating its capacity to establish itself as a quality full
service airline."
- -more-
US Airways Group 2nd Quarter Net Income Is $317 Million,
Including $181 Million In Non-Recurring Gains
Page Two
July 21, 1999
US Airways Group's operating profit of $279 million for the
quarter was 25.4 percent below the comparable number for the
second quarter of 1998. This was the result primarily of US
Airways' unit revenue being below last year, with both load
factor and yield lower than 1998 levels. Total operating
expenses increased 4.4 percent year over year, slightly less than
the 4.7 percent increase in total available seat miles.
Pre-tax profit for the quarter of $532 million was 63.7
percent more than the second quarter of 1998, including non-
recurring gains, while the provision for taxes of $215 million
was 64.1 percent above that for 1998. Net profit of $317 million
was higher by 63.4 percent, including non-recurring gains.
On a per-share basis, the $4.26 for 1999 was more than
double that of the $1.95 for second quarter of 1998. The $1.83
per share figure excluding non-recurring gains was slightly below
the $1.95 result for 1998.
Gangwal noted that MetroJet, whose results are included in
the company's overall report, continues to perform well. "The
MetroJet team is setting the standard for quality low-fare
service and customers are noticing the difference," Gangwal said.
Nonrecurring items recognized during the second quarter of
1999 include a gain of $274 million related to the Company's sale
of its interest in Galileo International, Inc. and expense
credits totaling $16 million resulting from asset dispositions.
These expense credits partially reversed prior period
nonrecurring items, including $12 million in accrued lease
obligations for certain of US Airways' nonoperating BAe-146
aircraft, and $4 million of accruals established for an abandoned
facility.
On the operating side, US Airways' revenue passenger miles
for the quarter were down by 0.1 percent compared to the first
quarter of 1998 while available seat miles increased by 4.7
percent, with almost all of the increase coming in MetroJet and
transatlantic growth. The load factor for the period was 73.5
percent, 3.5 percentage points below that of 1998. The break-
even load factor was 65.7 percent, 1.1 percentage points below
1998, and yield declined by 1.7 percent. Revenue per available
seat mile was 13.75 cents, a decline of 6.2 percent, and cost per
available seat mile was 12.37 cents, down by 0.4 percent. The
average fuel price for the quarter, excluding taxes, was 46.22
cents per gallon, a decrease of 0.3 percent.
- -more-
US Airways Group 2nd Quarter Net Income Is $317 Million,
Including $181 Million In Non-Recurring Gains
Page Three
July 21, 1999
For the first six months of 1999, US Airways Group's
operating profit of $368 million was 35 percent below that of
1998 on revenues of $4.4 billion, which were even with 1998.
Operating expenses of $4.0 billion were 5.2 percent above 1998.
Pre-tax profit for the period, including non-recurring gains, was
$608 million, up by 24.1 percent, while net income was $363
million, up by 23.9 percent, including non-recurring gains. On a
per share basis, earnings were $4.67, a 61.6 percent increase
over 1998, including non-recurring gains.
Excluding non-recurring items, net profit for the period was
$182 million, 37.9 percent below that for 1998, while earnings
per share were $2.34, down by 19 percent.
For the first six months of 1999, US Airways' revenue
passenger miles were up by 0.4 percent as compared to the first
half of 1998 while available seat miles increased by 3.8 percent,
with almost all of the increase coming in MetroJet and
transatlantic growth. The load factor for the period was 70.7
percent, 2.3 percentage points below that of 1998. The break-even
load factor was 65.4 percent, even with 1998, and yield declined
by 1.9 percent. Revenue per available seat mile was 13.48 cents,
a decline of 5.0 percent, and cost per available seat mile was
12.55 cents, up by 0.7 percent. The average fuel price for the
first six months, excluding taxes, was 41.78 cents per gallon, a
decrease of 14.6 percent.
-30-
NUMBER: 3703
US Airways Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in millions, except per share amounts)
Three Months Ended June 30,
-----------------------------------
1999 1998(Note 1) % Change
--------- --------- --------
Operating Revenues
Passenger transportation $ 2,063 $ 2,078 (0.7)
Cargo and freight 35 42 (16.7)
Other 188 177 6.2
--------- ---------
Total Operating Revenues 2,286 2,297 (0.5)
Operating Expenses
Personnel costs 813 774 5.0
Aviation fuel 162 158 2.5
Commissions 130 138 (5.8)
Aircraft rent 105 111 (5.4)
Other rent and landing fees 106 93 14.0
Aircraft maintenance 120 114 5.3
Other selling expenses 95 98 (3.1)
Depreciation and amortization 77 81 (4.9)
Other 399 356 12.1
--------- ---------
Total Operating Expenses 2,007 1,923 4.4
--------- ---------
Operating Income 279 374 (25.4)
Other Income (Expense)
Interest income 14 31 (54.8)
Interest expense (47) (60) (21.7)
Interest capitalized 9 (18) (150.0)
Gain on sale of
marketable equity securities 274 -- --
Other, net 3 (2) (250.0)
--------- ---------
Other Income (Expense), Net 253 (49) (616.3)
--------- ---------
Income Before Taxes 532 325 63.7
Provision for Income Taxes 215 131 64.1
--------- ---------
Net Income 317 194 63.4
Preferred Dividend Requirement -- -- --
--------- ---------
Earnings Applicable to
Common Stockholders $ 317 $ 194 63.4
========= =========
Earnings per Common Share
Basic $ 4.34 $ 1.99 118.1
Diluted $ 4.26 $ 1.95 118.5
Shares Used for Computation (000)
Basic 72,981 97,689
Diluted 74,457 99,694
Note 1. Certain 1998 amounts have been reclassified to conform
with 1999 classifications.
US Airways Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in millions, except per share amounts)
Six Months Ended June 30,
-----------------------------------
1999 1998(Note 1) % Change
--------- --------- --------
Operating Revenues
Passenger transportation $ 3,919 $ 3,936 (0.4)
Cargo and freight 75 86 (12.8)
Other 364 337 8.0
--------- ---------
Total Operating Revenues 4,358 4,359 --
Operating Expenses
Personnel costs 1,615 1,523 6.0
Aviation fuel 292 325 (10.2)
Commissions 254 261 (2.7)
Aircraft rent 219 222 (1.4)
Other rent and landing fees 214 201 6.5
Aircraft maintenance 238 229 3.9
Other selling expenses 195 200 (2.5)
Depreciation and amortization 158 153 3.3
Other 805 679 18.6
--------- ---------
Total Operating Expenses 3,990 3,793 5.2
--------- ---------
Operating Income 368 566 (35.0)
Other Income (Expense)
Interest income 29 61 (52.5)
Interest expense (97) (123) (21.1)
Interest capitalized 17 (13) (230.8)
Gain on sale of
marketable equity securities 274 -- --
Other, net 17 (1) (1,800.0)
--------- ---------
Other Income (Expense), Net 240 (76) (415.8)
--------- ---------
Income Before Taxes 608 490 24.1
Provision for Income Taxes 245 197 24.4
--------- --------
Net Income 363 293 23.9
Preferred Dividend Requirement -- (7) (100.0)
--------- --------
Earnings Applicable to
Common Stockholders $ 363 $ 286 26.9
========= ========
Earnings per Common Share
Basic $ 4.76 $ 2.99 59.2
Diluted $ 4.67 $ 2.89 61.6
Shares Used for Computation(000)
Basic 76,205 95,710
Diluted 77,671 101,317
Note 1. Certain 1998 amounts have been reclassified to conform
with 1999 classifications.
US Airways, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of US Airways Group, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in millions)
Three Months Ended June 30,
-----------------------------------
1999 1998 (Note 1) % Change
------- ------------- --------
Operating Revenues
Passenger transportation $ 1,838 $ 1,870 (1.7)
US Airways Express
transportation revenues 206 182 13.2
Cargo and freight 34 41 (17.1)
Other 170 168 1.2
--------- ---------
Total Operating Revenues 2,248 2,261 (0.6)
Operating Expenses
Personnel costs 755 724 4.3
Aviation fuel 150 146 2.7
Commissions 118 126 (6.3)
Aircraft rent 90 96 (6.3)
Other rent and landing fees 97 85 14.1
Aircraft maintenance 95 93 2.2
Other selling expenses 85 89 (4.5)
Depreciation and amortization 71 74 (4.1)
US Airways Express capacity
purchases 159 134 18.7
Other 361 328 10.1
--------- ---------
Total Operating Expenses 1,981 1,895 4.5
--------- ---------
Operating Income 267 366 (27.0)
Other Income (Expense)
Interest income 56 43 30.2
Interest expense (47) (60) (21.7)
Interest capitalized 4 (20) (120.0)
Gain on sale of marketable
equity securities 274 -- --
Other, net 4 (1) (500.0)
--------- ---------
Other Income (Expense), Net 291 (38) (865.8)
--------- ---------
Income Before Taxes 558 328 70.1
Provision for
Income Taxes 219 132 65.9
--------- ---------
Net Income $ 339 $ 196 73.0
========= =========
Note 1. Certain 1998 amounts have been reclassified to conform
with 1999 classifications.
US Airways, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of US Airways Group, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in millions)
Six Months Ended June 30,
-----------------------------------
1999 1998 (Note 1) % Change
--------- ------------- --------
Operating Revenues
Passenger transportation $ 3,499 $ 3,547 (1.4)
US Airways Express
transportation revenues 382 332 15.1
Cargo and freight 73 83 (12.0)
Other 334 330 1.2
--------- ---------
Total Operating Revenues 4,288 4,292 (0.1)
Operating Expenses
Personnel costs 1,499 1,421 5.5
Aviation fuel 269 300 (10.3)
Commissions 230 239 (3.8)
Aircraft rent 187 193 (3.1)
Other rent and landing fees 196 184 6.5
Aircraft maintenance 182 185 (1.6)
Other selling expenses 177 182 (2.7)
Depreciation and amortization 144 139 3.6
US Airways Express capacity
purchases 305 259 17.8
Other 739 635 16.4
--------- ---------
Total Operating Expenses 3,928 3,737 5.1
--------- ---------
Operating Income 360 555 (35.1)
Other Income (Expense)
Interest income 105 82 28.0
Interest expense (97) (123) (21.1)
Interest capitalized 8 (18) (144.4)
Gain on sale of marketable
equity securities 274 -- --
Other, net 17 -- --
--------- ---------
Other Income (Expense), Net 307 (59) (620.3)
--------- ---------
Income Before Taxes 667 496 34.5
Provision for
Income Taxes 261 200 30.5
--------- ---------
Net Income $ 406 $ 296 37.2
========= =========
Note 1. Certain 1998 amounts have been reclassified to conform
with 1999 classifications.
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,
-----------------------------
1999 1998 % Change
------- ------- --------
Revenue passengers (thousands)* 14,755 15,302 (3.6)
Total revenue passenger miles
(millions) 10,910 10,916 (0.1)
Revenue passenger miles
(millions)* 10,886 10,881 --
Total available seat miles
(millions) 14,846 14,179 4.7
Available seat miles(millions)* 14,817 14,138 4.8
Passenger load factor* 73.5% 77.0% (3.5)pts.
Break-even load factor (Note 2) 65.7% 66.8% (1.1)pts.
Yield* 16.88c 17.18c (1.7)
Passenger revenue per available
seat mile* 12.40c 13.22c (6.2)
Revenue per available seat mile
(Note 2) 13.75c 14.66c (6.2)
Cost per available seat mile
(Note 2) 12.37c 12.42c (0.4)
Average passenger journey (miles)* 738 711 3.8
Average stage length (miles)* 612 596 2.7
Revenue block hours (thousands) 332 319 4.1
Revenue aircraft miles (millions)* 110 105 4.8
Cost of aviation fuel per gallon 52.40c 52.35c 0.1
Cost of aviation fuel per gallon
(excluding fuel taxes) 46.22c 46.35c (0.3)
Gallons of aviation fuel consumed
(millions) 286 278 2.9
Schedule completion factor* 97.6% 98.5% (0.9)pts.
Number of aircraft in operating
fleet at period-end 382 370 3.2
Full-time equivalent employees at
period-end 39,599 38,276 3.5
* Scheduled service only (excludes charter service).
c cents
Note 1. Includes US Airways' "mainline" operations as well as
the operations of its low-cost product, MetroJet.
Note 2. Financial statistics exclude "nonrecurring items"
and the revenues and expenses generated under
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,
-----------------------------
1999 1998 % Change
------- ------- --------
Revenue passengers (thousands)* 27,752 28,610 (3.0)
Total revenue passenger miles
(millions) 20,483 20,397 0.4
Revenue passenger miles
(millions)* 20,439 20,326 0.6
Total available seat miles
(millions) 28,980 27,913 3.8
Available seat miles(millions)* 28,924 27,831 3.9
Passenger load factor* 70.7% 73.0% (2.3)pts.
Break-even load factor (Note 2) 65.4% 65.4% -- pts.
Yield* 17.12c 17.45c (1.9)
Passenger revenue per available
seat mile* 12.10c 12.74c (5.0)
Revenue per available seat mile
(Note 2) 13.48c 14.19c (5.0)
Cost per available seat mile
(Note 2) 12.55c 12.46c 0.7
Average passenger journey (miles)* 736 710 3.7
Average stage length (miles)* 613 594 3.2
Revenue block hours (thousands) 652 630 3.5
Revenue aircraft miles (millions)* 215 208 3.4
Cost of aviation fuel per gallon 47.92c 54.96c (12.8)
Cost of aviation fuel per gallon
(excluding fuel taxes) 41.78c 48.94c (14.6)
Gallons of aviation fuel consumed
(millions) 561 545 2.9
Scheduled completion factor* 96.8% 98.4% (1.6)pts.
Number of aircraft in operating
fleet at period-end 382 370 3.2
Full-time equivalent employees at
period-end 39,599 38,276 3.5
* Scheduled service only (excludes charter service).
c cents
Note 1. Includes US Airways' "mainline" operations as well as
the operations of its low-cost product, MetroJet.
Note 2. Financial statistics exclude "nonrecurring items"
and the revenues and expenses generated under
capacity purchase arrangements US Airways has with
certain US Airways Express air carriers.
