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 20, 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 October 20, 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 nine months ended September 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 Greg Taylor, Senior Vice President--
Planning 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. As of September 30, 1999 the
Company had authority to repurchase $170 million of its common stock
stemming from a March 30, 1999 authorization of the Board of Directors
and authority to repurchase an additional $500 million of its common
stock from the board's September 14, 1999 authorization. A valuation
procedure was conducted on behalf of the Company which confirmed that
the Company has adequate capital surplus under Delaware law to continue
to repurchase its stock. The Company had cash, cash equivalents and
short-term investments totaling $1.03 billion as of September 30, 1999.
Also disclosed during the call, US Airways' capacity (available
seat miles) is expected to increase approximately 6% in the fourth
quarter of 1999 versus the comparable period in 1998. In addition, US
Airways' capacity is expected to increase approximately 8 to 10% for
full-year 2000 compared to full-year 1999. The year-over-year increase
in capacity will be attributable to operating performance
improvements, which will contribute approximately 3 percentage points
of the expected increase, as well as 1.5 points resulting from larger
aircraft replacing retiring smaller aircraft and an additional 2
points from growth in transatlantic operations. The remaining 1.5 to
3.5 percentage points increase will be due to growth in the core
network and annualization of the MetroJet expansion that occurred
during 1999.
Mr. Gangwal further stated during the call that operational
difficulties experienced by the Company in 1999 are expected to
continue to show improvement through the summer of 2000.
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 20, 1999 of US Airways
Group, Inc. and US Airways, Inc.
(this space intentionally left blank)
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: October 20, 1999 By: --------------------------------
Anita P. Beier
Vice President and Controller
Chief Accounting Officer
US Airways, Inc. (REGISTRANT)
/s/ Anita P. Beier
Date: October 20, 1999 By: --------------------------------
Anita P. Beier
Vice President and Controller
Chief Accounting Officer
(this space intentionally left blank)
Exhibit 99
US AIRWAYS REPORTS 3RD QUARTER NET LOSS OF $85 MILLION
ARLINGTON, Va., Oct. 20, 1999 - US Airways Group, Inc. reported
a net loss for the third quarter today of $85 million, or a diluted
loss per common share of $1.19. An operating loss for the quarter of
$111 million was reported.
The net loss of $85 million compares to a net profit of $142
million, or diluted earnings per common share of $1.51, in the 3rd
quarter of 1998. The operating loss of $111 million compares to an
operating profit of $270 million for the quarter in 1998. Operating
revenue for the quarter was $2.1 billion, down from $2.2 billion in
the third quarter of 1998, while operating expenses for the quarter
were $2.2 billion, up from $1.9 billion last year.
"These results are clearly unacceptable. Our operational
difficulties during this quarter have taken a significant toll on our
financial performance," said US Airways President and CEO Rakesh
Gangwal. "At the same time, our employees are to be commended for
their hard work and diligent efforts during this trying period."
"While some labor contracts are still open," Gangwal added, "the
majority of our negotiations are successfully behind us and we look
forward to operating the quality airline we ran in 1996, 1997 and
1998."
US Airways Chairman Stephen M. Wolf noted that "the third
quarter loss is an immense disappointment to all of us."
US Airways flew significantly fewer available seat miles than it
had planned in the third quarter, driven by three main factors:
- - Unusual East Coast hurricane activity, especially Hurricane
Floyd which forced about 1,500 cancellations.
- - An inordinate amount of air traffic control delays and
cancellations.
- - A reduction in scheduled flying driven by crew shortages and
aircraft shortages. Crew shortages were a result of falling
behind in the airline's pilot training program and the
aircraft shortages resulted from delays in aircraft returning from
regularly scheduled maintenance.
As a result of these issues, the company flew 6.6% fewer
available seat miles than were planned going into the year. While
revenue was lost, there was little expense offset, leading to an
increase in unit costs. Cost per available seat mile at US Airways,
Inc. for the third quarter was 13.51 cents as compared to 12.26 cents
in the third quarter of 1998.
For the first nine months of 1999, operating revenues at US
Airways Group, Inc. were $6.5 billion as compared to $6.6 billion in
the first nine months of 1998. Operating expenses during this period
were $6.2 billion as compared to $5.7 billion last year. The
operating profit for the first three quarters of 1999 was $257
million as compared to $836 million in 1998. Net profit for the first
nine months of 1999 was $278 million, or diluted earnings per common
share of $3.65, as compared to $428 million, or $4.40 per common
share in 1998.
Cost per available seat mile at US Airways, Inc. for the first
nine months of 1999 was 12.88 cents as compared to 12.39 cents in
1998, primarily reflecting the impact of flight cancellations in the
third quarter.
For the third quarter at US Airways, Inc., the number of
revenue passengers flown was 14.0 million, down 7.9 percent from
1998. Available seat miles for the quarter were up 3.2 percent over
the third quarter of 1998 while revenue passenger miles declined by
2.4 percent. The load factor for the quarter was 71.7 percent, a
decline of 4.1 percentage points from 1998. The cost of aviation fuel
per gallon, excluding fuel taxes, was 57.21 cents, an increase of
33.4 percent over 1998.
For the first nine months of 1999, the number of revenue
passengers flown was 41.7 million, a decline of 4.7 percent from the
comparable figure for 1998. Available seat miles for the period
increased 3.6 percent while the number of revenue passenger miles
declined 0.6 percent. The load factor for the period was 71.0
percent, down 3.0 percentage points from 1998.
-30-
NUMBER: 3775
US Airways Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in millions, except per share amounts)
Three Months Ended September 30,
-----------------------------------
1999 1998(Note 1) % Change
--------- --------- --------
Operating Revenues
Passenger transportation $ 1,869 $ 1,988 (6.0)
Cargo and freight 34 39 (12.8)
Other 199 181 9.9
--------- ---------
Total Operating Revenues 2,102 2,208 (4.8)
Operating Expenses
Personnel costs 892 786 13.5
Aviation fuel 198 150 32.0
Commissions 119 132 (9.8)
Aircraft rent 124 108 14.8
Other rent and landing fees 108 107 0.9
Aircraft maintenance 130 110 18.2
Other selling expenses 102 99 3.0
Depreciation and amortization 92 83 10.8
Other 448 363 23.4
--------- ---------
Total Operating Expenses 2,213 1,938 14.2
--------- ---------
Operating Income (Loss) (111) 270 (141.1)
Other Income (Expense)
Interest income 19 26 (26.9)
Interest expense (47) (51) (7.8)
Interest capitalized 12 5 140.0
Gain on sale of
marketable equity securities -- -- --
Other, net -- (12) (100.0)
--------- ---------
Other Income (Expense), Net (16) (32) (50.0)
--------- ---------
Income (Loss) Before Taxes (127) 238 (153.4)
Provision (Credit) for
Income Taxes (42) 96 (143.8)
--------- ---------
Net Income (Loss) (85) 142 (159.9)
Preferred Dividend Requirement -- -- --
--------- ---------
Earnings (Loss) Applicable to
Common Stockholders $ (85) $ 142 (159.9)
========= =========
Earnings (Loss) per Common Share
Basic $ (1.19) $ 1.54 (177.3)
Diluted $ (1.19) $ 1.51 (178.8)
Shares Used for Computation (000)
Basic 71,601 91,908
Diluted 71,601 93,844
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)
Nine Months Ended September 30,
-----------------------------------
1999 1998(Note 1) % Change
--------- --------- --------
Operating Revenues
Passenger transportation $ 5,788 $ 5,924 (2.3)
Cargo and freight 110 124 (11.3)
Other 562 519 8.3
--------- ---------
Total Operating Revenues 6,460 6,567 (1.6)
Operating Expenses
Personnel costs 2,507 2,309 8.6
Aviation fuel 490 474 3.4
Commissions 373 394 (5.3)
Aircraft rent 343 330 3.9
Other rent and landing fees 322 308 4.5
Aircraft maintenance 367 338 8.6
Other selling expenses 297 299 (0.7)
Depreciation and amortization 250 236 5.9
Other 1,254 1,043 20.2
--------- ---------
Total Operating Expenses 6,203 5,731 8.2
--------- ---------
Operating Income (Loss) 257 836 (69.3)
Other Income (Expense)
Interest income 48 87 (44.8)
Interest expense (144) (174) (17.2)
Interest capitalized 29 (8) (462.5)
Gain on sale of
marketable equity securities 274 -- --
Other, net 16 (13) (223.1)
--------- ---------
Other Income (Expense), Net 223 (108) (306.5)
--------- ---------
Income (Loss) Before Taxes 480 728 (34.1)
Provision (Credit) for
Income Taxes 202 294 (31.3)
--------- ---------
Net Income (Loss) 278 434 (35.9)
Preferred Dividend Requirement -- (6) (100.0)
--------- ---------
Earnings (Loss) Applicable to
Common Stockholders $ 278 $ 428 (35.0)
========= =========
Earnings (Loss) per Common Share
Basic $ 3.72 $ 4.53 (17.9)
Diluted $ 3.65 $ 4.40 (17.0)
Shares Used for Computation(000)
Basic 74,653 94,429
Diluted 76,013 98,749
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 September 30,
-----------------------------------
1999 1998 (Note 1) % Change
--------- ------------- --------
Operating Revenues
Passenger transportation $ 1,663 $ 1,785 (6.8)
US Airways Express
transportation revenues 198 188 5.3
Cargo and freight 33 38 (13.2)
Other 175 166 5.4
--------- ---------
Total Operating Revenues 2,069 2,177 (5.0)
Operating Expenses
Personnel costs 832 732 13.7
Aviation fuel 182 138 31.9
Commissions 108 121 (10.7)
Aircraft rent 108 93 16.1
Other rent and landing fees 100 98 2.0
Aircraft maintenance 107 85 25.9
Other selling expenses 92 90 2.2
Depreciation and amortization 83 76 9.2
US Airways Express capacity
purchases 162 144 12.5
Other 402 337 19.3
--------- ---------
Total Operating Expenses 2,176 1,914 13.7
--------- ---------
Operating Income (Loss) (107) 263 (140.7)
Other Income (Expense)
Interest income 65 48 35.4
Interest expense (48) (51) (5.9)
Interest capitalized 7 1 600.0
Gain on sale of marketable
equity securities -- -- --
Other, net -- (12) (100.0)
--------- ---------
Other Income (Expense), Net 24 (14) (271.4)
--------- ---------
Income (Loss) Before Taxes (83) 249 (133.3)
Provision (Credit) for
Income Taxes (28) 100 (128.0)
--------- ---------
Net Income (Loss) $ (55) $ 149 (136.9)
========= =========
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)
Nine Months Ended September 30,
-----------------------------------
1999 1998 (Note 1) % Change
--------- ------------ --------
Operating Revenues
Passenger transportation $ 5,161 $ 5,331 (3.2)
US Airways Express
transportation revenues 581 520 11.7
Cargo and freight 107 121 (11.6)
Other 508 497 2.2
--------- ---------
Total Operating Revenues 6,357 6,469 (1.7)
Operating Expenses
Personnel costs 2,331 2,153 8.3
Aviation fuel 451 437 3.2
Commissions 338 361 (6.4)
Aircraft rent 295 285 3.5
Other rent and landing fees 296 281 5.3
Aircraft maintenance 289 270 7.0
Other selling expenses 268 272 (1.5)
Depreciation and amortization 227 215 5.6
US Airways Express capacity
purchases 466 403 15.6
Other 1,143 973 17.5
--------- ---------
Total Operating Expenses 6,104 5,650 8.0
--------- ---------
Operating Income (Loss) 253 819 (69.1)
Other Income (Expense)
Interest income 170 130 30.8
Interest expense (145) (174) (16.7)
Interest capitalized 16 (17) (194.1)
Gain on sale of marketable
equity securities 274 -- --
Other, net 16 (13) (223.1)
--------- ---------
Other Income (Expense), Net 331 (74) (547.3)
--------- ---------
Income (Loss) Before Taxes 584 745 (21.6)
Provision (Credit) for
Income Taxes 233 300 (22.3)
--------- ---------
Net Income (Loss) $ 351 $ 445 (21.1)
========= =========
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 September 30,
-----------------------------
1999 1998 % Change
------- ------- --------
Revenue passengers (thousands)* 13,984 15,177 (7.9)
Total revenue passenger miles
(millions) 10,694 10,961 (2.4)
Revenue passenger miles
(millions)* 10,673 10,937 (2.4)
Total available seat miles
(millions) 14,914 14,458 3.2
Available seat miles(millions)* 14,886 14,430 3.2
Passenger load factor* 71.7% 75.8% (4.1)pts.
Break-even load factor (Note 2) 76.6% 68.2% 8.4 pts.
Yield* 15.58c 16.32c (4.5)
Passenger revenue per available
seat mile* 11.17c 12.37c (9.7)
Revenue per available seat mile
(Note 2) 12.54c 13.75c (8.8)
Cost per available seat mile
(Note 2) 13.51c 12.26c 10.2
Average passenger journey (miles)* 763 721 5.8
Average stage length (miles)* 626 597 4.9
Revenue aircraft miles (millions)* 109 107 1.9
Cost of aviation fuel per gallon 63.53c 48.83c 30.1
Cost of aviation fuel per gallon
(excluding fuel taxes) 57.21c 42.87c 33.4
Gallons of aviation fuel consumed
(millions) 287 282 1.8
Schedule completion factor* 95.3% 98.3% (3.0)pts.
Number of aircraft in operating
fleet at period-end 394 368 7.1
Full-time equivalent employees at
period-end 40,613 38,188 6.4
* 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. Nonrecurring
items include expense credits of $0.6 million and $3.0
million for the three months ended September 30, 1999 and
1998, respectively, and $16.2 million and $3.0 million
for the nine months ended September 30, 1999 and 1998,
respectively.
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,
-----------------------------
1999 1998 % Change
------- ------- --------
Revenue passengers (thousands)* 41,736 43,788 (4.7)
Total revenue passenger miles
(millions) 31,177 31,358 (0.6)
Revenue passenger miles
(millions)* 31,112 31,263 (0.5)
Total available seat miles
(millions) 43,894 42,371 3.6
Available seat miles(millions)* 43,809 42,260 3.7
Passenger load factor* 71.0% 74.0% (3.0)pts.
Break-even load factor (Note 2) 69.0% 66.3% 2.7 pts.
Yield* 16.59c 17.05c (2.7)
Passenger revenue per available
seat mile* 11.78c 12.61c (6.6)
Revenue per available seat mile
(Note 2) 13.16c 14.04c (6.3)
Cost per available seat mile
(Note 2) 12.88c 12.39c 4.0
Average passenger journey (miles)* 745 714 4.3
Average stage length (miles)* 617 595 3.7
Revenue aircraft miles (millions)* 324 315 2.9
Cost of aviation fuel per gallon 53.21c 52.87c 0.6
Cost of aviation fuel per gallon
(excluding fuel taxes) 47.01c 46.87c 0.3
Gallons of aviation fuel consumed
(millions) 848 827 2.5
Schedule completion factor* 96.3% 98.4% (2.1)pts.
Number of aircraft in operating
fleet at period-end 394 368 7.1
Full-time equivalent employees at
period-end 40,613 38,188 6.4
* 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. Nonrecurring
items include expense credits of $0.6 million and $3.0
million for the three months ended September 30, 1999 and
1998, respectively, and $16.2 million and $3.0 million
for the nine months ended September 30, 1999 and 1998,
respectively.
