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 19, 2000
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) 872-7000
(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 19, 2000, 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, 2000, and selected operating and financial
statistics for US Airways for the same period (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, additional information related to the Company's
purchases of its common stock and select balance sheet information was
provided. During the first part of January 2000, the Company purchased
155,000 shares for approximately $5 million. The Company's cash
position as of March 31, 2000 was $1.4 billion, which included $500
million of borrowing under the Company's revolving credit facility.
Total debt including capital lease obligations as of March 31, 2000 was
$2.9 billion.
The following information was also disclosed during the call:
- -- For the second quarter of 2000, unit cost is expected to be flat
year-over-year. Unit cost adjusting for fuel is expected to improve 3%
to 4%. Greater improvements are expected in the third quarter due to
better operating performance, more capacity and longer stage length
flying.
- -- Year-over-year unit revenue performance for the second quarter is
expected to improve compared to the prior two quarters.
- -- Available seat miles is expected to increase 11.5% year-over-year for
the second quarter. This will be driven by a 25% increase in transatlantic
flying, a 14% increase in long-haul east-west flying out hubs and
improved operation performance.
- -- For the second half of 2000, available seat miles is expected to
increase 12%. Approximately 1/3 of the increase is expected to come from
long-haul growth in the core network, another 1/3 of the increase is
expected to come from growth in the transatlantic operation and the remaining
growth is expected to be equally split between larger aircraft in the
domestic operation and improvements in operating performance.
- -- Available seat miles for 2000 is expected to increase approximately 10.5%
versus 1999.
- -- Load factor is expected to be flat for the second quarter when compared to
prior year.
- -- The backlog of aircraft returning from maintenance has been
successfully eliminated. Previously, this backlog was expected to be
resolved by July 1, 2000.
Certain of the information discussed on the conference call should
be considered "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 which is subject to a
number of risks and uncertainties. The preparation of forward-looking
statements requires the use of estimates of future revenues, expenses,
activity levels and economic and market conditions, many of which are
outside US Airways' control. Specific factors that could cause actual
results to differ materially from those set forth in the forward-
looking statements include: economic conditions, labor costs; aviation
fuel costs; competitive pressures on pricing (particularly from lower-
cost competitors); weather conditions; government legislation; consumer
perceptions of US Airways' products; demand for air transportation in
the markets served by US Airways'; other operational matters and other
risks and uncertainties listed from time to time in US Airways' 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 statements, and the failure of such
other factors and assumptions to be realized may also cause actual
results to differ materially from those discussed. US Airways 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 April 19, 2000 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: April 19, 2000 By: --------------------------------
Anita P. Beier
Vice President and Controller
Chief Accounting Officer
US Airways, Inc. (REGISTRANT)
/s/ Anita P. Beier
Date: April 19, 2000 By: --------------------------------
Anita P. Beier
Vice President and Controller
Chief Accounting Officer
(this space intentionally left blank)
US AIRWAYS GROUP 1ST QUARTER LOSS IS $115 MILLION,
EXCLUDING ACCOUNTING CHARGE OF $103 MILLION
ARLINGTON, Va., April 19, 2000 - US Airways Group, Inc.,
reported a net loss of $115 million and an operating loss of $139
million for the first quarter of 2000, excluding an after-tax
accounting charge of $103 million. Operating revenues for the period
were $2.1 billion. On a diluted per-share basis, the net loss for
the quarter was $1.72, excluding the accounting charge.
Including the accounting charge - a change involving the way in
which frequent flyer partner revenue is recognized under accounting
rules- the net loss was $218 million and on a diluted per-share
basis, the loss was $3.27.
While sharply increased fuel costs accounted for a significant
portion of the losses, the company's performance also was affected by
weather in January and by uncertainties among customers related to
labor discussions in March.
"The unique challenges US Airways faced over the past year are
largely behind us and we look forward to operating a quality airline
and realizing US Airways' potential. US Airways' employees already
are focusing on this vision of the future through vastly improved
operational performance," said US Airways President and CEO Rakesh
Gangwal.
"I am pleased that we are all once again focused on our
customers," said US Airways Chairman Stephen M. Wolf.
The cost of aviation fuel during the first quarter rose from
43.27 cents per gallon in 1999 to 88.81 cents per gallon in 2000, an
increase of 105.2 percent. Combined with an increase in available
seat miles flown of 6.5 percent, this led to an increase in fuel
costs for the quarter of $145 million to $274 million. Meanwhile
unit passenger revenue for the quarter, after adjusting for the
accounting change, was down from 12.01 cents
-more-
US AIRWAYS GROUP 1ST QUARTER LOSS IS
$115 MILLION, EXCLUDING ACCOUNTING
CHARGE OF $103 MILLION
Page Two
April 19, 2000
in the first quarter of 1999 to 11.20 cents in 2000, reflecting a
decrease of 1.5 percent in the number of passengers flown as
customers booked away from US Airways during the period of flight
uncertainty in March.
Gangwal noted that the cost of fuel is beginning to decline and
that US Airways reached a tentative agreement with the Association of
Flight Attendants on March 25.
Operating revenues for the first quarter were $2.1 billion, up
1.7 percent over the first quarter of 1999, after adjusting for the
accounting change, while operating expenses were up 12.8 percent to
$2.2 billion. Unit cost for US Airways, Inc. for the quarter was
13.39 cents, up by 5.0 percent as compared to the first quarter of
1999. Revenue passenger miles for the quarter increased 1.1 percent
over 1999 as available seat miles increased 6.5 percent. The
passenger load factor for the period was 64.2 percent, a decrease of
3.5 percentage points as compared to the first quarter of 1999.
-30-
NUMBER: 3872
US Airways Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in millions, except per share amounts)
Three Months Ended March 31,
-----------------------------------
2000 1999 % Change
--------- --------- --------
Operating Revenues
Passenger transportation $ 1,884 $ 1,856 1.5
Cargo and freight 39 40 (2.5)
Other 175 176 (0.6)
--------- ---------
Total Operating Revenues 2,098 2,072 1.3
Operating Expenses
Personnel costs 876 801 9.4
Aviation fuel 274 129 112.4
Commissions 90 124 (27.4)
Aircraft rent 126 114 10.5
Other rent and landing fees 112 108 3.7
Aircraft maintenance 130 117 11.1
Other selling expenses 108 101 6.9
Depreciation and amortization 91 80 13.8
Other 430 409 5.1
--------- ---------
Total Operating Expenses 2,237 1,983 12.8
--------- ---------
Operating Income (Loss) (139) 89 (256.2)
Other Income (Expense)
Interest income 13 15 (13.3)
Interest expense (57) (50) 14.0
Interest capitalized 9 8 12.5
Other, net (1) 13 (107.7)
--------- ---------
Other Income (Expense), Net (36) (14) 157.1
--------- ---------
Income (Loss) Before Taxes and
Cumulative Effect of
Accounting Change (175) 75 (333.3)
Provision (Credit) for
Income Taxes (60) 29 (306.9)
--------- ---------
Income (Loss) Before Cumulative
Effect of Accounting Change (115) 46 (350.0)
Cumulative Effect of Accounting
Change, Net of Applicable
Income Taxes of $63 Million (103) -- --
--------- ---------
Net Income (Loss) $ (218) $ 46 (573.9)
========= =========
Earnings (Loss) per Common Share
Basic
Before Accounting Change $ (1.72) $ 0.57 (401.8)
Effect of Accounting
Change $ (1.55) $ -- --
--------- ---------
Earnings (Loss) per
Common Share $ (3.27) $ 0.57 (673.7)
========= =========
Diluted
Before Accounting Change $ (1.72) $ 0.56 (407.1)
Effect of Accounting
Change $ (1.55) $ -- --
--------- ---------
Earnings (Loss) per
Common Share $ (3.27) $ 0.56 (683.9)
========= =========
Shares Used for Computation (000)
Basic 66,500 79,464
Diluted 66,500 80,953
US Airways, Inc. NEWS RELEASE
(A Wholly-Owned Subsidiary of US Airways Group, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in millions)
Three Months Ended March 31,
-----------------------------------
%
2000 1999 Change
--------- ----------- --------
Operating Revenues
Passenger transportation $ 1,684 $ 1,661 1.4
US Airways Express
transportation revenues 191 177 7.9
Cargo and freight 38 39 (2.6)
Other 146 163 (10.4)
--------- ---------
Total Operating Revenues 2,059 2,040 0.9
Operating Expenses
Personnel costs 812 744 9.1
Aviation fuel 253 119 112.6
Commissions 83 113 (26.5)
Aircraft rent 108 98 10.2
Other rent and landing fees 101 99 2.0
Aircraft maintenance 103 88 17.0
Other selling expenses 97 91 6.6
Depreciation and amortization 82 73 12.3
US Airways Express capacity
purchases 179 146 22.6
Other 376 376 --
--------- ---------
Total Operating Expenses 2,194 1,947 12.7
--------- ---------
Operating Income (Loss) (135) 93 (245.2)
Other Income (Expense)
Interest income 24 49 (51.0)
Interest expense (57) (50) 14.0
Interest capitalized 3 4 (25.0)
Other, net (1) 13 (107.7)
--------- ---------
Other Income (Expense), Net (31) 16 (293.8)
--------- ---------
Income (Loss) Before Taxes
and Cumulative Effect of
Accounting Change (166) 109 (252.3)
Provision (Credit) for
Income Taxes (58) 42 (238.1)
--------- ---------
Income (Loss) Before
Cumulative Effect of
Accounting Change (108) 67 (261.2)
Cumulative Effect of
Accounting Change, Net
of Applicable Income
Taxes of $63 Million (103) -- --
--------- ---------
Net Income (Loss) $ (211) $ 67 (414.9)
========= =========
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 March 31,
%
2000 1999 Change
------- ------- --------
Revenue passengers (thousands)* 12,804 12,998 (1.5)
Total revenue passenger miles
(millions) 9,676 9,573 1.1
Revenue passenger miles
(millions)* 9,660 9,553 1.1
Total available seat miles
(millions) 15,057 14,134 6.5
Available seat miles(millions)* 15,037 14,107 6.6
Passenger load factor* 64.2% 67.7% (3.5)pts.
Break-even load factor (Note 2) 70.8% 65.0% 5.8 pts.
Yield* (Note 3) 17.43c 17.73c (1.7)
Passenger revenue per available
seat mile* (Note 3) 11.20c 12.01c (6.7)
Revenue per available seat mile
(Notes 2 and 3) 12.40c 13.12c (5.5)
Cost per available seat mile
(Note 2) 13.39c 12.75c 5.0
Average passenger journey (miles)* 754 735 2.6
Average stage length (miles)* 614 614 --
Revenue aircraft miles (millions)* 111 105 5.7
Cost of aviation fuel per gallon 88.81c 43.27c 105.2
Cost of aviation fuel per gallon
(excluding fuel taxes) 82.32c 37.17c 121.5
Gallons of aviation fuel consumed
(millions) 285 275 3.6
Schedule mileage completion factor* 96.7% 96.1% 0.6 pts.
Number of aircraft in operating
fleet at period-end 387 377 2.7
Full-time equivalent employees at
period-end 42,727 38,832 10.0
* Scheduled service only (excludes charter service).
c cents
Note 1. Includes US Airways' "mainline" operations and
the operations of its low-cost product, MetroJet.
Note 2. Financial statistics exclude the revenues and
expenses generated under capacity purchase arrangements
US Airways has with certain US Airways Express air
carriers.
Note 3. Effective January 1, 2000, US Airways modified its
accounting policy related to Dividend Mile revenue
recognition in connection with guidance found in the
Securities and Exchange Commission Staff Accounting
Bulletin 101, "Revenue Recognition in Financial
Statements." The 1999 amount has been adjusted to show
what US Airways would have reported if the new accounting
policy had been in effect in all years prior to 2000
US Airways Group, Inc. NEWS RELEASE
SUPPLEMENTAL SCHEDULE
(unaudited)
(dollars in millions, except per share amounts)
Three Months Ended March 31,
-----------------------------------------------
As
Reported Pro Forma
1999 % 1999 %
2000 (Note 1) Change (Note 1) Change
-------- ---------- ------ --------- ------
US AIRWAYS GROUP, INC.
Operating Revenues
Passenger transportation $ 1,884 $ 1,856 1.5 $ 1,889 (0.3)
Cargo and freight 39 40 (2.5) 40 (2.5)
Other 175 176 (0.6) 134 30.6
-------- -------- --------
Total Operating Revenues $ 2,098 $ 2,072 1.3 $ 2,063 1.7
======== ======== ========
Net Income (Loss) $ (218) $ 46 (573.9) $ 40 (645.0)
======== ======== ========
Earnings (Loss) per Common Share
Basic $ (3.27) $ 0.57 (673.7) $ 0.50 (754.0)
Diluted $ (3.27) $ 0.56 (683.9) $ 0.49 (767.3)
US AIRWAYS, INC.
Operating Revenues
Passenger transportation $ 1,684 $ 1,661 1.4 $ 1,694 (0.6)
US Airways Express
transportation revenue 191 177 7.9 177 7.9
Cargo and freight 38 39 (2.6) 39 (2.6)
Other 146 163 (10.4) 121 20.7
-------- -------- --------
Total Operating Revenues $ 2,059 $ 2,040 0.9 $ 2,031 1.4
======== ======== ========
Net Income (Loss) $ (211) $ 67 (414.9) $ 61 (445.9)
======== ======== ========
Note 1. Effective January 1, 2000, US Airways modified its accounting policy
related to Dividend Miles revenue recognition in connection with
guidance found in the Securities and Exchange Commission Staff
Accounting Bulletin 101,"Revenue Recognition in Financial Statements."
The Pro Forma 1999 amounts above are provided to show what US Airways
would have reported if the new accounting policy had been in effect in
all years prior to 2000.
