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)
January 19, 2000
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 January 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 and year ended December 31, 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, additional information related to the Company's
purchases of its common stock and select balance sheet information was
provided. In 1999, the Company purchased 18.1 million shares for
approximately $817 million, including 5.6 million shares for
approximately $165 million in the fourth quarter. The cash and cash
equivalent balance and debt including capital lease obligations
balance as of December 31, 1999 were $870 million and $2.2 billion,
respectively.
Also disclosed during the call, US Airways' system-wide capacity
(available seat miles or ASMs) is expected to increase approximately
8% to 10% for 2000 compared to 1999. Departure completion factor is
expected to rebound from 95.5% in 1999 to 98% in 2000. Unit revenues
are expected to decline year over year.
Despite higher fuel costs, which are expected to be $184 million
over 1999 levels, and higher pay rates, unit cost for 2000 is expected
to decline by 4% year over year. More specifically, the Company's growth
is expected to allow it to become more productive and spread overhead
over a larger base. Commission expenses is expected to decline by
$78 million, driven by a decrease in average commission rate of 6.3%
in 1999 to 4.9% in 2000. Information technology and communication costs
are planned to be down $30 million or 9%, reflecting steady-state
costs vs. the transition activities seen in 1999. Labor unit costs,
despite the year-over-year increases in rates of pay are expected to
improve by 3%, driven by improvements in productivity and better completion
factors. Aircraft rent is expected to be up about 10%, as we plan to lease
roughly 30% of our 2000 deliveries. Maintenance materials and repairs are
planned to be flat with 1999. Other selling expenses are expected to climb
by 11%, and depreciation and amortization should increase 5%, after
adjusting for 1999's impairment charge. With regards to items not impacting
unit cost, aircraft financings are expected to drive interest expense up
by 34%, while interest income is planned to fall about 20%.
In the near term, the Company is expecting a loss for the first
quarter of 2000. Even though the Company expects unit costs less fuel
costs to be flat for the quarter, unit revenues will be under pressure
driven by the capacity imbalances in the route network, the lingering
revenue impacts due to the passenger ill-will caused by the
disappointing operational performance of the 1999 third quarter, and
the booking impact due to the uncertainties associated with the open
contract with the flight attendants.
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, disruptions relating to labor negotiations 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 January 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: January 19, 2000 By: --------------------------------
Anita P. Beier
Vice President and Controller
Chief Accounting Officer
US Airways, Inc. (REGISTRANT)
/s/ Anita P. Beier
Date: January 19, 2000 By: --------------------------------
Anita P. Beier
Vice President and Controller
Chief Accounting Officer
(this space intentionally left blank)
Exhibit 99
US AIRWAYS GROUP 1999 NET INCOME IS $197 MILLION
INCLUDING NON-RECURRING AND UNUSUAL ITEMS
ARLINGTON, Va., Jan. 19, 2000 - US Airways Group, Inc. reported
net income of $197 million and operating income of $136 million for
1999 on revenues of $8.6 billion. On a diluted per share basis, the
net earnings for the year were $2.64.
Excluding non-recurring and unusual items, net income for the
year was $37 million and operating income was $181 million. On a
diluted per share basis, the net earnings for the year, excluding
non-recurring and unusual items, were $0.50.
For the 4th quarter of 1999, there was a net loss of $81 million
and an operating loss of $121 million on revenues of $2.1 billion. On
a diluted per share basis, the net loss for the quarter was $1.16.
Excluding non-recurring and unusual items, the net loss for the
4th quarter was $47 million and the operating loss was $60 million. On
a diluted per share basis, excluding non-recurring and unusual items,
the net loss for the quarter was $0.68.
"The results for 1999 are a disappointment to all of us. The
employees of US Airways nevertheless are to be commended for continuing their
efforts to run a quality airline and build upon the positive
developments of the past year," said President and CEO Rakesh
Gangwal.
"While there was progress during 1999 that speaks well for the
future, the year's financial performance clearly was well below an
acceptable level," said US Airways Chairman Stephen M. Wolf.
Wolf and Gangwal noted that the year's performance was affected
by a number of factors, including poor weather early in the year, air
traffic control issues, the learning impact of a new computer system,
crew shortages due to training needs and aircraft coming out of
maintenance at a pace slower than anticipated.
At the same time, they noted that in addition to the many labor
agreements reached during the year, US Airways continued to integrate
new Airbus single-aisle aircraft into the fleet. They said that
planning also is well along for introducing new Airbus A330-300
transatlantic aircraft and that the new Sabre system now is
functioning smoothly.
Included in the 4th quarter results were three unusual financial
items. In connection with an evaluation of its fleet, US Airways
recognized a pretax impairment charge of $64 million relating to the
planned retirement of the company's remaining DC-9 and 17 737-200
aircraft. The company also recognized a pretax gain of approximately
$7.3 million from the sale of about 34 percent of its holdings in
Equant, and recorded a pretax credit of $3 million due to a reversal
of certain prior write-offs involving BAe-146 aircraft.
There also was an unusual pretax gain of $9.9 million in the 1st
quarter of 1999 relating to the sale of Equant stock and one of $274
million in the 2nd quarter relating to the sale of holdings in
Galileo. Also in the 2nd quarter, there was a $12 million pretax
expense credit resulting from the sale or lease termination of six
BAe-146 aircraft and a $4 million pretax reversal of an accrual
related to the consolidation of maintenance facilities.
Operating revenues for 1999 of $8.6 billion were down by 1.1
percent as compared to 1998 while operating expenses of $8.5 billion
were up by 10.2 percent. Unit costs for US Airways, Inc. for the year
increased 4.5 percent to 12.90 cents, driven in part by an increase
of 13.1 percent in cost of aviation fuel per gallon to 58.63 cents.
Passenger unit revenues of 11.58 cents declined 6.5 percent from
1998. Total available seat miles for the year increased 4.2 percent
while total revenue passenger miles increased 0.5 percent. The
passenger load factor for the year was 70.1 percent, a decline of 2.6
percentage points from 1998.
Operating revenues for the 4th quarter of $2.1 billion were up
by 0.7 percent as compared to 1998 while operating expenses of $2.3
billion were up by 16.1 percent, reflecting both fuel costs and
unusual items. Unit costs for US Airways, Inc. for the quarter were
12.96 cents, up by 6.2 percent. The cost of fuel was 74.21 cents per
gallon, an increase of 52.1 percent. Passenger unit revenues of 11.01
cents were down by 5.7 percent from 1998. Total available seat miles
for the quarter increased 5.9 percent while total revenue passenger
miles increased 3.7 percent. The passenger load factor was 67.6
percent, down by 1.5 percentage points.
-30-
NUMBER: 3816
US Airways Group, Inc. NEWS RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in millions, except per share amounts)
Three Months Ended December 31,
-----------------------------------
1999 1998(Note 1) % Change
--------- --------- --------
Operating Revenues
Passenger transportation $ 1,896 $ 1,902 (0.3)
Cargo and freight 40 43 (7.0)
Other 199 176 13.1
--------- ---------
Total Operating Revenues 2,135 2,121 0.7
Operating Expenses
Personnel costs 873 793 10.1
Aviation fuel 237 148 60.1
Commissions 111 125 (11.2)
Aircraft rent 123 111 10.8
Other rent and landing fees 109 109 --
Aircraft maintenance 131 110 19.1
Other selling expenses 82 72 13.9
Depreciation and amortization 151 82 84.1
Other 439 393 11.7
--------- ---------
Total Operating Expenses 2,256 1,943 16.1
--------- ---------
Operating Income (Loss) (121) 178 (168.0)
Other Income (Expense)
Interest income 18 24 (25.0)
Interest expense (49) (49) --
Interest capitalized 9 11 (18.2)
Gain on sale of
marketable equity securities -- -- --
Other, net 8 10 (20.0)
--------- ---------
Other Income (Expense), Net (14) (4) 250.0
--------- ---------
Income (Loss) Before Taxes (135) 174 (177.6)
Provision (Credit) for
Income Taxes (54) 70 (177.1)
--------- ---------
Net Income (Loss) (81) 104 (177.9)
Preferred Dividend Requirement -- -- --
--------- ---------
Earnings (Loss) Applicable to
Common Stockholders $ (81) $ 104 (177.9)
========= =========
Earnings (Loss) per Common Share
Basic $ (1.16) $ 1.20 (196.7)
Diluted $ (1.16) $ 1.18 (198.3)
Shares Used for Computation (000)
Basic 69,347 86,430
Diluted 69,347 87,987
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)
Twelve Months Ended December 31,
-----------------------------------
1999 1998(Note 1) % Change
--------- --------- --------
Operating Revenues
Passenger transportation $ 7,685 $ 7,826 (1.8)
Cargo and freight 149 168 (11.3)
Other 761 694 9.7
--------- ---------
Total Operating Revenues 8,595 8,688 (1.1)
Operating Expenses
Personnel costs 3,380 3,101 9.0
Aviation fuel 727 623 16.7
Commissions 484 519 (6.7)
Aircraft rent 466 440 5.9
Other rent and landing fees 430 417 3.1
Aircraft maintenance 498 448 11.2
Other selling expenses 379 372 1.9
Depreciation and amortization 401 318 26.1
Other 1,694 1,436 18.0
--------- ---------
Total Operating Expenses 8,459 7,674 10.2
--------- ---------
Operating Income (Loss) 136 1,014 (86.6)
Other Income (Expense)
Interest income 66 111 (40.5)
Interest expense (193) (223) (13.5)
Interest capitalized 38 3 1,166.7
Gain on sale of
marketable equity securities 274 -- --
Other, net 24 (3) (900.0)
--------- ---------
Other Income (Expense), Net 209 (112) (286.6)
--------- ---------
Income (Loss) Before Taxes 345 902 (61.8)
Provision (Credit) for
Income Taxes 148 364 (59.3)
--------- ---------
Net Income (Loss) 197 538 (63.4)
Preferred Dividend Requirement -- (6) (100.0)
--------- ---------
Earnings (Loss) Applicable to
Common Stockholders $ 197 $ 532 (63.0)
========= =========
Earnings (Loss) per Common Share
Basic $ 2.69 $ 5.75 (53.2)
Diluted $ 2.64 $ 5.60 (52.9)
Shares Used for Computation(000)
Basic 73,316 92,413
Diluted 74,603 96,211
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 December 31,
-----------------------------------
1999 1998 (Note 1) % Change
--------- ------------- --------
Operating Revenues
Passenger transportation $ 1,687 $ 1,690 (0.2)
US Airways Express
transportation revenues 199 191 4.2
Cargo and freight 38 43 (11.6)
Other 179 163 9.8
--------- ---------
Total Operating Revenues 2,103 2,087 0.8
Operating Expenses
Personnel costs 810 735 10.2
Aviation fuel 219 137 59.9
Commissions 100 113 (11.5)
Aircraft rent 107 95 12.6
Other rent and landing fees 99 100 (1.0)
Aircraft maintenance 107 87 23.0
Other selling expenses 73 63 15.9
Depreciation and amortization 143 75 90.7
US Airways Express capacity
purchases 168 147 14.3
Other 392 364 7.7
--------- ---------
Total Operating Expenses 2,218 1,916 15.8
--------- ---------
Operating Income (Loss) (115) 171 (167.3)
Other Income (Expense)
Interest income 30 52 (42.3)
Interest expense (50) (49) 2.0
Interest capitalized 3 6 (50.0)
Gain on sale of marketable
equity securities -- -- --
Other, net 8 10 (20.0)
--------- ---------
Other Income (Expense), Net (9) 19 (147.4)
--------- ---------
Income (Loss) Before Taxes (124) 190 (165.3)
Provision (Credit) for
Income Taxes (47) 76 (161.8)
--------- ---------
Net Income (Loss) $ (77) $ 114 (167.5)
========= =========
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)
Twelve Months Ended December 31,
-----------------------------------
1999 1998 (Note 1) % Change
--------- ------------ --------
Operating Revenues
Passenger transportation $ 6,848 $ 7,021 (2.5)
US Airways Express
transportation revenues 780 711 9.7
Cargo and freight 145 164 (11.6)
Other 687 660 4.1
--------- ---------
Total Operating Revenues 8,460 8,556 (1.1)
Operating Expenses
Personnel costs 3,142 2,888 8.8
Aviation fuel 670 575 16.5
Commissions 438 474 (7.6)
Aircraft rent 402 381 5.5
Other rent and landing fees 395 381 3.7
Aircraft maintenance 397 357 11.2
Other selling expenses 341 336 1.5
Depreciation and amortization 370 290 27.6
US Airways Express capacity
purchases 634 550 15.3
Other 1,532 1,334 14.8
--------- ---------
Total Operating Expenses 8,321 7,566 10.0
--------- ---------
Operating Income (Loss) 139 990 (86.0)
Other Income (Expense)
Interest income 199 182 9.3
Interest expense (195) (224) (12.9)
Interest capitalized 18 (10) (280.0)
Gain on sale of marketable
equity securities 274 -- --
Other, net 24 (2) (1,300.0)
--------- ---------
Other Income (Expense), Net 320 (54) (692.6)
--------- ---------
Income (Loss) Before Taxes 459 936 (51.0)
Provision (Credit) for
Income Taxes 186 377 (50.7)
--------- ---------
Net Income (Loss) $ 273 $ 559 (51.2)
========= =========
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 December 31,
-----------------------------
1999 1998 % Change
------- ------- --------
Revenue passengers (thousands)* 14,075 14,202 (0.9)
Total revenue passenger miles
(millions) 10,386 10,012 3.7
Revenue passenger miles
(millions)* 10,367 9,991 3.8
Total available seat miles
(millions) 15,352 14,490 5.9
Available seat miles(millions)* 15,326 14,463 6.0
Passenger load factor* 67.6% 69.1% (1.5)pts.
Break-even load factor (Note 2) 71.4% 63.9% 7.5 pts.
Yield* 16.27c 16.91c (3.8)
Passenger revenue per available
seat mile* 11.01c 11.68c (5.7)
Revenue per available seat mile
(Note 2) 12.40c 13.08c (5.2)
Cost per available seat mile
(Note 2) 12.96c 12.20c 6.2
Average passenger journey (miles)* 737 703 4.8
Average stage length (miles)* 612 603 1.5
Revenue aircraft miles (millions)* 113 107 5.6
Cost of aviation fuel per gallon 74.21c 48.79c 52.1
Cost of aviation fuel per gallon
(excluding fuel taxes) 68.04c 43.23c 57.4
Gallons of aviation fuel consumed
(millions) 295 281 5.0
Schedule mileage completion factor* 97.9% 98.2% (0.3)pts.
Number of aircraft in operating
fleet at period-end 383 376 1.9
Full-time equivalent employees at
period-end 41,636 38,210 9.0
* Scheduled service only (excludes charter service).
c cents
Note 1. Includes US Airways' "mainline" operations, mainline
flights operated as US Airways Shuttle, and the
operations of its low-cost product, MetroJet.
Note 2. Financial statistics exclude unusual charges and credits
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)
Twelve Months Ended December 31,
-----------------------------
1999 1998 % Change
------- ------- --------
Revenue passengers (thousands)* 55,812 57,990 (3.8)
Total revenue passenger miles
(millions) 41,563 41,370 0.5
Revenue passenger miles
(millions)* 41,478 41,253 0.5
Total available seat miles
(millions) 59,246 56,861 4.2
Available seat miles(millions)* 59,136 56,723 4.3
Passenger load factor* 70.1% 72.7% (2.6)pts.
Break-even load factor (Note 2) 69.6% 65.7% 3.9 pts.
Yield* 16.51c 17.02c (3.0)
Passenger revenue per available
seat mile* 11.58c 12.38c (6.5)
Revenue per available seat mile
(Note 2) 12.96c 13.80c (6.1)
Cost per available seat mile
(Note 2) 12.90c 12.34c 4.5
Average passenger journey (miles)* 743 711 4.5
Average stage length (miles)* 616 597 3.2
Revenue aircraft miles (millions)* 437 422 3.6
Cost of aviation fuel per gallon 58.63c 51.83c 13.1
Cost of aviation fuel per gallon
(excluding fuel taxes) 52.44c 45.95c 14.1
Gallons of aviation fuel consumed
(millions) 1,143 1,109 3.1
Schedule mileage completion factor* 96.7% 98.3% (1.6)pts.
Number of aircraft in operating
fleet at period-end 383 376 1.9
Full-time equivalent employees at
period-end 41,636 38,210 9.0
* Scheduled service only (excludes charter service).
c cents
Note 1. Includes US Airways' "mainline" operations, mainline
flights operated as US Airways Shuttle, and the
operations of its low-cost product, MetroJet.
Note 2. Financial statistics exclude unusual charges and credits
and the revenues and expenses generated under capacity
purchase arrangements US Airways has with certain
US Airways Express air carriers.
