<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1995 or
------------------------
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 1-10140
------------------------
AMERICA WEST AIRLINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 86-0418245
------------------------------ -----------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4000 EAST SKY HARBOR BLVD,
PHOENIX, ARIZONA 85034
---------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
Registrant's telephone number, including area code: (602) 693-0800
--------------
N/A
-------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes XX No
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes XX No (Not Applicable)
The Company has 1,200,000 shares of Class A Common Stock and 43,966,706
shares of Class B Common Stock outstanding as of July 31, 1995.
================================================================================
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICA WEST AIRLINES, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 279,392 $ 182,581
Accounts receivable, less allowance for doubtful accounts of 79,657 57,474
$3,930 in 1995 and $3,531 in 1994..........................
Expendable spare parts and supplies, less allowance for 27,210 24,179
obsolescence of $1,254 in 1995 and $483 in 1994............
Prepaid expenses.............................................. 42,504 29,284
----------- ------------
Total current assets....................................... 428,763 293,518
----------- ------------
Property and equipment:
Flight equipment.............................................. 498,020 452,177
Other property and equipment.................................. 94,736 92,169
----------- ------------
592,756 544,346
Less accumulated depreciation and amortization............. 42,236 15,882
----------- ------------
550,520 528,464
Equipment purchase deposits................................ 27,489 26,074
----------- ------------
578,009 554,538
----------- ------------
Restricted cash................................................. 30,019 28,578
Reorganization value in excess of amounts allocable to 609,287 645,703
identifiable assets, net......................................
Other assets, net............................................... 27,039 22,755
----------- ------------
$ 1,673,117 $1,545,092
========= ============
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE> 3
AMERICA WEST AIRLINES, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
---------- ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt............................. $ 63,282 $ 65,198
Accounts payable................................................. 90,708 77,569
Air traffic liability............................................ 217,901 127,356
Accrued compensation and vacation benefits....................... 21,613 15,776
Accrued interest................................................. 11,991 13,109
Accrued taxes.................................................... 54,659 27,061
Other accrued liabilities........................................ 15,743 15,376
---------- ------------
Total current liabilities..................................... 475,897 341,445
---------- ------------
Long-term debt, less current maturities............................ 438,204 465,598
Deferred credits................................................... 112,812 116,882
Other liabilities.................................................. 24,439 25,721
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 48,800,000 shares; no
shares issued at June 30, 1995 or December 31, 1994........... -- --
Class A common stock, $.01 par value. Authorized 1,200,000
shares; issued and outstanding 1,200,000 shares at June 30,
1995 and December 31, 1994.................................... 12 12
Class B common stock, $.01 par value. Authorized 100,000,000
shares; issued and outstanding 43,966,685 shares at June 30,
1995 and 43,936,272 at December 31, 1994...................... 440 439
Additional paid-in capital....................................... 587,384 587,149
Retained earnings................................................ 33,929 7,846
---------- ------------
Total stockholders' equity.................................... 621,765 595,446
---------- ------------
$1,673,117 $ 1,545,092
========= ==========
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE> 4
AMERICA WEST AIRLINES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
REORGANIZED | PREDECESSOR REORGANIZED | PREDECESSOR
COMPANY | COMPANY COMPANY | COMPANY
------------ | ------------ ----------- | -----------
THREE MONTHS | THREE MONTHS SIX MONTHS | SIX MONTHS
ENDED | ENDED ENDED | ENDED
JUNE 30, | JUNE 30, JUNE 30, | JUNE 30,
1995 | 1994 1995 | 1994
------------ | ------------ ----------- | -----------
<S> <C> | <C> <C> | <C>
Operating revenues: | |
Passenger.................................... $374,979 | $ 340,617 $ 698,438 | $ 665,044
Cargo........................................ 10,935 | 10,998 22,311 | 21,489
Other........................................ 14,002 | 11,736 24,957 | 22,082
-------- | --------- -------- | ---------
Total operating revenues.................. 399,916 | 363,351 745,706 | 708,615
-------- | --------- -------- | ---------
Operating expenses: | |
Salaries and related costs................... 95,871 | 83,013 185,051 | 162,484
Rentals and landing fees..................... 69,689 | 66,576 137,943 | 132,835
Aircraft fuel................................ 42,787 | 37,862 82,481 | 75,794
Agency commissions........................... 31,360 | 30,820 60,325 | 59,931
Aircraft maintenance materials and repairs... 14,115 | 10,973 26,879 | 18,902
Depreciation and amortization................ 20,202 | 22,045 40,330 | 43,198
Other........................................ 72,935 | 67,916 134,845 | 133,575
-------- | --------- -------- | ---------
Total operating expenses.................. 346,959 | 319,205 667,854 | 626,719
-------- | --------- -------- | ---------
Operating income.......................... 52,957 | 44,146 77,852 | 81,896
-------- | --------- -------- | ---------
Nonoperating income (expenses): | |
Interest income.............................. 4,085 | 183 6,959 | 344
Interest expense (contract interest of | |
$17,526 and $33,963 for the three months | |
and six months ended June 30, 1994, | |
respectively)............................. (15,579) | (12,893) (31,458) | (26,068)
Loss on disposition of property and | |
equipment................................. (302) | (728) (1,225) | (1,270)
Reorganization expense, net.................. -- | (9,862) -- | (18,258)
Other, net................................... 36 | 129 37 | 138
-------- | --------- -------- | ---------
Total nonoperating expenses, net.......... (11,760) | (23,171) (25,687) | (45,114)
-------- | --------- -------- | ---------
Income before income taxes..................... 41,197 | 20,975 52,165 | 36,782
-------- | --------- -------- | ---------
Income taxes................................... 20,324 | 839 26,082 | 1,471
-------- | --------- -------- | ---------
Net income..................................... 20,873 | 20,136 26,083 | 35,311
Retained earnings (deficit) at beginning of | |
period....................................... 13,056 | (423,451) 7,846 | (438,626)
-------- | --------- -------- | ---------
Retained earnings (deficit) at end of period... $ 33,929 | $ (403,315) $ 33,929 | $ (403,315)
======== | ========= ======== | =========
Earnings per share:(a) | |
Primary: | |
Net income................................ $ .46 | $ .74 $ .58 | $ 1.30
======== | ========= ======== | =========
Fully Diluted: | |
Net income................................ $ .45 | $ .52 $ .58 | $ .92
======== | ========= ======== | =========
Shares used for computation: | |
Primary................................... 45,167 | 28,255 45,166 | 28,704
======== | ========= ======== | =========
Fully diluted............................. 48,085 | 40,158 48,019 | 40,607
======== | ========= ======== | =========
</TABLE>
---------------
(a) Historical per share data for the Predecessor Company is not meaningful
since the Company has been recapitalized and has adopted fresh start
reporting as of August 25, 1994.
See accompanying notes to condensed financial statements.
4
<PAGE> 5
AMERICA WEST AIRLINES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
REORGANIZED | PREDECESSOR
COMPANY | COMPANY
----------- | ----------
SIX MONTHS | SIX MONTHS
ENDED | ENDED
JUNE 30, | JUNE 30,
1995 | 1994
----------- | ----------
<S> <C> | <C>
Cash flows from operating activities: |
Net income......................................................... $ 26,083 | $ 35,311
Adjustments to reconcile net income to cash provided by operating |
activities: |
Depreciation and amortization................................... 23,914 | 43,198
Amortization of manufacturers' and deferred credits............. (5,350) | (2,225)
Amortization of deferred overhauls.............................. 2,784 | --
Amortization of reorganization value in excess of amounts |
allocable to identifiable assets............................... 16,416 | --
Loss on disposition of property and equipment................... 1,225 | 1,270
Reorganization items, net....................................... -- | 3,703
Other........................................................... 1,675 | (283)
Changes in operating assets and liabilities: |
Increase in accounts receivable, net............................ (21,942) | (12,463)
Increase in spare parts and supplies, net....................... (3,027) | (511)
Decrease (increase) in prepaid expenses......................... (13,220) | 2,051
Decrease (increase) in other assets and restricted cash......... 16,025 | (5,201)
Increase in accounts payable.................................... 11,859 | 8,923
Increase in air traffic liability............................... 90,545 | 45,467
Increase in accrued compensation and vacation benefits.......... 5,837 | 821
Increase (decrease) in accrued interest......................... (1,053) | 5,130
Increase in accrued taxes....................................... 27,598 | 13,190
Increase in other accrued liabilities........................... 602 | 7,141
Decrease in other liabilities................................... (113) | (6,337)
----------- | ----------
Net cash provided by operating activities:................. 179,858 | 139,185
Cash flows from investing activities: |
Purchases of property and equipment................................ (50,707) | (34,981)
Long-term investment............................................... (1,750) | --
Proceeds from disposition of property.............................. 483 | 269
----------- | ----------
Net cash used in investing activities...................... (51,974) | (34,712)
Cash flows from financing activities: |
Repayment of debt.................................................. (31,074) | (27,182)
Exercise of warrants............................................... 1 | --
----------- | ----------
Net cash used in financing activities...................... (31,073) | (27,182)
----------- | ----------
Net increase in cash and cash equivalents.................. 96,811 | 77,291
----------- | ----------
Cash and cash equivalents at beginning of period..................... 182,581 | 99,631
----------- | ----------
Cash and cash equivalents at end of period........................... $ 279,392 | $176,922
========= | ========
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE> 6
AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1995
America West Airlines, Inc. (the "Predecessor Company") filed a voluntary
petition on June 27, 1991 to reorganize (the "Reorganization") under Chapter 11
of the U.S. Bankruptcy Code. On August 10, 1994, the Plan of Reorganization
("Plan"), filed by the Predecessor Company, was confirmed and became effective
on August 25, 1994 (the "Effective Date"). For a detailed discussion of the
Company's Plan, refer to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994. On August 25, 1994, America West Airlines, Inc. (the
"Reorganized Company" or the "Company") adopted fresh start reporting in
accordance with Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code" ("SOP 90-7") of the American Institute
of Certified Public Accountants. Accordingly, the Company's post-reorganization
balance sheet and statement of operations have not been prepared on a basis
consistent with such pre-reorganization financial statements and are not
comparable in all respects to financial statements prior to reorganization. For
accounting purposes, the inception date of the Reorganized Company is deemed to
be August 26, 1994. A vertical black line is shown in the financial statements
to separate the Reorganized Company from the Predecessor Company since they are
not comparable.
1. BASIS OF PRESENTATION
The unaudited condensed financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission but do not include all information and footnotes
required by generally accepted accounting principles pursuant to such rules and
regulations. In the opinion of management, the condensed financial statements
reflect all adjustments, which are of a normal recurring nature, necessary for a
fair presentation. Certain prior year amounts have been reclassified to conform
with current year presentation. The accompanying condensed financial statements
should be read in conjunction with the financial statements and related notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
2. PER SHARE DATA
Primary earnings per share is based upon the weighted average number of
shares of common stock outstanding and dilutive common stock equivalents (stock
options and warrants). Primary earnings per share reflect net income adjusted
for interest on borrowings effectively reduced by the proceeds from the assumed
exercise of common stock equivalents, but only if the effects of such
adjustments are dilutive.
Fully diluted earnings per share is based on the weighted average number of
shares of common stock outstanding, dilutive common stock equivalents (stock
options and warrants), and for the Predecessor Company the conversion of
outstanding convertible preferred stock and the conversion of convertible
subordinated debentures. Fully diluted earnings per share reflect net income
adjusted for interest on borrowings effectively reduced by the proceeds from the
assumed exercise of common stock equivalents, but only if the effects of such
adjustments are dilutive.
3. RESTRICTED STOCK AND STOCK OPTIONS
In December 1994, the Company's Board of Directors approved the America
West Airlines, Inc. 1994 Incentive Equity Plan (the "Incentive Plan" or "Plan").
The stockholders of the Company approved the Incentive Plan at the Annual
Meeting held in May 1995. Under the Incentive Plan, up to 3,500,000 shares of
Class B Common Stock may be issued to cover awards under the Plan, of which no
more than 1,500,000 will be issued as restricted stock or bonus stock. As of
June 30, 1995, the Company's Board of Directors granted under the Incentive Plan
41,334 shares of restricted stock and options to purchase 1,492,000 shares of
Class B Common Stock at the fair market value on the date of grant. Also,
options to purchase 75,000 shares of Class B Common Stock have been granted at
the fair market value on date of grant to members of the Board
6
<PAGE> 7
of Directors who are not employees of the Company. As of June 30, 1995, 26,167
shares of restricted stock were vested and 291,000 options to purchase shares of
Class B Common Stock were exercisable.
4. INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS 109) upon its emergence from bankruptcy. The
Predecessor Company had adopted SFAS 109 as of January 1, 1993.
INCOME TAX EXPENSE:
For the periods shown below, the Company recorded income tax expense as
follows:
<TABLE>
<CAPTION>
REORGANIZED | PREDECESSOR
REORGANIZED | PREDECESSOR COMPANY | COMPANY
COMPANY | COMPANY ------------- | -------------
------------------ | ------------------ SIX MONTHS | SIX MONTHS
THREE MONTHS ENDED | THREE MONTHS ENDED ENDED | ENDED
(IN THOUSANDS) JUNE 30, 1995 | JUNE 30, 1994 JUNE 30, 1995 | JUNE 30, 1994
------------------ | ------------------ ------------- | -------------
<S> <C> | <C> <C> | <C>
Current taxes: | |
Federal.................... $ 594 | $713 $ 604 | $ 1,163
State...................... 1,132 | 126 1,150 | 308
------- | ---- ------- | ------
1,726 | 839 1,754 | 1,471
Deferred taxes............... -- | -- -- | --
Income tax expense | |
Attributable to | |
Reorganization items....... 18,598 | N/A 24,328 | N/A
------- | ---- ------- | ------
Income tax expense........... $ 20,324 | $839 $26,082 | $ 1,471
======= | ==== ======= | ======
</TABLE>
For the three and six months ended June 30, 1995, income tax expense
pertains both to income from continuing operations as well as certain
adjustments necessitated by the effectiveness of the Plan and the resultant
fresh start adjustments to the Company's financial statements. The Company's
Reorganization and the associated implementation of fresh start reporting gave
rise to significant items of expense for financial reporting purposes that are
not deductible for income tax purposes. In large measure, it is these
nondeductible (for income tax purposes) expenses that result in income tax
expense (for financial reporting purposes) significantly greater than taxes
computed at the current U.S. corporate statutory rate of 35 percent.
Nevertheless, the Company's actual income tax liability (i.e., income taxes
payable) is considerably lower than income tax expense shown for financial
reporting purposes.
For the three and six months ended June 30, 1994, income tax expense
pertains solely to income from continuing operations.
5. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
Cash paid for interest and income taxes during the six months ended June
30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
REORGANIZED | PREDECESSOR
COMPANY | COMPANY
------------- | -------------
SIX MONTHS | SIX MONTHS
ENDED | ENDED
(IN THOUSANDS) JUNE 30, 1995 | JUNE 30, 1994
------------- | -------------
<S> <C> | <C>
Interest (net of amounts capitalized)...................... $26,848 | $20,615
Income taxes............................................... $ 19 | $ 1,207
</TABLE>
7
<PAGE> 8
In addition, during the six months ended June 30, 1995 and 1994, the
Company had the following non-cash financing and investing activities:
<TABLE>
<CAPTION>
REORGANIZED | PREDECESSOR
COMPANY | COMPANY
------------- | -------------
SIX MONTHS | SIX MONTHS
ENDED | ENDED
(IN THOUSANDS) JUNE 30, 1995 | JUNE 30, 1994
------------- | -------------
<S> <C> | <C>
Equipment acquired through capital leases.................. $ -- | $ 138
Accrued interest reclassified to long-term debt............ $ 65 | $ 4,268
Notes payable issued to seller............................. $ 1,415 | $ --
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
(a) Leases
At June 30, 1995, the Company was obligated to lease five aircraft under a
put agreement with deliveries to start no earlier than January 1, 1996 and end
by June 30, 1999. Under the agreement, new or used B737-300, B757-200, or new or
"like new" A320-200 aircraft may be put to the Company at a rate of no more than
two aircraft in 1996 and three aircraft per year, thereafter. In addition, no
more than four used aircraft may be put to the Company, and for every new A320
aircraft put to the Company, the Company has the right to reduce deliveries
under the AVSA A320 purchase contract on a one-for-one basis. During each
January of the put period, the Company will negotiate the type and delivery
dates for deliveries during the year beginning in the following January. The
negotiation deadline for 1996 deliveries has been postponed until September 30,
1995 by mutual agreement.
In July 1995, the Company entered into agreements to lease two Boeing
737-300 aircraft. Under the agreements, the leased aircraft have a term of two
years with payments due monthly.
(b) Contingent Legal Obligations
Certain administrative and priority tax claims are pending against the
Company which, if ultimately allowed by the Bankruptcy Court, would represent
general obligations of the Company. Such claims include claims of various state
and local tax authorities and certain contractual indemnification obligations.
Management cannot predict whether or not and to what extent, if any, the pending
administrative and priority tax claims will result in liabilities to the
Company. Should such liabilities be incurred, future operating results could be
adversely affected. However, based on information currently available,
management believes that the disposition will not have a material adverse effect
on the Company's financial condition.
7. REORGANIZATION EXPENSE
Reorganization expense is comprised of items of income, expense, gain or
loss that were realized or incurred by the Company as a result of the
Reorganization. Such items consisted of the following at June 30, 1994.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
(IN THOUSANDS) JUNE 30, 1994 JUNE 30, 1994
------------------ -------------
<S> <C> <C>
Professional fees and other expenses................. $ 7,063 $12,127
Provision for settlement of claims................... 4,500 8,680
Interest income...................................... (1,701) (2,549)
------- -------
$ 9,862 $18,258
======= =======
</TABLE>
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
On August 25, 1994, America West Airlines, Inc. (the "Company") emerged
from bankruptcy protection after filing a voluntary petition to reorganize under
Chapter 11 of the Federal Bankruptcy Code on June 27, 1991. In connection with
its emergence from bankruptcy, the Company adopted fresh start reporting in
accordance with Statement of Position 90-7 "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code" ("SOP 90-7") of the American Institute
of Certified Public Accountants. Under fresh start reporting, the reorganization
value of the Company has been allocated to its assets and liabilities on a basis
substantially consistent with purchase accounting. The portion of reorganization
value not attributable to specific tangible assets has been recorded as
"Reorganization Value in Excess of Amounts Allocable to Identifiable Assets."
Certain fresh start reporting adjustments, primarily related to the adjustment
of the Company's assets and liabilities to fair market values, will have a
significant effect on the Company's future statements of operations. The more
significant adjustments relate to reduced depreciation expense on property and
equipment, increased amortization expense relating to reorganization value in
excess of amounts allocable to identifiable assets, increased interest expense
and reduced aircraft rent expense. In addition, income tax expense for financial
reporting purposes will generally be higher than it otherwise would be as
amortization of the excess reorganization value is not deductible for income tax
purposes.
The Company's results of operations for the quarter ended June 30, 1995
have not been prepared on a basis of accounting consistent with its results of
operations for the quarter ended June 30, 1994 due to the implementation of
fresh start reporting upon the Company's emergence from bankruptcy.
RESULTS OF OPERATIONS
The Company realized net income of $20.9 million for the second quarter of
1995 compared to $20.1 million for the second quarter of 1994. Operating income
for the quarters ended June 30, 1995 and 1994 was $53.0 million and $44.1
million, respectively. The 1994 second quarter net income included
reorganization expense of $9.9 million. Income tax expense was $20.3 million for
the three months ended June 30, 1995 compared to $.8 million for the 1994 second
quarter due primarily to a higher level of pretax income in 1995 and the impact
of a certain nondeductible expense discussed above.
For the six months ended June 30, 1995 and 1994, the Company realized net
income of $26.1 million and $35.3 million, respectively. Net income for the six
month period of 1994 included reorganization expense of $18.3 million.
Total operating revenues were $399.9 million for the quarter ended June 30,
1995 compared to $363.4 million for the comparable 1994 period, an increase of
10%. Passenger revenue increased 10.1% to $375.0 million for the 1995 second
quarter compared to $340.6 million for the 1994 second quarter as a result of
increases realized in both load factor and yield, as more fully discussed below.
Cargo and other revenues increased 9.7% to $24.9 million for the 1995 second
quarter compared to $22.7 million for the 1994 second quarter. Total operating
revenues were $745.7 million for the six months ended June 30, 1995 compared to
$708.6 million for the comparable period of 1994. Passenger revenues increased
5% to $698.4 million and cargo and other revenues increased 8.5% to $47.3
million for the six months ended June 30, 1995 compared to the six-month 1994
period.
9
<PAGE> 10
The following table details certain key operating statistics for the
applicable periods.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30
---------------------------
PERCENT
1995 1994 CHANGE
----- ----- -------
<S> <C> <C> <C>
Number of Aircraft (end of period).......................... 89 85 4.7
Available Seat Miles (millions)............................. 4,858 4,502 7.9
Revenue Passenger Miles (millions).......................... 3,498 3,222 8.6
Load Factor (percent)....................................... 72.0 71.6 .6
Passenger Enplanements (thousands).......................... 4,365 4,073 7.2
Average Passenger Journey Miles............................. 1,010 996 1.4
Average Stage Length (miles)................................ 690 674 2.4
Yield Per Revenue Passenger Mile (cents).................... 10.72 10.57 1.4
Revenue Per Available Seat Mile:
Passenger (cents)......................................... 7.72 7.57 2.0
Total (cents)............................................. 8.23 8.07 2.0
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
---------------------------
PERCENT
1995 1994 CHANGE
----- ----- -------
<S> <C> <C> <C>
Number of Aircraft (end of period).......................... 89 85 4.7
Available Seat Miles (millions)............................. 9,493 8,804 7.8
Revenue Passenger Miles (millions).......................... 6,458 6,139 5.2
Load Factor (percent)....................................... 68.0 69.7 (2.4)
Passenger Enplanements (thousands).......................... 8,185 7,814 4.7
Average Passenger Journey Miles............................. 985 988 (.3)
Average Stage Length (miles)................................ 688 667 3.1
Yield Per Revenue Passenger Mile (cents).................... 10.82 10.82 --
Revenue Per Available Seat Mile:
Passenger (cents)......................................... 7.36 7.55 (2.5)
Total (cents)............................................. 7.86 8.05 (2.4)
</TABLE>
Capacity, as measured by available seat miles, increased 7.9% and 7.8% for
the three months and six months ended June 30, 1995, respectively, compared to
the 1994 periods. These increases were the result of the addition of four
aircraft to the fleet and increases in the average stage length of 2.4% and
3.1%, respectively. Revenue passenger miles increased 8.6% and 5.2% for the
three months and six months ended June 30, 1995, respectively, compared to the
1994 periods. Consequently, load factor increased by .4 load factor points for
the three month period but decreased by 1.7 load factor points for the six month
period of 1995 compared to the comparable 1994 periods. Yield increased 1.4% for
the three months ended June 30, 1995 as passenger fare increases were sustained
in certain key markets and discounting of fares was less pervasive across the
industry; however, yield was flat for the six months ended June 30, 1995
compared to the 1994 period.
Operating expense per available seat mile increased to 7.14 cents for the
second quarter of 1995 from 7.09 cents for the 1994 quarter, but decreased to
7.04 cents for the six months ended June 30, 1995 from 7.12 cents for the six
month period of 1994. The table below sets forth the major categories of
operating expense per available seat mile for the applicable periods.
10
<PAGE> 11
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30 (CENTS) JUNE 30 (CENTS)
--------------- ---------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Salaries and Related Costs................................ 1.97 1.84 1.95 1.85
Rentals and Landing Fees.................................. 1.43 1.48 1.45 1.51
Aircraft Fuel............................................. .88 .84 .87 .86
Agency Commissions........................................ .65 .69 .64 .68
Aircraft Maintenance Materials & Repairs.................. .29 .24 .28 .21
Depreciation and Amortization............................. .42 .49 .43 .49
Other..................................................... 1.50 1.51 1.42 1.52
---- ---- ---- ----
7.14 7.09 7.04 7.12
==== ==== ==== ====
</TABLE>
The changes in the components of operating expense per available seat mile
are explained as follows:
- The increase in salaries and related costs is the result of salary
increases effective January 1, 1995 under the Total Pay Program which are
anticipated to increase non-executive pay by approximately $25 million
annually, accruals totaling $4.5 million for the six months ended June
30, 1995 to provide for performance awards and increases in pilot
salaries under the contract with the pilots' collective bargaining agent.
Partially offsetting these increases were reductions in the work force
arising from a strategic restructuring program. Since January 1995,
reductions in the work force of approximately 1,100 positions have been
realized. When fully implemented, the strategic restructuring programs
are anticipated to result in the elimination of approximately 1,300
positions.
- The decrease in rentals and landing fees is the result of increases in
the nominal expense levels of 4.7% and 3.8% for the three month and six
month periods ended June 30, 1995 over the comparable 1994 periods, which
was more than offset by increases in available seat miles flown of 7.9%
and 7.8% for the three month and six month periods ended June 30, 1995,
respectively. Aircraft rent expense increased due to the addition of four
aircraft to the fleet.
- Aircraft fuel increased during the second quarter due to the increase in
the average price per gallon to 55.13 cents in 1995 from 52.65 cents for
1994. For the six month period, the average price per gallon of fuel
increased to 54.56 cents for 1995 from 53.66 cents for 1994. Also, fuel
consumption was higher in both of the 1995 periods then in 1994 due to
the increases in capacity discussed above.
- Agency commissions decreased due to a change in the mix of tickets sold
through travel agencies vis-a-vis direct sales to passengers through the
Company's reservations system.
- Aircraft maintenance materials and repairs increased largely as the
result of a flight hour agreement involving certain auxiliary power
units, an increase in block hours flown and a change in the
classification of the amortization expense associated with capitalized
heavy engine and airframe overhauls. For the three months and six months
ended June 30, 1995 amortization of capitalized maintenance totaling $1.9
million and $2.8 million, respectively, is included in aircraft
maintenance materials and repairs. Amortization of capitalized
maintenance totaling $9.4 million and $17.8 million for the 1994 second
quarter and six month period, respectively, is included in depreciation
and amortization expense.
- Depreciation and amortization expense decreased due to the classification
change discussed above.
- Other operating expenses decreased due to reductions in advertising
expense and property taxes.
Nonoperating expenses (net of nonoperating income) amounted to $11.8
million and $23.2 million for the second quarter of 1995 and 1994, respectively.
Interest expense for the second quarter of 1995 was $15.6 million compared to
$12.9 million for the second quarter of 1994. In conformity with SOP 90-7, the
Company ceased accruing and paying interest on unsecured prepetition long-term
debt during the pendency of its bankruptcy proceeding. Interest expense for the
second quarter of 1994 would have been $17.5 million, if the Company had accrued
interest expense on such prepetition debt. The 1994 second quarter includes
11
<PAGE> 12
reorganization expense of $9.9 million. Interest income for the second quarter
of 1995 increased to $4.1 million compared to $.2 million for the second quarter
of 1994 due to the significant improvement in the Company's liquidity, period
over period.
LIQUIDITY AND CAPITAL RESOURCES
Unrestricted cash and cash equivalents increased to $279.4 million at June
30, 1995 from $182.6 million at December 31, 1994. Cash generated from operating
activities for the six months ended June 30, 1995 and 1994 amounted to $179.9
million and $139.2 million, respectively. During the first six months of 1995,
the Company incurred capital expenditures of $50.7 million compared to $35.0
million in 1994. The capital expenditures incurred for both the 1995 and 1994
quarters consisted largely of aircraft spare parts and heavy engine overhauls.
The Company has a working capital deficiency which has decreased to $47.1
million at June 30, 1995 from $47.9 million at December 31, 1994. Despite the
working capital deficiency, the Company expects to meet all of its obligations
as they become due.
At June 30, 1995, the Company had on order with AVSA S.A.R.L. ("AVSA") a
total of 24 Airbus A320-200 aircraft, with an aggregate net cost estimated at
$1.1 billion. Delivery dates of the aircraft will fall in the years 1998 through
2000 with an option to defer the 1998 deliveries. If new A320 aircraft are
delivered as a result of a certain "put" agreement (and in April 1995, the
Company took delivery of two new A320 aircraft under this "put" agreement), the
Company will have the right to cancel on a one-for-one basis, up to a maximum of
eight non-consecutive aircraft deliveries hereunder, subject to certain
conditions. Additionally, the Company has the option to cancel without cause, up
to an additional four of these aircraft, and the Company has the right, with
that airline's concurrence, to assign all or some of these delivery positions to
Continental Airlines.
In December 1994, the Company entered into a support contract with
International Aero Engines ("IAE") which provides for the purchase by the
Company of six new V2500-A5 spare engines scheduled for delivery beginning in
1998 through 2000 for use on certain of the A320 fleet. Such engines have an
estimated aggregate cost of $42.3 million. Under this contract, as amended, the
Company took delivery of one additional V2500-A5 engine in June 1995.
At June 30, 1995, the Company had significant capital commitments for a
number of new aircraft and spare engines, as discussed above. Although the
Company has arranged for financing on an "if needed" basis for up to one-half of
the deliveries under the AVSA agreement, the Company will require substantial
capital from external sources to meet its remaining financial commitments. The
Company intends to seek additional financing (which may include public debt
financing or private financing) in the future when and as appropriate. There can
be no assurance that sufficient financing will be obtained for all aircraft,
spare engines and other capital requirements. A default by the Company under any
such commitment could have a material adverse effect on the Company.
At June 30, 1995, the Company was obligated to lease five aircraft under a
put agreement with deliveries to start no earlier than January 1, 1996 and end
by June 30, 1999. Under the agreement, new or used B737-300, B757-200, or new or
"like new" A320-200 aircraft may be put to the Company at a rate of no more than
two aircraft in 1996 and three aircraft per year, thereafter. In addition, no
more than four used aircraft may be put to the Company, and for every new A320
aircraft put to the Company, the Company has the right to reduce deliveries
under the AVSA A320 purchase contract on a one-for-one basis. During each
January of the put period, the Company will negotiate the type and delivery
dates for deliveries during the year beginning in the following January. The
negotiation deadline for 1996 deliveries has been postponed until September 30,
1995 by mutual agreement.
Certain of the Company's long-term debt agreements contain minimum cash
balance requirements, leverage ratios, coverage ratios and other financial
covenants with which the Company was in compliance at June 30, 1995.
12
<PAGE> 13
In June 1995, the Company acquired an interest in the limited partnership
which owns, and entered into an advertising and media arrangement with, the
Arizona Diamondbacks, the major league baseball franchise that will begin to
play in Phoenix in 1998, which arrangement contemplates an investment by the
Company of $5 million over the next three years.
In July 1995, the Company filed a registration statement with the
Securities and Exchange Commission relating to its proposal to utilize existing
cash balances to prepay $48 million of its $123 million 11 1/4% Senior Unsecured
Notes due September 2001, and to exchange the remaining $75 million of such
notes for $75 million of 10 3/4% Senior Unsecured Notes due September 1, 2005.
On August 14, 1995, the Company completed the transactions as contemplated by
such registration statement.
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
The 1995 Annual Meeting of Stockholders of the Company was held on May 2,
1995. The following persons were elected as proposed in the proxy statement
pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended,
to serve as directors until the next Annual Meeting of Stockholders or until
their successors are elected and qualified: William A. Franke, A. Maurice Myers,
Julia Chang Bloch, Stephen F. Bollenbach, Frederick W. Bradley, Jr., James G.
Coulter, John F. Fraser, John L. Goolsby, Richard C. Kraemer, John R. Power,
Jr., Larry L. Risley, Frank B. Ryan, Richard P. Schifter, John F. Tierney and
Raymond S. Troubh. The stockholders also approved the America West Airlines,
Inc. 1994 Incentive Equity Plan and a proposal for a grant of Class B Common
Stock to a tax-exempt, non-profit corporation.
There were 93,157,283 votes cast in the election of directors and there
were no abstentions or broker non-votes. Results by nominated director were:
<TABLE>
<CAPTION>
VOTED FOR AUTHORITY WITHHELD
---------- -------------------
<S> <C> <C>
William A. Franke.............................. 92,777,771 379,512
A. Maurice Myers............................... 92,778,007 379,276
Julia Chang Bloch.............................. 92,770,731 386,552
Stephen F. Bollenbach.......................... 92,778,051 379,232
Frederick W. Bradley, Jr....................... 92,778,209 379,074
James G. Coulter............................... 92,778,650 378,633
John F. Fraser................................. 92,778,196 379,087
John L. Goolsby................................ 92,778,835 378,448
Richard C. Kraemer............................. 92,777,373 379,910
John R. Power, Jr.............................. 92,778,548 378,735
Larry L. Risley................................ 92,777,554 379,729
Frank B. Ryan.................................. 92,778,671 378,612
Richard P. Schifter............................ 92,777,639 379,644
John F. Tierney................................ 92,441,810 715,473
Raymond S. Troubh.............................. 92,777,590 379,693
</TABLE>
There were 79,972,180 votes cast for the approval of the 1994 Incentive
Equity Plan, with 3,847,793 votes against, 64,204 abstentions and 9,273,106
broker non-votes.
There were 81,694,898 votes cast for the approval of a stock grant of up to
250,000 shares of Class B Common Stock to a tax exempt, non-profit corporation
with 1,828,312 votes against, 239,686 abstentions and 9,394,387 broker
non-votes.
13
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION AND METHOD OF FILING
------- ---------------------------------------------------------------------------------
<C> <S>
3.1 Company's Articles of Incorporation -- Incorporated by reference to the Company's
Report on Form 8-K dated September 8, 1994.
3.2 Restated By-laws of America West Airlines, Inc., as amended -- Incorporated by
reference to the Company's Report on Form 10-K dated December 31, 1994.
*11.1 Computation of Net Income (Loss) per Share
23.2 Consent of KPMG Peat Marwick LLP -- Incorporated by reference to Company's S-4
Registration Statement dated July 18, 1995.
*27 Financial Data Schedule
</TABLE>
---------------
* Filed herewith
b. Reports on Form 8-K
None
14
<PAGE> 15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICA WEST AIRLINES, INC.
By /s/ W. DOUGLAS PARKER
------------------------------------
W. Douglas Parker
Senior Vice President and
Chief Financial Officer
DATED: August 14, 1995
15
<PAGE> 1
EXHIBIT 11.1
AMERICA WEST AIRLINES, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
(IN THOUSANDS EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
REORGANIZED | PREDECESSOR
COMPANY | COMPANY REORGANIZED | PREDECESSOR
----------- | ----------- COMPANY | COMPANY
THREE | THREE ----------- | -----------
MONTHS | MONTHS SIX MONTHS | SIX MONTHS
ENDED | ENDED ENDED | ENDED
JUNE 30, | JUNE 30, JUNE 30, | JUNE 30,
1995 | 1994 1995 | 1994
----------- | ----------- ----------- | -----------
<S> <C> | <C> <C> | <C>
Primary Earnings Per Share | |
Computation for Statements of Operation: | |
Net Income................................ $ 20,873 | $ 20,136 $ 26,083 | $ 35,311
Preferred dividends....................... -- | -- -- | --
Adjustment for interest on debt reduction, | |
net of taxes........................... -- | 878 -- | 2,050
----------- | ----------- ----------- | -----------
Net income applicable to common stock..... $ 20,873 | $ 21,014 $ 26,083 | $ 37,361
=========== | =========== =========== | ===========
Weighted average number of common shares | |
outstanding............................ 45,166,676 | 25,405,255 45,166,317 | 25,348,572
Assumed exercise of stock options and | |
warrants(a)............................ -- | 2,850,027 -- | 3,355,748
----------- | ----------- ----------- | -----------
Weighted average number of common shares | |
outstanding as adjusted................ 45,166,676 | 28,255,282 45,166,317 | 28,704,320
=========== | =========== =========== | ===========
Primary earnings per common share: | |
Net income(b)............................. $ .46 | $ .74 $ .58 | $ 1.30
=========== | =========== =========== | ===========
| |
Net Income................................ $ 20,873 | $ 26,083 |
Preferred dividends....................... -- | -- |
Adjustment for interest on debt reduction, | |
net of taxes........................... 901 | 2,069 |
----------- | ----------- |
Net income applicable to common stock..... $ 21,774 | $ 28,152 |
=========== | =========== |
Weighted average number of common shares | |
outstanding............................ 45,166,676 | 45,166,317 |
Assumed exercise of stock options and | |
warrants (a)........................... 2,917,927 | 2,852,951 |
=========== | =========== |
Weighted average number of common shares | |
outstanding as adjusted................ 48,084,603 | 48,019,268 |
=========== | =========== |
Primary earnings per common share: | |
Net income(c)............................. $ .45 | $ .59 |
=========== | =========== |
</TABLE>
16
<PAGE> 2
EXHIBIT 11.1
AMERICA WEST AIRLINES, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
(IN THOUSANDS EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
REORGANIZED | PREDECESSOR REORGANIZED | PREDECESSOR
COMPANY | COMPANY COMPANY | COMPANY
------------ | ------------ ---------- | ----------
THREE MONTHS | THREE MONTHS SIX MONTHS | SIX MONTHS
ENDED | ENDED ENDED | ENDED
JUNE 30, | JUNE 30, JUNE 30, | JUNE 30,
1995 | 1994 1995 | 1994
------------ | ------------ ---------- | ----------
<S> <C> | <C> <C> | <C>
Fully Diluted Earnings Per Share | |
Computation for Statements of | |
Operations: | |
Net Income............................ $ 20,873 | $ 20,136 $ 26,083 | $ 35,311
Adjustment for interest on debt | |
reduction, net of taxes............ 579 | 852 1,676 | 1,988
Preferred dividends................... -- | -- -- | --
----------- | ----------- ----------- | -----------
Net income applicable to common | |
stock.............................. $ 21,452 | $ 20,988 $ 27,759 | $ 37,299
=========== | =========== =========== | ===========
Weighted average number of common | |
shares outstanding................. 45,166,676 | 25,405,255 45,166,317 | 25,348,572
Assumed exercise of stock options and | |
warrants(a)........................ 2,917,927 | 2,850,027 2,852,951 | 3,355,748
----------- | ----------- ----------- | -----------
Weighted average number of common | |
shares outstanding as adjusted..... 48,084,603 | 28,255,282 48,019,268 | 28,704,320
=========== | =========== =========== | ===========
Fully diluted earnings per common share: | |
Net income(b)......................... $ .45 | $ .74(d) $ .58 | $ 1.30(d)
=========== | =========== =========== | ===========
Additional Fully Diluted Computation: | |
Additional adjustment to net income as | |
adjusted per fully diluted computation | |
above: | |
Net Income............................ $ 20,873 | $ 20,136 $ 26,083 | $ 35,311
Add interest on debt reduction, net | |
of taxes........................... 579 | 852 1,676 | 1,988
----------- | ----------- ----------- | -----------
Net income applicable to common | |
stock.............................. $ 21,452 | $ 20,988 $ 27,759 | $ 37,299
=========== | =========== =========== | ===========
</TABLE>
17
<PAGE> 3
EXHIBIT 11.1
AMERICA WEST AIRLINES, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
(IN THOUSANDS EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
REORGANIZED | PREDECESSOR REORGANIZED | PREDECESSOR
COMPANY | COMPANY COMPANY | COMPANY
------------ | ------------ ----------- | -----------
THREE MONTHS | THREE MONTHS SIX MONTHS | SIX MONTHS
ENDED | ENDED ENDED | ENDED
JUNE 30, | JUNE 30, JUNE 30, | JUNE 30,
1995 | 1994 1995 | 1994
------------ | ------------ ----------- | -----------
<S> <C> | <C> <C> | <C>
Fully Diluted Earnings Per Share | |
Additional adjustment to weighted | |
average number of shares outstanding | |
Weighted average number of shares | |
outstanding as adjusted per fully | |
diluted computation above............ 48,084,603 | 28,255,282 48,019,268 | 28,704,320
Additional dilutive effect of | |
outstanding options and warrants..... -- | -- -- | --
Additional dilutive effect of assumed | |
conversion of preferred stock: | |
Series C 9.75%....................... -- | 73,099 -- | 73,099
Additional dilutive effect of assumed | |
conversion of 7.75% subordinated | |
debenture............................ -- | 2,257,558 -- | 2,257,558
Additional dilutive effect of assumed | |
conversion of 7.5% subordinated | |
debenture............................ -- | 2,264,932 -- | 2,264,932
Additional dilutive effect of assumed | |
conversion of 11.5% subordinated | |
debenture............................ -- | 7,306,865 -- | 7,306,865
----------- | ----------- ----------- | -----------
Weighted average number of common shares | |
outstanding as adjusted.............. 48,084,603 | 40,157,736 48,019,268 | 40,606,773
=========== | =========== =========== | ===========
Fully diluted earnings per common share: | |
Net income (b).......................... $ .45 | $ .52 $ .58 | $ .92
=========== | =========== =========== | ===========
</TABLE>
---------------
(a) The stock options and warrants are included only in the periods in which
they are dilutive.
(b) Historical per share data for the Predecessor Company is not meaningful
since the Company has been recapitalized and has adopted fresh start
reporting as of August 25, 1994.
(c) The calculation is submitted in accordance with Regulation S-K Item
601(b)(ii) although not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because it results in a dilution of less than 3%.
(d) The calculation is submitted in accordance with Regulation S-K Item 601
(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an antidilutive result.
18
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000706270
<NAME> AMERICA WEST AIRLINES, INC.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 279,392
<SECURITIES> 0
<RECEIVABLES> 83,587
<ALLOWANCES> 3,930
<INVENTORY> 27,210
<CURRENT-ASSETS> 428,763
<PP&E> 592,756
<DEPRECIATION> 42,236
<TOTAL-ASSETS> 1,673,117
<CURRENT-LIABILITIES> 475,897
<BONDS> 438,204
<COMMON> 452
0
0
<OTHER-SE> 621,765
<TOTAL-LIABILITY-AND-EQUITY> 1,673,117
<SALES> 0
<TOTAL-REVENUES> 745,706
<CGS> 0
<TOTAL-COSTS> 667,854
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,550
<INTEREST-EXPENSE> 31,458
<INCOME-PRETAX> 52,165
<INCOME-TAX> 26,082
<INCOME-CONTINUING> 26,083
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,083
<EPS-PRIMARY> .58
<EPS-DILUTED> .58
<FN>America West Airlines, Inc. emerged from Chapter 11 on August 15, 1994 and
adopted fresh start reporting in accordance with statement of Position 90-7.
Accordingly, the Company's post-reorganization balance financial statements
have not been prepared on a consistent basis with such pre-reorganization
financial statements and are not comparable in all respects to financial
statements prior to reorganization.
</FN>
</TABLE>
