<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 21, 1999
Commission File Number 1-12649
AMERICA WEST HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 86-0847214
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
51 W. Third Street (602) 693-0800
Tempe, Arizona 85281 (Registrant's telephone number,
(Address of principal executive offices) including area code)
Commission File Number 1-10140
AMERICA WEST AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Delaware 86-0418245
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4000 E. Sky Harbor Boulevard (602) 693-0800
Phoenix, Arizona 85034-3899 (Registrant's telephone number,
(Address of principal executive offices) including area code)
<PAGE> 2
FORM 8-K
AMERICA WEST HOLDINGS CORPORATION
AMERICA WEST AIRLINES, INC.
ITEM 5. OTHER EVENTS
America West Holdings Corporation Press Release issued July 20, 1999 regarding
1999 Second Quarter Earnings (copy of press release attached hereto)
<PAGE> 3
[AMERICA WEST HOLDING CORPORATION LETTERHEAD]
Investor Contact: Nancy Gore
Phoenix, AZ (PDT)
480/693-2843
Media Contact: Patty Nowack
Phoenix, AZ (PDT)
480/693-5729
FOR IMMEDIATE RELEASE: Tues., July 20, 1999
AMERICA WEST REPORTS RECORD SECOND QUARTER EARNINGS;
EARNINGS PER SHARE INCREASE 23 PERCENT
PHOENIX (NYSE:AWA)--American West Holdings Corporation, parent company of
America West Airlines, Inc. and The Leisure Company, today reported record
second quarter 1999 net income of $42.3 million, the best quarterly earnings in
Company history. Diluted earnings per share (EPS) for the 1999 second quarter
were a record $1.06, a 23 percent increase over 1998's second quarter EPS, the
previous record of $0.86. Year-to-date performance also set records for the best
half year in America West's history including record operating revenues of $1.1
billion, record net income of $68.2 million and record EPS of $1.68.
Excluding the amortization of excess reorganization value (ERV), diluted
earnings per share would have been $1.19 for the 1999 second quarter versus the
reported $1.06 and $1.95 year-to-date versus the reported $1.68.
"We are very pleased to report our seventh consecutive record quarter, and
the best quarter in our Company's history," said William A. Franke, chairman and
chief executive officer, America West Holdings Corporation. "These results
reflect the success of our strategies at both America West Airlines and The
Leisure Company and reinforce our commitment to continued growth."
more/...
<PAGE> 4
America West Holdings Corporation
Second Quarter 1999 Financial Results / 2
America West Airlines reported record second quarter revenue of $554.2
million compared with $519.5 million in the 1998 quarter. Passenger revenue per
available seat mile (RASM) of 8.08 cents was up 0.1 percent compared with a
year ago, despite a 4.8 percent increase in average stage length. Operating
cost per available seat mile (CASM) rose 1.0 percent to 7.40 cents, driven by
Year 2000 (Y2K) computer readiness expenditures and higher fuel prices. A total
of $9.7 million was spent on the Y2K project in this year's quarter, an
increase of $8.5 million over the second quarter 1998. Fuel expense for the
quarter increased 11 percent to $53.1 million, driven by a 3.8 percent increase
in average cost per gallon. Fuel expense was reduced by the Company's fuel
hedging program, which resulted in $1.3 million of savings in the second
quarter. Excluding Y2K expenses and fuel, CASM declined 1.0 percent in the
quarter.
The Leisure Company reported second quarter revenues of $65.6 million, a
30 percent increase over the prior year's quarter. The revenue growth was
driven by two acquisitions over the past year. Gross profit increased 8.0
percent to $15.4 million. Pretax earnings decreased slightly from $3.8 million
in 1998 to $3.4 million due to higher infrastructure costs related to future
growth needs and a year-over-year increase in fees paid for services provided
by America West Airlines. Year-to-date revenues for The Leisure Company were
$111.6 million, a 19.5 percent increase. Pretax earnings for the half-year
increased 3.4 percent to $6.4 million.
America West Holdings, pursuant to its stock repurchase program, purchased
$35.8 million of its equity since the first quarter's reporting date in
mid-April. Year-to-date purchases total $55.8 million. The Corporation has now
returned more than $247.5 million to its equity holders through stock and
warrant repurchases.
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America West Holdings Corporation
Second Quarter 1999 Financial Results / 3
Included in the current quarter's financial results was a $2.7 million
pre-tax gain on the sale of Priceline.com equity. America West Airlines
purchased 30,000 shares at a price of $16 per share through a directed shares
program, which was set up as part of Priceline.com's initial public offering in
March 1999. These shares were sold in June 1999. America West Airlines continues
to hold 312,500 warrants to purchase Priceline.com common stock for $3.20 per
share, which has a current value of approximately $30 million. These warrants
are not yet registered.
In addition to traditional earnings results, the Corporation also reports
earnings per share excluding excess reorganization value (ERV). Amortized over a
20-year period, ERV is an intangible asset established as a result of America
West's emergence from financial restructuring in August 1994. Management
believes that an improved understanding of the Corporation's results can be
gained by adjusting for the impact of this non-cash charge.
This press release contains forward-looking statements within the meaning
of the Securities Litigation Reform Act that involve risks and uncertainties,
including competitive practices in the industry, the impact of changes in fuel
prices, relationships with employees, the impact of industry regulation and
other factors described from time to time in the Company's publicly available
SEC reports, which could cause actual results to differ materially.
<PAGE> 6
America West Holdings Corporation
Second Quarter 1999 Financial Results / 4
America West Holdings Corporation is an aviation and travel services
company with 1998 sales of $2.0 billion. Wholly owned subsidiary America West
Airlines is the nation's ninth largest carrier serving more than 90 destinations
in the U.S., Canada and Mexico. The Leisure Company, also a wholly owned
subsidiary, is one of the nation's largest tour packagers.
This press release, as well as releases issued in the past year by America
West Holdings and its affiliates, can be accessed on the America West Internet
site at www.americawest.com or via the Corporation's fax-on-demand system by
calling 888/AWA-FAXS.
The following tables outline the second quarter and year-to-date 1999
financial and statistical results of America West:
<PAGE> 7
America West Holdings Corporation
Second Quarter 1999 Financial Results/5
America West Holdings Corporation
Condensed Consolidated Statements of Income
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
3 Months Ended 3 Months Ended Percent
June 30, 1999 June 30, 1998 Change
-------------- -------------- -------
<S> <C> <C> <C>
Operating revenues:
Passenger $524,246 $491,042 6.8
Cargo 10,670 11,887 (10.2)
TLC net revenues 15,393 14,258 8.0
Other 19,171 16,508 16.1
-------- --------
Total Operating revenues 569,480 533,695 6.7
-------- --------
Operating expenses:
Salaries and related costs 120,434 112,743 6.8
Aircraft rental 65,577 60,195 8.9
Rentals and landing fees 31,589 28,795 9.7
Aircraft fuel 53,070 47,798 11.0
Agency commissions 30,750 34,900 (11.9)
Aircraft maintenance materials and repairs 51,938 44,041 17.9
Depreciation and amortization 12,322 12,765 (3.5)
Reorganization value amortization 4,974 4,974 -
TLC expenses 11,990 10,267 16.8
Other 111,245 100,476 10.7
-------- --------
Total operating expenses 493,889 456,954 8.1
-------- --------
Operating income 75,591 76,741 (1.5)
-------- --------
Nonoperating income (expenses):
Interest income 2,658 3,972 (33.1)
Interest expense, net (5,995) (6,313) (5.0)
Other, net 3,064 (652) n.m.
-------- --------
Total nonoperating expenses, net (273) (2,993) (90.9)
-------- --------
Income before income taxes 75,318 73,748 2.1
-------- --------
Income taxes 33,064 32,331 2.3
-------- --------
Net income $ 42,254 $ 41,417 2.0
======== ========
Earnings per share:
Basic: $ 1.12 $ 0.95 17.9
======== ========
Diluted: $ 1.06 $ 0.86 23.3
======== ========
Shares used for computation:
Basic: 37,824 43,617 (13.3)
======== ========
Diluted: 39,985 48,410 (17.4)
======== ========
</TABLE>
<PAGE> 8
America West Holdings Corporation
Second Quarter 1999 Financial Results / 6
America West Airlines, Inc.
Statements of Income
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
3 Months Ended 3 Months Ended Percent
June 30, 1999 June 30, 1998 Change
-------------- -------------- -------
<S> <C> <C> <C>
Operating revenues:
Passenger........................................ $524,246 $491,042 6.8
Cargo............................................ 10,670 11,887 (10.2)
Other............................................ 19,277 16,560 16.4
-------- --------
Total operating revenues......................... 554,193 519,489 6.7
-------- --------
Operating expenses:
Salaries and related costs....................... 119,962 112,262 6.9
Aircraft rental.................................. 65,577 60,195 8.9
Rentals and landing fees......................... 31,589 28,794 9.7
Aircraft fuel.................................... 53,070 47,798 11.0
Agency commissions............................... 30,750 34,900 (11.9)
Aircraft maintenance materials and repairs....... 51,938 44,041 17.9
Depreciation and amortization.................... 12,322 12,765 (3.5)
Reorganization value amortization................ 4,974 4,974 -
Other............................................ 109,952 99,968 10.0
-------- --------
Total operating expenses......................... 480,134 445,697 7.7
-------- --------
Operating income................................. 74,059 73,792 0.4
-------- --------
Nonoperating income (expenses):
Interest income.................................. 4,402 6,041 (27.1)
Interest expense, net............................ (7,804) (8,263) (5.6)
Other, net....................................... 3,238 - -
-------- --------
Total nonoperating expenses, net................. (164) (2,222) (92.6)
-------- --------
Income before income taxes......................... $ 73,895 $ 71,570 3.2
======== ========
</TABLE>
<PAGE> 9
America West Holdings Corporation
Second Quarter 1999 Financial Results / 7
<TABLE>
<CAPTION>
3 Months Ended 3 Months Ended Percent
June 30, 1999 June 30, 1998 Change
<S> <C> <C> <C>
Operating Statistics:
Number of aircraft at end of period 113 104 8.7
Available seat miles/ASMs (in millions) 6,491 6,082 6.7
Block hours 122,692 115,050 6.6
Average stage length (miles) 858 819 4.8
Revenue passenger miles/RPMs (in millions) 4,477 4,287 4.4
Load Factor (%) 69.0 70.5 (1.5) points
Passenger enplanements (000) 4,724 4,643 1.7
Passenger yield (cents) 11.71 11.46 2.2
Passenger revenue per ASM (cents) 8.08 8.07 0.1
Operating cost per ASM (cents) 7.40 7.33 1.0
Average fuel cost per gallon (cents) 51.08 49.23 3.8
Fuel gallons consumed (in millions) 103.9 97.1 7.0
Full-time equivalent employees at end of period 11,181 10,526 6.2
</TABLE>
<PAGE> 10
America West Holdings Corporation
Second Quarter 1999 Financial Results / 8
The Leisure Company
Statements of Income
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
3 Months Ended 3 Months Ended Percent
June 30, 1999 June 30, 1998 Change
-------------- -------------- -------
<S> <C> <C> <C>
Operating revenues $65,553 $50,436 30.0
Cost of goods sold 50,160 36,178 38.6
------- -------
Net revenues 15,393 14,258 8.0
Total operating expenses 11,990 10,267 16.8
------- -------
Operating income 3,403 3,991 (14.7)
------- -------
Nonoperating income (expenses), net 36 (147) n.m.
------- -------
Income before income taxes $ 3,439 $ 3,844 (10.5)
======= =======
</TABLE>
America West Holdings Corporation
Adjustment for Amortization of Excess Reorganization Value (ERV)(a)
(in thousands except per share data)
<TABLE>
<CAPTION>
3 Months Ended 3 Months Ended
June 30, 1999 June 30, 1998
-------------- --------------
<S> <C> <C>
Diluted EPS - as reported $ 1.06 $ 0.86
Pretax amortization of ERV(b) 5,373 5,373
After-tax amortization of ERV(c) 5,373 5,373
Diluted shares 39,985 48,410
Amortization of ERV per share $ 0.13 $ 0.11
Diluted EPS - as adjusted $ 1.19 $ 0.97
</TABLE>
(a) ERV is an intangible asset that was established upon the Company's emergence
from financial restructuring in August 1994 and is being amortized over a
20-year period.
(b) Includes $399,000 of ERV for second quarter 1999 and 1998, respectively,
classified as TLC expenses.
(c) Amortization of ERV is not a tax-deductible expense.
<PAGE> 11
America West Holdings Corporation
Second Quarter 1999 Financial Results/9
America West Holdings Corporation
Condensed Consolidated Balance Sheets
(in thousands of dollars)
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
------------- -----------------
(unaudited)
<S> <C> <C>
Assets
Current assets
Cash equivalents and short-term investments $ 186,592 $ 135,845
Other current assets, net 193,643 166,258
---------- ----------
Total current assets 380,235 302,103
---------- ----------
Property and equipment, net 777,111 762,040
Other assets
Restricted cash 33,433 35,262
Reorganization value in excess of amounts
allocable to identifiable assets, net 326,024 336,772
Deferred income tax and other assets 115,545 88,853
---------- ----------
Total assets $1,632,348 $1,525,030
========== ==========
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt and
capital leases $ 75,141 $ 80,439
Other liabilities 555,443 454,820
---------- ----------
Total current liabilities 630,584 535,259
---------- ----------
Long-term debt, less current maturities 198,003 207,906
Deferred credits and other noncurrent liabilities 109,621 112,407
Stockholders' equity 694,140 669,458
---------- ----------
Total liabilities and stockholders' equity $1,632,348 $1,525,030
========== ==========
</TABLE>
<PAGE> 12
America West Holdings Corporation
Second Quarter 1999 Financial Results / 10
America West Holdings Corporation
Condensed Consolidated Statements of Income
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
6 Months Ended 6 Months Ended Percent
June 30, 1999 June 30, 1998 Change
<S> <C> <C> <C>
Operating revenues:
Passenger ................................... $1,002,868 $ 934,834 7.3
Cargo ....................................... 21,398 24,492 (12.6)
TLC net revenues ............................ 28,664 26,570 7.9
Other ....................................... 36,176 31,015 16.6
---------- ----------
Total operating revenues .................... 1,089,106 1,016,911 7.1
---------- ----------
Operating expenses:
Salaries and related costs .................. 238,495 218,859 9.0
Aircraft rental ............................. 131,102 118,940 10.2
Rentals and landing fees .................... 60,850 58,253 4.5
Aircraft fuel ............................... 97,433 98,082 (0.7)
Agency commissions .......................... 60,442 66,517 (9.1)
Aircraft maintenance materials and repairs .. 100,624 86,469 16.4
Depreciation and amortization ............... 23,997 25,063 (4.3)
Reorganization value amortization ........... 9,948 9,948 -
TLC expenses ................................ 22,450 20,116 11.6
Other ....................................... 217,459 188,516 15.4
---------- ----------
Total operating expenses .................... 962,800 890,763 8.1
---------- ----------
Operating income ............................ 126,306 126,148 0.1
---------- ----------
Nonoperating income (expenses):
Interest income ............................. 5,560 6,972 (20.3)
Interest expense, net ....................... (12,257) (14,048) (12.7)
Other, net .................................. 2,446 (1,068) n.m.
---------- ----------
Total nonoperating expenses, net ............ (4,251) (8,144) (47.8)
---------- ----------
Income before income taxes ................... 122,055 118,004 3.4
---------- ----------
Income taxes ................................. 53,862 51,449 4.7
---------- ----------
Net income ................................... $ 68,193 $ 66,555 2.5
========== ==========
Earnings per share:
Basic: ...................................... $ 1.78 $ 1.52 17.1
========== ==========
Diluted: .................................... $ 1.68 $ 1.38 21.7
========== ==========
Shares used for computation:
Basic: ...................................... $ 38,407 $ 43,808 (12.3)
========== ==========
Diluted: .................................... $ 40,547 $ 48,132 (15.8)
========== ==========
</TABLE>
<PAGE> 13
America West Holdings Corporation
Second Quarter 1999 Financial Results / 11
America West Airlines, Inc.
Statements of Income
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
6 Months Ended 6 Months Ended Percent
June 30, 1999 June 30, 1998 Change
-------------- -------------- -------
<S> <C> <C> <C>
Operating revenues:
Passenger $1,002,868 $934,834 7.3
Cargo 21,398 24,492 (12.6)
Other 36,389 31,116 16.9
-------------- --------------
Total operating revenues 1,060,655 990,442 7.1
-------------- --------------
Operating expenses:
Salaries and related costs 237,517 217,846 9.0
Aircraft rental 131,102 118,940 10.2
Rentals and landing fees 60,850 58,252 4.5
Aircraft fuel 97,433 98,082 (0.7)
Agency commissions 60,442 66,517 (9.1)
Aircraft maintenance materials
and repairs 100,624 86,469 16.4
Depreciation and amortization 23,997 25,063 (4.3)
Reorganization value amortization 9,948 9,948 -
Other 215,794 187,710 15.0
-------------- --------------
Total operating expenses 937,707 868,827 7.9
-------------- --------------
Operating income 122,948 121,615 1.1
-------------- --------------
Nonoperating income (expenses):
Interest income 8,915 11,086 (19.6)
Interest expense, net (15,824) (17,935) (11.8)
Other, net 2,647 (264) n.m.
-------------- --------------
Total nonoperating expenses, net (4,262) (7,113) (40.1)
-------------- --------------
Income before income taxes $ 118,686 $114,502 3.7
============== ==============
</TABLE>
<PAGE> 14
America West Holdings Corporation
Second Quarter 1999 Financial Results / 12
<TABLE>
<CAPTION>
6 Months Ended 6 Months Ended Percent
June 30, 1999 June 30, 1998 Change
-------------- -------------- -------
<S> <C> <C> <C>
Operating Statistics:
Number of aircraft at end of period 113 104 8.7
Available seat miles/ASMs (in millions) 12,789 11,928 7.2
Block hours 242,326 228,252 6.2
Average stage length (miles) 857 811 5.7
Revenue passenger miles/RPMs (in millions) 8,507 7,923 7.4
Load factor (%) 66.5 66.4 0.1 points
Passenger enplanements (000) 8,987 8,792 2.2
Passenger yield (cents) 11.79 11.80 (0.1)
Passenger revenue per ASM (cents) 7.84 7.84 --
Operating cost per ASM (cents) 7.33 7.28 0.7
Average fuel cost per gallon (cents) 47.90 51.56 (7.1)
Fuel gallons consumed (in millions) 203.4 190.2 6.9
Full-time equivalent employees at end of period 11,181 10,526 6.2
</TABLE>
<PAGE> 15
America West Holdings Corporation
Second Quarter 1999 Financial Results / 13
The Leisure Company
Statements of Income
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
6 Months Ended 6 Months Ended Percent
June 30, 1999 June 30, 1998 Change
-------------- -------------- -------
<S> <C> <C> <C>
Operating revenues $111,612 $93,396 19.5
Cost of goods sold 82,948 66,826 24.1
-------- -------
Net revenues 28,664 26,570 7.9
Total operating expenses 22,450 20,116 11.6
-------- -------
Operating income 6,214 6,454 (3.7)
-------- -------
Nonoperating income (expenses), net 163 (286) n.m.
-------- -------
Income before income taxes $ 6,377 $ 6,168 3.4
======== =======
</TABLE>
America West Holdings Corporation
Adjustment for Amortization of Excess Reorganization Value (ERV)(a)
(in thousands except per share data)
<TABLE>
<CAPTION>
6 Months Ended 6 Months Ended
June 30, 1999 June 30, 1998
-------------- --------------
<S> <C> <C>
Diluted EPS - as reported $ 1.68 $ 1.38
Pretax amortization of ERV (b) 10,746 10,746
After-tax amortization of ERV (c) 10,746 10,746
Diluted shares 40,547 48,132
Amortization of ERV per share $ 0.27 $ 0.22
Diluted EPS - as adjusted $ 1.95 $ 1.60
</TABLE>
(a) ERV is an intangible asset that was established upon the Company's
emergence from financial restructuring in August 1994 and is being amortized
over a 20-year period.
(b) Includes $798,000 of ERV for six months ended June 30, 1999 and 1998,
respectively, classified as TLC expenses.
(c) Amortization of ERV is not a tax-deductible expense.
<PAGE> 16
SIGNATURES
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 hereunto duly authorized.
Date: July 21, 1999 AMERICA WEST HOLDINGS CORPORATION
By: /s/ W. Douglas Parker
------------------------------------------
W. Douglas Parker
Executive Vice President
AMERICA WEST AIRLINES, INC.
By: /s/ Kathleen M. Doyle
------------------------------------------
Kathleen M. Doyle
Vice President and General Counsel
