US Airways posts 3.5% quarterly revenue increase

Posted Tuesday, Apr. 23, 2013  comments  Print Reprints
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US Airways continues to post strong results as it heads toward a merger with American Airlines.

Thanks to fuller planes and passengers paying more to fly, the Tempe, Ariz.-based carrier on Tuesday reported a $44 million profit for the first quarter. Revenue grew by 3.5 percent to $3.38 billion even as business travel demand softened in recent weeks because of the federal budget cuts.

"The good news is leisure demand has remained quite strong in 2013," airline President Scott Kirby said in a conference call with analysts.

US Airways reported record passenger load factors, over 81 percent. Its unit revenue rose 2.2 percent from the first quarter of 2012.

With federal budget cuts related to sequestration, Kirby said the airline's government revenue, about 3 percent of its total revenue, was down 37 percent in March.

"Business demand remains volatile and as long as the sequester remains in place, we expect government demand to continue to remain depressed," Kirby said.

Unit revenues are expected to drop 3 to 4 percent in April from last year and be flat to down 2 percent in May and June if the sequester cuts remain in force, he added.

CEO Doug Parker said the airline is experiencing some delays as a result of the Federal Aviation Administration furloughs of air traffic controllers.

Parker said there are other ways for the FAA to cut $160 million from its budget and predicted that travel delays will increase as more furloughs take effect.

"As it continues, it gets worse," Parker said. "We haven't had any bad weather and bad weather would make this much worse. ... I can't imagine it stays in place for an extended period of time."

Excluding one-time items, US Airways said its profit was $55 million, or 31 cents per share, beating Wall Street expectations of 27 cents, according to FactSet. Shares of US Airways (ticker: LCC) closed at $16.30, up 78 cents, or 5 percent.

Regarding the merger with Fort Worth-based AMR Corp. to create the world's largest airline, Parker said integration planning is going well and the companies remain on track to close the merger in the third quarter.

"We've made a lot of progress," Parker said, adding that US Airways is working with government regulators as the Justice Department conducts its antitrust review.

Also Tuesday, Delta Air Lines reported a profit in the traditionally weak first quarter. The Atlanta-based carrier said first-quarter earnings were $7 million as revenue increased 1 percent to $8.5 billion.

Andrea Ahles, 817-390-7631

Twitter: @Sky_Talk

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