US Airways loses $78million
October 26, 2006
US Airways Group, formed last year from the merger of US Airways and America West Airlines, on Thursday posted a third-quarter net loss after fuel hedging and merger-related costs.
The number 7 US airline reported a net loss of USD$78 million, compared with a loss of USD$99 million for America West a year earlier. For accounting purposes, America West was treated as the acquiring company.
Excluding special items, US Airways said it earned USD$101 million.
The results were cut by an USD$88 million charge to reduce the book value of some outstanding fuel hedges. Several major airlines, including US Airways, have hedges that locked in prices above current market levels and were unable to take full advantage of a decline in fuel prices since August.
"We have continued to increase our hedge positions," said Chief Financial Officer Derek Kerr.
Kerr said the carrier has hedged 46 percent of its fuel consumption in the third quarter. The airline has hedged 37 percent of its fuel exposure in the first quarter of 2007, 27 percent in the second quarter, 19 percent in the third quarter, and 5 percent in the fourth quarter, he said.
Jet fuel prices have eased since August, but US Airways said it paid USD$179 million more for fuel in the third quarter than it would have if prices remained at the same levels as the year-ago period.
The airline said it has cut its projected fourth-quarter fuel costs by about USD$90 million, and expects to pay between $2 and $2.05 per gallon of jet fuel.
US Airways also reported USD$27 million in merger-related costs. The merger was completed in September 2005.
Its revenue rose to USD$2.97 billion, compared with USD$929 million a year earlier.
Airport security regulations cost the carrier between USD$30 million and USD$40 million in revenue during August and September, Chief Executive Doug Parker said in a statement.
The carrier ended the quarter with USD$3 billion in cash and investments, of which USD$2.3 billion was unrestricted.
(Reuters)