US Airways Q3 Profit Down 12%, But Results Beat View

(RTTNews) - Airline operator US Airways Group Inc. (LCC) on Wednesday reported a 12 percent decline in profit for the third quarter from last year, reflecting a tax provision and merger-related costs that offset higher revenues and traffic. However, both quarterly revenues and adjusted earnings per share beat analysts' estimates.

The Tempe, Arizona-based company's third-quarter net income was $216 million or $1.04 per share, down from $245 million or $1.24 per share in the year-ago period.

The latest quarter's results include a provision for income tax of $120 million, mainly comprising non-cash federal income tax expense, while the year-ago quarter's provision for income tax was only $1 million.

The company recorded about $31 million of net special items before taxes in the third quarter, including merger-related costs.

Excluding special items, adjusted earnings for the quarter were $1.16 per share, compared to $0.98 per share in the same period last year. On average, eleven analysts polled by Thomson Reuters expected the company to report earnings of $1.12 per share for the quarter. Analysts' estimates typically exclude one-time items.

Total operating revenues for the quarter grew 9 percent to $3.86 billion from $3.53 billion in the same period last year. Analysts had a consensus revenue estimate of $3.84 billion for the quarter.

Total operating expenses rose 5 percent from last year to $3.43 billion, with aircraft fuel and related taxes increasing 2 percent. However, average aircraft fuel price declined 2 percent to $3.01 per gallon.

US Airways' consolidated traffic for the quarter, measured in revenue passenger miles, grew 4.7 percent to 20.65 billion on a capacity increase of 4.1 percent to 24.14 billion available seat miles. Passenger load factor, or the percentage of seats filled, increased 0.6 percentage points to 85.5 percent.

Total revenue per ASM was 15.97 cents, up 4.9 percent versus the same period last year. This was driven by a 4.4 percent increase in passenger yield and the load factor of 85.5 percent.

Passenger revenue per available seat mile or PRASM for the airline rose 5.1 percent from last year to 14.32 cents, while operating cost per available seat mile or CASM increased 0.1 percent to 14.20 cents.

In mid-August, the U.S. Department of Justice or DoJ filed a lawsuit against the proposed $11 billion merger of American Airlines' parent AMR Corp. (AAMRQ.PK) and US Airways, claiming the deal would jeopardize competition and inflate airfares. The DoJ, along with six state attorneys general and the District of Columbia, filed the civil antitrust suit in the U.S. District Court for the District of Columbia.

US Airways said it continues to make significant progress in its merger integration planning with American Airlines. However, both companies are preparing for a vigorous defense of the merger, with the trial scheduled to begin on November 25.

In Wednesday's regular session, LCC is trading at $21.46, down $0.49 or 2.23 percent on a volume of 1.79 million shares.