US Airways Loss Unexpectedly Shrinks on Traffic, Fares

US Airways Group Inc. (LCC), a potential merger partner for American Airlines, said its first-quarter loss narrowed more than analysts expected to $22 million, as the carrier flew more passengers and collected higher fares.

The loss of 13 cents a share, excluding gains on an asset swap, shrank from $110 million, or 68 cents, on that basis a year earlier, the Tempe, Arizona-based company said in a statement today. The loss was narrower than the 23-cent average of 12 analyst estimates compiled by Bloomberg.

US Airways’ 5.4 percent growth in passenger traffic in the carrier’s main jet operations and 5.7 percent increase in average fares helped diminish the effect of higher jet-fuel costs. Sales rose 10 percent to $3.27 billion. Since the start of 2010, US Airways has reported losses in only the first quarter of each year.

“Consumer demand for our product remains very high,” Chief Executive Officer Doug Parker said in the statement. “We continue to be encouraged with the overall strength in passenger demand” heading into the busy summer travel season.

US Airways, the smallest of the major U.S. full-service carriers, has reached agreements with each of American’s major unions on contract terms, contingent on a successful takeover of the bankrupt airline. AMR Corp. (AAMRQ)’s American this week began trying to persuade a bankruptcy court to let it replace existing contracts with new concessionary terms after failing to negotiate accords with its unions.

Photographer: Andrew Harrer/Bloomberg

US Airways Group Inc. planes at Ronald Reagan National Airport. Close

US Airways Group Inc. planes at Ronald Reagan National Airport.

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Photographer: Andrew Harrer/Bloomberg

US Airways Group Inc. planes at Ronald Reagan National Airport.

Airline Consolidation

Parker long has backed consolidation among U.S. airlines. He oversaw the 2005 combination of America West Holdings Corp. and US Airways, and since has failed in attempted mergers with Delta Air Lines Inc. and United Airlines parent UAL Corp.

US Airways’ results included a $73 million gain from the December swap of landing and takeoff slots with Delta at New York’s LaGuardia and Washington’s Reagan National airports and a $3 million special operating charge. Including those items, US Airways had a net profit of $48 million, or 28 cents a share, compared with a net loss of $114 million, or 71 cents, a year earlier.

US Airways gained 4.2 percent to $9.70 at 8.21 a.m. in New York. The shares have risen 84 percent this year before today.

To contact the reporter on this story: Mary Schlangenstein in Dallas at {maryc.s@bloomberg.net}

To contact the editor responsible for this story: Ed Dufner at {edufner@bloomberg.net}

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