US Airways Rises as Profit Tops Estimates on Record Sales

US Airways Group Inc., the carrier pushing for a merger with bankrupt American Airlines, rose 1.5 percent after record quarterly revenue and higher travel demand drove profit that beat analysts’ estimates.

Shares traded at $15.07 at the close, the highest price since Jan. 10. The stock has more than doubled since US Airways disclosed its interest in a combination on Jan. 25, 2012.

US Airways recorded its seventh consecutive quarterly net profit in the fourth quarter as passenger traffic rose 2.7 percent and unit revenue, a measure of fares and seats, increased 2.5 percent. The airline may know soon if it will succeed in engineering a friendly combination with AMR Corp. (AAMRQ)’s American as bankruptcy creditors complete their review.

“It definitely is a story they need to tell to give them a stronger position to come to the American deal,” Savanthi Syth, a Raymond James & Associates Inc. analyst, said in an interview, referring to US Airways’ financial and operational performance. The company cited annual records for on-time flights, completed flights and baggage handling.

Earnings excluding one-time items more than doubled to $46 million, or 26 cents a share, from $21 million, or 13 cents, on that basis a year earlier, the Tempe, Arizona-based airline said in a statement today. That exceeded the 19-cent average of analyst estimates compiled by Bloomberg.

‘Well Prepared’

“As we carry this momentum into 2013, we’re very pleased with our strategic positioning and extremely well-prepared for whatever may lie ahead,” Chief Executive Officer Doug Parker said on a conference call today. He declined to answer any questions related to Fort Worth, Texas-based American, citing a non-disclosure agreement.

American CEO Tom Horton told employees on Jan. 3 that he expected a decision on whether to merge with US Airways “within a matter of weeks.”

Superstorm Sandy reduced quarterly results by $35 million, the company said. Sales rose 3.9 percent to a record $3.28 billion, matching an average estimate from 11 analysts. The carrier ended the quarter with $2.7 billion in cash and investments, with $336 million of that reserved for specific purposes.

US Airways benefited as spending on fuel, its largest expense rose 2.1 percent year over year, compared with a 29.4 percent increase in 2011’s fourth quarter, Syth said. US Airways is the only major U.S. carrier that doesn’t hedge fuel, which involves using financial instruments to help flatten price spikes. Syth, who is based in St. Petersburg, Florida, rates US Airways outperform.

American, Delta

Including $9 million in costs linked to corporate transactions and auction-rate securities auctions, net income rose to $37 million, or 22 cents, from $18 million, or 11 cents, a year earlier.

American last week reported that its fourth-quarter loss excluding bankruptcy-related items narrowed to $88 million. Delta Air Lines Inc. (DAL) yesterday reported quarterly profit of $238 million, excluding costs primarily related to restructuring its fleet and refinancing some debt.

Full-year profit rose to a record $537 million, or $2.79 a share, excluding special items, US Airways said.

The airline expects to reach a third tentative contract agreement with its flight attendants union “in the very near future,” Steve Johnson, a US Airways executive vice president, said on the call. The two prior agreements were rejected in votes by members of the Association of Flight Attendants-CWA.

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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