US Airways Sees Progress

Updated from 7:37 a.m. EST

Five months after being formed by the merger of a legacy airline and a regional low-cost carrier, US Airways (LCC Quote - Cramer on LCC - Stock Picks) said it has reduced losses at both predecessors and now expects to report a profit in 2006.

"The rate of improvement is much better than any other airline has experienced," CEO Doug Parker said on a conference call. "We're exceptionally pleased with our momentum." He said the airline expects a profit this year even at current fuel prices.

The Tempe, Ariz., carrier lost $261 million, or $3.26 a share, in the quarter ended Dec. 31, compared with a year-ago loss of $69 million, or $4.66 a share. Revenue rose to $2.58 billion from $697 million a year ago. Year-ago data tracks the operations of America West only.

Results for the most recent fourth-quarter include a $69 million unrealized loss related to fuel hedges, $36 million of charges, primarily merger expenses, and $18 million in charges partly related to the remarketing and warrant repurchase associated with America West's prior Airline Transportation Stabilization Board loan. Excluding those items, the latest-quarter loss was $1.72 a share, narrower than the $3.89 a year earlier and 12 cents better than the Thomson First Call analyst consensus estimate.

On a standalone basis for predecessor US Airways, the airline's loss for its fourth quarter was $120 million. Excluding special items, which were primarily merger-related, US Airways lost $105 million. The carrier lost $218 million for the same period in the prior year.

By itself, America West lost $139 million in the fourth quarter. Before items, America West lost $31 million. The year-ago loss was $57 million, excluding items.

Parker said the combined loss, excluding special items, was about $138 million, while the combined fuel cost was $197 million higher than it was in the same quarter a year earlier.

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