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US Airways Optimistic Amid '08 Loss

Ted Reed

CHARLOTTE, N.C. -- Despite a 3% cutback in domestic capacity in 2008, US Airways(LCC Quote) says it will report a full-year loss, primarily as a result of skyrocketing fuel costs during much of the year.

The carrier lost money in each of the first three quarters and is expected to report a loss estimated at $1.71 in the fourth quarter, bringing the full-year estimated loss to $8.02, according to analysts surveyed by Thomson Reuters. Looking ahead, analysts estimate a profit of $2.99 in 2009. Domestic capacity was down 3% for the full year, 7.3% in the fourth quarter and 8.1% in December.

Shares in US Airways were trading Wednesday afternoon at $8.91, down 15 cents.

In a traffic report Wednesday, the carrier said passenger revenue per available seat mile in December increased between 3% and 5%. "Looking forward, we continue to be cautiously optimistic about the demand environment," said President Scott Kirby, in a prepared statement.

In a report, UBS analyst Kevin Crissey said PRASM growth was ahead of his expectations and will likely lead to slightly positive fourth quarter growth of 1% to 2% despite a 4% decline in November. Nevertheless, Crissey said the consensus fourth quarter estimate may move down.

Crissey said that while November was dismal, December demand benefitted from a late Thanksgiving. "We believe January looks more like December than November at this point," he said. UBS has a financial relationship with US Airways that includes making a market in its securities.

In an SEC filing, the company said it has about 46% of fourth-quarter fuel consumption hedged and that its restricted cash balance includes $159 million related to letters of credit collateralizing parties in fuel hedging transactions. Additionally, the carrier said it has reduced its estimate of cargo and other revenue, but continues to expect that fees added during the past year will generate about $400 million to $500 million annually.

Also Wednesday, Delta(DAL Quote) reported record December load factors of 80.1% for the entire Delta system, 82.3% for December and 81.9% for Northwest, JetBlue(JBLU Quote) said revenue passenger miles declined by 1.8% on a capacity decline of 5.1%.

Earlier, Continental(CAL Quote) reported December RASM growth of 3.5% to 4.5%, ahead of several analysts' expectations