US Airways Flying High

The RASM improvement also reflected better pricing, strong leisure demand and revenue gains from the merger, said Executive Vice President Scott Kirby. "Fares have gone up about 20%," he said. "We're selling a lot fewer of the absurdly priced low-end fares. Whereas a year ago, it was common to have $158 [transcontinental] fares in the market, today those fares are more like $300."

RASM comparisons with the former US Airways are strong, Kirby said. "They were in bankruptcy, customers were defecting, there was lots of bad press -- and US Airways got into the mode of deeply discounting because they felt like they had to," he said. "We don't feel like we have to do that anymore."

Parker said the airline now expects to be profitable for the full year, even after accounting for integration expenses, a projection the company had not made before. US Airways shares closed trading at $51.63, up $4.33, or 9.2%.

He also said the company is willing to make changes in the pilot contract currently being negotiated, but is unwilling to see its costs increase. "US Airways is still here and now is doing well because the employees of US Airways did what was required to compete," he said. "It was hard and painful, as we know. We're asking people to not reverse the great progress that's been made."

JPMorgan analyst Jamie Baker said "mainline and express RASM [were] both significantly stronger than expected." On Tuesday, Baker said US Airways' margins improved more than any other carrier's, and he reaffirmed his price target of $100 a share by mid-2007. During the past 12 months, US Airways has been a JPMorgan client, and a JPMorgan affiliate has also received compensation from the airline.

Analyst Ray Neidl of Calyon Securities set a target share price of $60 after revising his 2007 EPS estimate to $7.60 based on "much stronger RASM increases than we were expecting, and expectations that this trend will continue this year."