US Airways Group (LCC)

Q4 2011 Earnings Call

January 25, 2012 11:30 am ET

Executives

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Derek J. Kerr - Chief Financial officer, Chief Financial officer of America West Airlines Inc, Executive Vice President and Principal Accounting officer

Daniel Cravens -

William Douglas Parker - Executive Chairman, Chief Executive Officer, Chairman of Labor Committee, Chairman of US Airways and Director of AWA

J. Scott Kirby - President

Stephen L. Johnson - Executive Vice President of Corporate & Government Affairs and General Counsel

Analysts

Ted Reed

William J. Greene - Morgan Stanley, Research Division

Kevin Crissey - UBS Investment Bank, Research Division

Helane R. Becker - Dahlman Rose & Company, LLC, Research Division

Garrett L. Chase - Barclays Capital, Research Division

Hunter K. Keay - Wolfe Trahan & Co.

Michael Linenberg - Deutsche Bank AG, Research Division

Jamie N. Baker - JP Morgan Chase & Co, Research Division

Glenn D. Engel - BofA Merrill Lynch, Research Division

Daniel McKenzie - Rodman & Renshaw, LLC, Research Division

Daniel McKenzie - Hudson Securities, Inc., Research Division

Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division

Raymond Neidl

Presentation

Operator

Good day, and welcome to the US Airways' Fourth Quarter Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] And now I would like to turn the conference over to your moderator, Director of Investor Relations, Mr. Daniel Cravens. You may begin.

Daniel Cravens

Thanks, Andrea, and welcome, everybody to the US Airways' Fourth Quarter 2011 Earnings Conference Call. In the room with us today in Phoenix are Doug Parker, our Chairman and CEO; Scott Kirby, our President; Derek Kerr, our Chief Financial Officer, and also in the room for our Q&A session are Robert Isom, our Chief Operating Officer; Steve Johnson, our EVP of Corporate; and Elise Eberwein, our EVP of People and Communications. Like we typically do, we're going to start the call with Doug and he'll provide an overview of our fourth quarter financial results. Derek will then walk us through the details on the quarter including our cost liquidity and then provide some color on our 2012 guidance. Scott will then follow with commentary on revenue environment and our operational performance. And then after we hear from those comments, we'll open the call to analyst questions and answers and lastly, questions from the media.

Before we begin, we must state that today's call does contain forward-looking statements, including statements concerning future events, our future revenues and fuel prices. These statements represent our predictions and expectations as to future events but numerous risks and uncertainties could cause actual results to differ materially from those projected. Information about some of these risks and uncertainties can be found in our earnings press release issued this morning, our Form 10-Q from the quarter ended September 30, 2011, and our 2010 Form 10-K. In addition, we will be discussing certain non-GAAP financial measures this morning such as net loss and CASM, excluding unusual items. A reconciliation of those numbers to the GAAP financial measures is included in the earnings release and that can be found on our website at usairways.com under the Company Information's Investor Relations section. A webcast of this call is also available on our website and will be archived for one month. The information that we're giving you on the call is as of today's date, and we undertake no obligation to update the information, subsequently. Thanks again for joining us, and at this point, I'd like to turn the call over to our Chairman and CEO, Doug Parker.

William Douglas Parker

Thank you, Dan. First off, I would like to congratulate Dan. Dan was named investor -- Institutional Investor's Top IR Director, which he definitely deserves. So thanks for all you did to name Dan that. We're certainly proud of him and our program was named Best Investor Relations program. Thanks to Dan. Maybe it's because of how well you read that thing, Dan. But anyway. Let's get started with our call.

We posted our earnings this morning, a fourth profit of $21 million, a full year profit of $111 million. Now that's down from the full year 2010 profit of $447 million, but considering where fuel prices are, we're extremely pleased with these results. Indeed as we noted in the release, had average fuel prices just remained where they were in 2010, our 2011 fuel expense would have been $1.2 billion lower. So fuel expense was up $1.2 billion, but our profits were only $330 million lower. That's due to some very strong revenue growth and some impressive control of our nonfuel cost, and Scott and Derek will talk more about that in a moment.

Now before I do that though, I do want to take a moment and thank the hard-working team of 32,000 employees here at US Airways that made these results possible. The team did a phenomenal job. In the fourth quarter, we produced our best ever fourth quarter on-time performance, our highest completion factor, our lowest mishandled baggage ratio, and they did all of that, while we had record high load factors. So all in all, we are extremely happy with how we ended 2011 and 2012 is off to a great start. We're encouraged by continued strength of demand for our product, and we believe we are very well-positioned for the future. So with that said, I'll turn it over to Derek to take you through some more detail of the numbers.

Derek J. Kerr

Thanks, Doug. As announced in our press release earlier this morning, Doug said we recorded a fourth quarter net profit of $18 million or $0.11 per diluted share. This compares to a net profit of $28 million or $0.17 per diluted share a year ago. When you exclude the special items, the company's net profit for the fourth quarter was $21 million or $0.13 per diluted share versus a net profit of $28 million or $0.17 per share in the fourth quarter of last year.

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