US Airways Group Inc., formed by a merger of two carriers a year ago, reported a third-quarter net loss of $78 million on fuel-related expenses.
The loss was 88 cents a share, the Tempe, Arizona-based airline said in a statement today. Excluding $179 million in costs for locking in fuel prices in advance and merging operations, US Airways had a profit of $101 million, or $1.09 a share. That beat analysts’ average estimate of $1.01 a share.
Chief Executive W. Douglas Parker continues to reap savings from combining bankrupt US Airways and America West Holdings Corp. He has unified operations at all airports except Chicago O’Hare, adopted one fare structure and now has one Web site.
“Bottom line is a $100 million operating profit,” said Michael Boyd, president of Boyd Group, an Evergreen, Colorado- based aviation consulting company. “Forget the accounting entry. Doug Parker has taken something that had very little chance of survival and he’s making it spit out cash.” Parker said the carrier expects a fourth-quarter profit. The combined airline “is doing everything we had hoped for and more,” he said on a conference call.
US Airways didn’t provide combined results for the full year-earlier quarter because the merger didn’t occur until Sept. 27, 2005. Sales at the seventh-largest U.S. carrier were $2.97 billion.
Excluding one-time costs, the airline was expected to earn $1.10 a share by Ray Neidl, a New York-based analyst at Calyon Securities Inc. Neidl is among the top-rated analysts by StarMine Corp. for accuracy in estimating US Airways’ earnings.
Shares Rise Shares of U.S. Airways rose 87 cents to $49.38 at 12:09 p.m. in New York Stock Exchange composite trading. The stock has gained 33 percent this year.
US Airways said tighter security restrictions after U.K. authorities disrupted a terror plot on Aug. 10 cost the carrier $30 million to $40 million in revenue. US Airways spent $719 million on fuel, its largest expense.
“Business is strong,” President J. Scott Kirby said on the conference call. “In the last couple of weeks we’ve seen even more recovery as business travel has come back.” Business travel on short flights was most affected by the U.S. ban on liquids in carry-on baggage, which has since been eased. Most of those trips were canceled or made by train or car, Kirby said.
US Airways said its unified Web site boosted online sales 21 percent in the quarter. The airline also said it will add workers and equipment to address ongoing delays in Philadelphia.
James Corridore, a New York-based equity analyst with Standard & Poor’s, reaffirmed his “strong buy” rating on the shares, writing in a research note that US Airways would “continue to outperform peers” on growth in unit revenue.
