8-K 1 final8kearnings.txt FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) January 17, 2002 US Airways Group, Inc. (Commission file number: 1-8444) and US Airways, Inc. (Commission file number: 1-8442) (Exact names of registrants as specified in their charters) Delaware US Airways Group, Inc. 54-1194634 (State of incorporation US Airways, Inc. 53-0218143 of both registrants) (I.R.S. Employer Identification Nos.) US Airways Group, Inc. 2345 Crystal Drive, Arlington, VA 22227 (Address of principal executive offices) (703) 872-7000 (Registrant's telephone number, including area code) US Airways, Inc. 2345 Crystal Drive, Arlington, VA 22227 (Address of principal executive offices) (703) 872-7000 (Registrant's telephone number, including area code) Item 5. Other Events On January 17, 2002, US Airways Group, Inc. (the Company) and US Airways, Inc. (US Airways) issued a news release disclosing the results of operations for both companies for the three months and twelve months ended December 31, 2001, and selected operating and financial statistics for US Airways for the same periods (see Exhibit 99 to this report). Following the news release, Stephen M. Wolf, Chairman and Chief Executive Officer of both the Company and US Airways, Lawrence M. Nagin, Executive Vice President of Corporate Affairs and General Counsel for both companies, Alan W. Crellin, Executive Vice President of Operations for US Airways, Thomas A. Mutryn, Senior Vice President, Finance and Chief Financial Officer of both companies and Gregory T. Taylor, Senior Vice President of Planning for US Airways, spoke with industry analysts on a conference call. During the call, the Company disclosed that it expects its operating cash flow to be negative $3 million per day in the first quarter of 2002. Operating cash flow is expected to turn positive for April 2002 and for the second quarter of 2002. In terms of guidance for 2002, US Airways expects a 10% to 12% reduction in available seat miles for the year and unit costs to be in the same range as 2001. For the first quarter of 2002, US Airways expects its capacity to be 18% to 20% lower on a year-over-year basis, with unit costs increasing 3% to 5% over last year's first quarter. The Company advised that given the tough revenue environment facing the airline industry and US Airways, it expects a significant loss for the first quarter of 2002. Certain of the information contained in the attached news release should be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 which is subject to a number of risks and uncertainties. The preparation of forward-looking statements requires the use of estimates of future revenues, expenses, activity levels and economic and market conditions, many of which are outside the Company's control. Specific factors that could cause actual results to differ materially from those set forth in the forward-looking statements include: costs related to the Company's compliance with governmental requirements imposed as a result of the September 11, 2001, terrorist attacks and the Company's response to the effect of such attacks; labor and competitive responses to the steps taken by the Company as a result of such attacks; demand for transportation in the markets in which the Company operates in light of such attacks; economic conditions; labor costs; financing costs; aviation fuel costs; competitive pressures on pricing (particularly from lower-cost competitors); weather conditions; government legislation and regulation; consumer perceptions of the Company's products; and other risks and uncertainties listed from time to time in the Company's reports to the United States Securities and Exchange Commission. Other factors and assumptions not identified above are also involved in the preparation of forward-looking statements, and the failure of such other factors and assumptions to be realized may also cause actual results to differ materially from those discussed. The Company assumes no obligation to update such estimates to reflect actual results, changes in assumptions or changes in other factors affecting such estimates. Item 7. Financial Statements and Exhibits (c) Exhibits Designation Description ----------- ----------- 99 News release dated January 17, 2002 of US Airways Group, Inc. and US Airways, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized. US Airways Group, Inc. (REGISTRANT) /s/ Anita P. Beier Date: January 17, 2002 By: -------------------------------- Anita P. Beier Vice President and Controller Chief Accounting Officer US Airways, Inc. (REGISTRANT) /s/ Anita P. Beier Date: January 17, 2002 By: -------------------------------- Anita P. Beier Vice President and Controller Chief Accounting Officer (this space intentionally left blank) Exhibit 99 US AIRWAYS GROUP REPORTS $1.17 BILLION LOSS FOR 2001 EXCLUDING UNUSUAL ITEMS ARLINGTON, Va., Jan. 17, 2002 - US Airways Group, Inc. today reported a net loss of $1.17 billion for the full year 2001, on revenues of $8.29 billion, excluding unusual items. On a diluted per share basis, the net loss for the year excluding unusual items was $17.35. For the fourth quarter 2001, US Airways Group, Inc. reported a $552 million net loss, on revenues of $1.57 billion, excluding unusual items. On a diluted per share basis, the net loss for the quarter excluding unusual items was $8.16. Including unusual items, the net loss for the full year 2001 was $1.97 billion, while the net loss for the fourth quarter was $1.01 billion. On a diluted per share basis, including unusual items, the net loss for the year was $29.28, and the net loss for the quarter was $14.89. "US Airways' results reflect the impact of the economic recession, the tragic events of September 11, and increasing regional jet competition," said US Airways Chairman and Chief Executive Officer Stephen M. Wolf. "Yet, despite the enormous challenges facing the industry, our employees remain steadfast in their dedication to our customers. As a result of their superb efforts, our customers are flying with an on time, efficient, customer focused airline." Wolf said that US Airways has taken difficult yet necessary steps to create a platform from which the company can move forward. "We have eliminated unprofitable flying, retired four fleet types substantially improving our operating efficiencies, deferred new aircraft deliveries, consolidated and closed facilities, and sadly, but necessarily, reduced our workforce significantly," he said. -more- US AIRWAYS GROUP REPORTS $1.17 BILLION LOSS FOR 2001 EXCLUDING UNUSUAL ITEMS Page Two Jan. 17, 2002 The company's focus has turned to attracting more passengers and increasing revenue, Wolf said, adding that full restoration of US Airways service at Ronald Reagan Washington National Airport is "extremely important to our company's future." Reemphasizing the acute need for more regional jet flying, Wolf added, "we continue to be in discussions with our ALPA representatives on this issue as we face more and more regional jet flying from our competition." Under new authority by the U.S. Department of Transportation, on Jan. 6, 2002, US Airways and US Airways Express added 17 additional roundtrip flights to six new destinations from Reagan National Airport. Between Feb. 1 and March 1, US Airways will add as many as 29 additional destinations. US Airways, US Airways Express and US Airways Shuttle currently operate 83 daily departures at Reagan National Airport and expect to operate 153 daily departures by March 2. In terms of cash, US Airways Group, Inc. began the fourth quarter 2001 with $1.04 billion and completed the year with $1.08 billion. In accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" and in light of the company's recent cumulative losses, compounded by the current economic downturn, US Airways Group, Inc. recognized $369 million of non-cash tax expense in the fourth quarter 2001 to establish a full valuation allowance against its deferred tax asset. Results for the fourth quarter 2001 include two other unusual items: charges of $76 million relating to the on-going implementation of the company's restructuring plan, and a reduction of $11 million in the expected Federal Airline Stabilization Act grant. For the full year of 2001, unusual items relating to aircraft impairment, restructuring charges, the Federal Airline Stabilization Act grant, merger termination fees and the tax valuation allowance resulted in net unusual charges of $803 million after tax. Results for the fourth quarter 2000 and full year 2000 include a $12 million after tax impairment loss related to warrants the company held in Priceline.com. -more- US AIRWAYS GROUP REPORTS $1.17 BILLION LOSS FOR 2001 EXCLUDING UNUSUAL ITEMS Page Three Jan. 17, 2002 Fourth quarter 2001 operating revenues were $1.57 billion, down 33.6 percent compared to the fourth quarter 2000, while operating expenses of $2.06 billion excluding unusual items were down by 15.9 percent year-over-year. The loss for the quarter excluding unusual items was $552 million, or $8.16 on a diluted per share basis. This compares to a fourth quarter 2000 loss of $89 million, or $1.33 on a diluted per share basis. US Airways, Inc. unit costs for the fourth quarter 2001 increased to 12.85 cents, while passenger unit revenues of 8.51 cents decreased 22.7 percent compared to the fourth quarter 2000. Available seat miles for the quarter declined 19.9 percent while revenue passenger miles declined 26.9 percent. The passenger load factor for the quarter was 63.2 percent, a decline of 6.1 percentage points compared to the same period 2000. Operating revenues for the full year 2001 were $8.29 billion, down 10.6 percent compared to the same period 2000, while operating expenses of $9.33 billion excluding unusual items were 0.1 percent higher than the previous year. The loss for the year, excluding unusual items and the accounting change was $1.17 billion, or $17.46 on a diluted per share basis. This compares to a full year 2000 loss of $154 million, or $2.30 on a diluted per share basis. US Airways, Inc. unit costs for the full year 2001 decreased to 12.46 cents, while passenger unit revenues of 9.86 cents declined 13.9 percent for the year compared to 2000. Available seat miles for the year decreased 0.2 percent, while revenue passenger miles decreased 2.3 percent. The passenger load factor for the year was 68.9 percent, a decline of 1.4 percentage points compared to the same period 2000. US Airways will conduct its fourth quarter 2001 conference call this afternoon at 2 p.m., Eastern time. Interested parties are invited to listen as senior officers of the company discuss the earnings results with analysts from the investment community. The conference call will be held via a special Webcast on US Airways' Web site usairways.com at the following location: http://investor.usairways.com/medialist.cfm. -more- US AIRWAYS GROUP REPORTS $1.17 BILLION LOSS FOR 2001 EXCLUDING UNUSUAL ITEMS Page Four Jan. 17, 2002 The Webcast will last approximately one hour. We ask that you log on at least five minutes before the call in order to register. An archive of the conference call also will be available on US Airways' Web site through April 17, 2002. A telephone replay of the call will be available through 6 p.m., Eastern time, Jan. 21, 2002 by calling 402-220-0512. To access the Webcast, you will need Real Player installed on your computer. You can download Real Player through the US Airways Web site by following the instructions shown on the Presentations page (URL listed above). The download is free and should take approximately 10 minutes. Certain of the information discussed above or enclosed herewith should be considered "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. A number of risks and uncertainties exist, which could cause the actual results to differ materially from the results projected in such forward-looking statements. Additional information concerning the factors, which could cause actual results to differ materially from the forward-looking statements, was contained in a Form 8-K filed today with the Securities and Exchange Commission. US Airways assumes no obligation to update such estimates to reflect actual results, changes in assumptions or changes in other factors affecting such estimates. -30- NUMBER: 4230 US Airways Group, Inc. NEWS RELEASE CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (dollars in millions, except per share amounts) Three Months Ended December 31, ----------------------------------- 2001 2000 % Change --------- --------- -------- Operating Revenues Passenger transportation $ 1,310 $ 2,103 (37.7) Cargo and freight 37 44 (15.9) Other 218 209 4.3 --------- --------- Total Operating Revenues 1,565 2,356 (33.6) Operating Expenses Personnel costs 869 968 (10.2) Aviation fuel 202 380 (46.8) Commissions 47 91 (48.4) Aircraft rent 142 138 2.9 Other rent and landing fees 99 112 (11.6) Aircraft maintenance 126 123 2.4 Other selling expenses 61 91 (33.0) Depreciation and amortization 104 92 13.0 Asset impairments and other special charges 76 -- -- Airline stabilization act grant 11 -- -- Other 405 449 (9.8) --------- --------- Total Operating Expenses 2,142 2,444 (12.4) --------- --------- Operating Income (Loss) (577) (88) NM Other Income (Expense) Interest income 10 22 (54.5) Interest expense (77) (65) 18.5 Interest capitalized 3 8 (62.5) Merger termination fee -- -- -- Other, net 2 (23) NM --------- --------- Other Income (Expense), Net (62) (58) 6.9 --------- --------- Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change (639) (146) NM Provision (Credit) for Income Taxes 369 (45) NM --------- --------- Income (Loss) Before Cumulative Effect of Accounting Change (1,008) (101) NM Cumulative Effect of Accounting Change, Net of Applicable Income Taxes -- -- -- --------- --------- Net Income (Loss) $ (1,008) $ (101) NM ========= ========= Earnings (Loss) per Common Share Basic Before Cumulative Effect of Accounting Change $ (14.89) $ (1.50) NM Cumulative Effect of Accounting Change $ -- $ -- -- --------- --------- Net Earnings (Loss) per Common Share $ (14.89) $ (1.50) NM ========= ========= Diluted Before Cumulative Effect of Accounting Change $ (14.89) $ (1.50) NM Cumulative Effect of Accounting Change $ -- $ -- -- --------- --------- Net Earnings (Loss) per Common Share $ (14.89) $ (1.50) NM ========= ========= Shares Used for Computation (000) Basic 67,730 67,031 Diluted 67,730 67,031 NM - Not Meaningful US Airways Group, Inc. NEWS RELEASE CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (dollars in millions, except per share amounts) Twelve Months Ended December 31, ----------------------------------- 2001 % (Note 1) 2000 Change --------- --------- -------- Operating Revenues Passenger transportation $ 7,164 $ 8,341 (14.1) Cargo and freight 164 164 -- Other 960 764 25.7 --------- --------- Total Operating Revenues 8,288 9,269 (10.6) Operating Expenses Personnel costs 3,726 3,637 2.4 Aviation fuel 1,103 1,284 (14.1) Commissions 279 371 (24.8) Aircraft rent 573 519 10.4 Other rent and landing fees 449 448 0.2 Aircraft maintenance 532 504 5.6 Other selling expenses 368 419 (12.2) Depreciation and amortization 392 369 6.2 Asset impairments and other special charges 810 -- -- Airline stabilization act grant (320) -- -- Other 1,911 1,771 7.9 --------- --------- Total Operating Expenses 9,823 9,322 5.4 --------- --------- Operating Income (Loss) (1,535) (53) NM Other Income (Expense) Interest income 61 76 (19.7) Interest expense (297) (251) 18.3 Interest capitalized 18 33 (45.5) Merger termination fee 50 -- -- Other, net (1) (28) (96.4) --------- --------- Other Income (Expense), Net (169) (170) (0.6) --------- --------- Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change (1,704) (223) NM Provision (Credit) for Income Taxes 272 (57) NM --------- --------- Income (Loss) Before Cumulative Effect of Accounting Change (1,976) (166) NM Cumulative Effect of Accounting Change, Net of Applicable Income Taxes of $5 Million and $63 Million, respectively 7 (103) NM --------- --------- Net Income (Loss) $ (1,969) $ (269) NM ========= ========= Earnings (Loss) per Common Share Basic Before Cumulative Effect of Accounting Change $ (29.39) $ (2.47) NM Cumulative Effect of Accounting Change $ 0.11 $ (1.55) NM --------- --------- Net Earnings (Loss) per Common Share $ (29.28) $ (4.02) NM ========= ========= Diluted Before Cumulative Effect of Accounting Change $ (29.39) $ (2.47) NM Cumulative Effect of Accounting Change $ 0.11 $ (1.55) NM --------- --------- Net Earnings (Loss) per Common Share $ (29.28) $ (4.02) NM ========= ========= Shares Used for Computation (000) Basic 67,227 66,855 Diluted 67,227 66,855 NM - Not Meaningful Note 1. Certain amounts have been reclassified to conform with 2001 presentation. US Airways, Inc. NEWS RELEASE (A Wholly-Owned Subsidiary of US Airways Group, Inc.) CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in millions) Three Months Ended December 31, ----------------------------------- % 2001 2000 Change --------- --------- -------- Operating Revenues Passenger transportation $ 1,196 $ 1,933 (38.1) US Airways Express transportation revenues 210 229 (8.3) Cargo and freight 37 43 (14.0) Other 111 142 (21.8) --------- --------- Total Operating Revenues 1,554 2,347 (33.8) Operating Expenses Personnel costs 808 910 (11.2) Aviation fuel 190 360 (47.2) Commissions 44 85 (48.2) Aircraft rent 127 124 2.4 Other rent and landing fees 93 107 (13.1) Aircraft maintenance 110 103 6.8 Other selling expenses 55 84 (34.5) Depreciation and amortization 99 88 12.5 Asset impairments and other special charges 76 -- -- Airline stabilization act grant 10 -- -- US Airways Express capacity purchases 208 205 1.5 Other 281 362 (22.4) --------- --------- Total Operating Expenses 2,101 2,428 (13.5) --------- --------- Operating Income (Loss) (547) (81) NM Other Income (Expense) Interest income 13 21 (38.1) Interest expense (78) (65) 20.0 Interest capitalized 2 4 (50.0) Merger termination fee -- -- -- Other, net 2 (21) NM --------- --------- Other Income (Expense), Net (61) (61) -- --------- --------- Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change (608) (142) NM Provision (Credit) for Income Taxes 298 (44) NM --------- --------- Income (Loss) Before Cumulative Effect of Accounting Change (906) (98) NM Cumulative Effect of Accounting Change, Net of Applicable Income Taxes -- -- -- --------- --------- Net Income (Loss) $ (906) $ (98) NM ========= ========= NM - Not meaningful US Airways, Inc. NEWS RELEASE (A Wholly-Owned Subsidiary of US Airways Group, Inc.) CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in millions) Twelve Months Ended December 31, ----------------------------------- 2001 2000 % (Note 1) (Note 2) Change --------- --------- -------- Operating Revenues Passenger transportation $ 6,580 $ 7,556 (12.9) US Airways Express transportation revenues 963 880 9.4 Cargo and freight 161 160 0.6 Other 549 585 (6.2) --------- --------- Total Operating Revenues 8,253 9,181 (10.1) Operating Expenses Personnel costs 3,492 3,398 2.8 Aviation fuel 1,042 1,205 (13.5) Commissions 259 342 (24.3) Aircraft rent 511 454 12.6 Other rent and landing fees 426 417 2.2 Aircraft maintenance 443 412 7.5 Other selling expenses 335 382 (12.3) Depreciation and amortization 372 344 8.1 Asset impairments and other special charges 810 -- -- Airline stabilization act grant (309) -- -- US Airways Express capacity purchases 908 764 18.8 Other 1,437 1,507 (4.6) --------- --------- Total Operating Expenses 9,726 9,225 5.4 --------- --------- Operating Income (Loss) (1,473) (44) NM Other Income (Expense) Interest income 73 106 (31.1) Interest expense (298) (252) 18.3 Interest capitalized 10 15 (33.3) Merger termination fee 50 -- -- Other, net (1) (27) (96.3) --------- --------- Other Income (Expense), Net (166) (158) 5.1 --------- --------- Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change (1,639) (202) NM Provision (Credit) for Income Taxes 209 (50) NM --------- --------- Income (Loss) Before Cumulative Effect of Accounting Change (1,848) (152) NM Cumulative Effect of Accounting Change, Net of Applicable Income Taxes of $5 Million and $63 Million, respectively 7 (103) NM --------- --------- Net Income (Loss) $ (1,841) $ (255) NM ========= ========= NM - Not meaningful Note 1. Certain amounts have been reclassified to conform with 2001 presentation. Note 2. Results for the twelve months ended December 31, 2000 include the activity of the former Shuttle, Inc. from July 1, 2000 forward. US Airways, Inc. NEWS RELEASE (A Wholly-Owned Subsidiary of US Airways Group, Inc.) SELECTED AIRLINE OPERATING AND FINANCIAL STATISTICS (Note 1) (unaudited) Three Months Ended December 31, ------------------------------- % 2001 2000 Change ------- ------- -------- Revenue passengers (thousands)* (Note 3) 11,151 15,605 (28.5) Total revenue passenger miles (millions) (Note 3) 8,895 12,173 (26.9) Revenue passenger miles (millions)* (Note 3) 8,888 12,163 (26.9) Total available seat miles (millions) (Note 3) 14,068 17,570 (19.9) Available seat miles(millions)* (Note 3) 14,056 17,557 (19.9) Passenger load factor* (Note 3) 63.2% 69.3% (6.1) pts. Break-even load factor (Note 2) 87.6% 74.2% 13.4 pts. Yield* (Note 3) 13.46c 15.90c (15.3) Passenger revenue per available seat mile* (Note 3) 8.51c 11.01c (22.7) Revenue per available seat mile (Notes 2 and 3) 9.56c 12.06c (20.7) Cost per available seat mile (Notes 2 and 3) 12.85c 12.65c 1.6 Average passenger journey (miles)* (Note 3) 797 779 2.3 Average stage length (miles)* (Note 3) 659 648 1.7 Revenue aircraft miles (millions)* 95 126 (24.6) Cost of aviation fuel per gallon 76.53c 109.27c (30.0) Cost of aviation fuel per gallon (excluding fuel taxes) 70.79c 102.48c (30.9) Gallons of aviation fuel consumed (millions) 248 329 (24.6) Scheduled mileage completion factor* 99.6% 98.1% 1.5 pts. Number of aircraft in operating fleet at period-end (Note 3) 342 417 (18.0) Full-time equivalent employees at period-end (Note 3) 35,232 43,467 (18.9) * Scheduled service only (excludes charter service). c cents Note 1. Includes US Airways' "mainline" operations only. Note 2. Financial statistics exclude the revenues and expenses generated under capacity purchase arrangements US Airways has with certain US Airways Express air carriers. Financial statistics also exclude asset impairments and other special charges, airline stabilization act grant and merger termination fees. Note 3. Includes the activity of the former Shuttle, Inc. on a pro forma basis as if it was merged into US Airways as of January 1, 2000. US Airways, Inc. NEWS RELEASE (A Wholly-Owned Subsidiary of US Airways Group, Inc.) SELECTED AIRLINE OPERATING AND FINANCIAL STATISTICS (Note 1) (unaudited) Twelve Months Ended December 31, ------------------------------- % 2001 2000 Change ------- ------- -------- Revenue passengers (thousands)* (Note 3) 56,114 60,636 (7.5) Total revenue passenger miles (millions) (Note 3) 45,979 47,065 (2.3) Revenue passenger miles (millions)* (Note 3) 45,948 47,012 (2.3) Total available seat miles (millions) (Note 3) 66,744 66,919 (0.3) Available seat miles(millions)* (Note 3) 66,704 66,851 (0.2) Passenger load factor* (Note 3) 68.9% 70.3% (1.4) pts. Break-even load factor (Note 2) 80.8% 73.3% 7.5 pts. Yield* (Note 3) 14.32c 16.28c (12.0) Passenger revenue per available seat mile* (Note 3) 9.86c 11.45c (13.9) Revenue per available seat mile (Notes 2 and 3) 10.92c 12.51c (12.7) Cost per available seat mile (Notes 2 and 3) 12.46c 12.72c (2.0) Average passenger journey (miles)* (Note 3) 819 775 5.7 Average stage length (miles)* (Note 3) 667 633 5.4 Revenue aircraft miles (millions)* 462 481 (4.0) Cost of aviation fuel per gallon 86.28c 95.81c (9.9) Cost of aviation fuel per gallon (excluding fuel taxes) 80.09c 89.17c (10.2) Gallons of aviation fuel consumed (millions) 1,208 1,258 (4.0) Scheduled mileage completion factor* 96.7% 97.4% (0.7) pts. Number of aircraft in operating fleet at period-end (Note 3) 342 417 (18.0) Full-time equivalent employees at period-end (Note 3) 35,232 43,467 (18.9) * Scheduled service only (excludes charter service). c cents Note 1. Includes US Airways' "mainline" operations only. Note 2. Financial statistics exclude the revenues and expenses generated under capacity purchase arrangements US Airways has with certain US Airways Express air carriers. Financial statistics also exclude asset impairments and other special charges, airline stabilization act grant and merger termination fees. Note 3. Includes the activity of the former Shuttle, Inc. on a pro forma basis as if it was merged into US Airways as of January 1, 2000.