8-K 1 form8kearnings.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 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) July 18, 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 July 18, 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 six months ended June 30, 2002, and selected operating and financial statistics for US Airways for the same periods (see Exhibit 99 to this report). 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: results of the Company's restructuring efforts, 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 other than as required by law. Item 7. Financial Statements and Exhibits (c) Exhibits Designation Description ----------- ----------- 99 News release dated July 18, 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: July 19, 2002 By: -------------------------------- Anita P. Beier Vice President and Controller Chief Accounting Officer US Airways, Inc. (REGISTRANT) /s/ Anita P. Beier Date: July 19, 2002 By: -------------------------------- Anita P. Beier Vice President and Controller Chief Accounting Officer (this space intentionally left blank) Exhibit 99 US AIRWAYS GROUP REPORTS $248 MILLION SECOND QUARTER LOSS ARLINGTON, Va., July 18, 2002 -- US Airways Group, Inc. today reported a net loss of $248 million for the second quarter of 2002 on operating revenues of $1.9 billion, compared to a net loss of $24 million on operating revenues of $2.5 billion for the same period in 2001. On a diluted per-share basis, the net loss in the second quarter amounted to $3.64 versus a net loss of $0.36 last year. "US Airways' continuing losses are an enormous disappointment to all of us and it is imperative that we move quickly to reverse this trend," said US Airways President and Chief Executive Officer Dave Siegel. "Our existing cost structure cannot support the continuing weak economic conditions, intense competition from low- cost, low-fare carriers in the Northeast, and significant drop in business travel, where we still find some corporate customers resorting to other means of transportation or not traveling at all. "Our employees, nevertheless, are to be commended for their ongoing hard work in delivering a high-quality product to the traveling public. Their efforts, especially in this difficult environment, are praiseworthy and have resulted in our company receiving high marks in consumer satisfaction ratings," said Siegel. "The agreements reached to date with the majority of our employee union leaderships, which are symbolic of their commitment to share in the sacrifices necessary to restore our company's financial health, and the Air Transportation Stabilization Board's (ATSB) conditional approval for a federal loan guarantee are key elements of our restructuring plan," Siegel said. "However, the successful negotiation of concessions from our remaining unions, and our lessors, lenders and vendors is necessary to complete the restructuring plan. Much hard work remains ahead, and we are committed to reorganizing US Airways so that we can become a strong, vibrant, and competitive airline." -more- US AIRWAYS GROUP REPORTS $248 MILLION SECOND QUARTER LOSS Page Two July 18, 2002 FINANCIAL AND OPERATING PERFORMANCE Operating revenues for the second quarter were $1.9 billion, down 23.7 percent from the second quarter of 2001. Operating expenses were $2.1 billion, down 16.0 percent. Pre-tax loss of $259 million for the 2002 second quarter compared to a pre-tax loss of $30 million last year. US Airways Group's cash position on June 30, 2002, was $602 million while the company's operating cash flow was a negative $1 million per day during the second quarter. Total balance sheet debt outstanding, including capital lease obligations, on June 30, 2002, was $3.8 billion. "As we enter the seasonally weaker second half of the year, the expected pressure on our cash position highlights the need to finalize our restructuring efforts and secure the ATSB loan," said Neal Cohen, US Airways executive vice president and chief financial officer. As a result of previously announced payment deferrals related to aircraft lessors and lenders targeted by the company to participate in its restructuring plan, the company is currently in default on certain public and private debt obligations. The company continues to negotiate with these stakeholders in pursuit of its preferred approach of a consensual accord to satisfy the conditions of the government-guaranteed loan. These defaults, which could eventually lead to cross defaults with other lessors, vendors and creditors, if not rescinded, and, potentially, acceleration of those obligations, could result in the company seeking to implement its restructuring plan through a filing for Chapter 11 reorganization of the U.S. Bankruptcy Code. US Airways has shown significant improvement in nearly all operations quality measurements. Year-to-date, the company's completion factor was up 1.2 percentage points year over year. Departure and arrival performances have improved in four of the six months of 2002, while the completion factor has improved in each of the six months. Second quarter available seat miles for US Airways, Inc. declined 20.0 percent year over year, reflecting US Airways' capacity reductions following the events of September 11 and the current economic climate. US Airways carried 13.0 million passengers during the 2002 second quarter, a decline of 21.7 percent compared to the -more- US AIRWAYS GROUP REPORTS $248 MILLION SECOND QUARTER LOSS Page Three July 18, 2002 16.6 million passengers carried during the same period the previous year. Revenue passenger miles declined 18.6 percent compared to the second quarter 2001, while the passenger load factor increased by 1.3 percentage points to 75.1 percent. Passenger revenue per available seat mile was 9.84 cents for the second quarter 2002, a decrease of 10.4 percent compared to the same period in 2001, while the cost per available seat mile was 12.25 cents, an increase of 1.0 percent year- over-year (5.1 percent excluding fuel). FIRST SIX MONTHS RESULTS Operating revenues for the first half of the year 2002 were $3.6 billion, down 23.7 percent over the first six months of 2001, while operating expenses of $4.2 billion were down by 15.9 percent. The operating loss for the first half of the year was $545 million, compared to an operating loss of $208 million for the first six months of 2001. On a diluted per-share basis, the net loss for the first six months of 2002 of $7.60 compares to a net loss of $2.90 in 2001. Results for 2002 include a $17 million credit related to a change in accounting policy for engine maintenance at one of the company's Express subsidiaries. Results for 2001 included a $22 million ($14 million after-tax) impairment charge related to the early retirement of certain Boeing 737-200 aircraft and a $7 million after-tax credit resulting from US Airways' accounting change to adopt SFAS 133 - Accounting for Derivative Instruments and Hedging Activities. For the first half of the year 2002, US Airways, Inc. carried 24.8 million passengers, a decline of 19.4 percent from the first six months of 2001. Revenue passenger miles for the period declined 17.4 percent while available seat miles declined 19.5 percent, resulting in a passenger load factor of 71.9 percent, a year-over-year increase of 1.8 percentage points. The yield of 13.36 cents for the first half of 2002 was down 12.9 percent from the same period in 2001, while passenger revenue per available seat mile of 9.60 cents was down 10.7 percent. Cost per available seat mile of 12.57 cents for the first half of the year increased 1.0 percent versus the same period of 2001. The cost of aviation fuel per gallon for the period was 68.80 cents, down 24.3 percent from 2001. -more- US AIRWAYS GROUP REPORTS $248 MILLION SECOND QUARTER LOSS Page Four July 18, 2002 In light of the ongoing restructuring efforts, US Airways will not hold a second quarter 2002 conference call or Web cast. 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, are contained in US Airways' periodic filings 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: 4325 US Airways Group, Inc. NEWS RELEASE CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (dollars in millions, except per share amounts) Three Months Ended June 30, ----------------------------------- 2002 2001 % Change --------- --------- -------- Operating Revenues Passenger transportation $ 1,599 $ 2,183 (26.8) Cargo and freight 37 44 (15.9) Other 267 266 0.4 --------- --------- Total Operating Revenues 1,903 2,493 (23.7) Operating Expenses Personnel costs 878 959 (8.4) Aviation fuel 189 311 (39.2) Aircraft rent 135 145 (6.9) Other rent and landing fees 107 119 (10.1) Aircraft maintenance 105 143 (26.6) Other selling expenses 83 106 (21.7) Depreciation and amortization 75 101 (25.7) Commissions 26 80 (67.5) Asset impairments -- -- -- Other 480 509 (5.7) --------- --------- Total Operating Expenses 2,078 2,473 (16.0) --------- --------- Operating Income (Loss) (175) 20 NM Other Income (Expense) Interest income 6 18 (66.7) Interest expense (84) (76) 10.5 Interest capitalized 2 4 (50.0) Other, net (8) 4 NM --------- --------- Other Income (Expense), Net (84) (50) 68.0 --------- --------- Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change (259) (30) NM Provision (Credit) for Income Taxes (11) (6) 83.3 --------- --------- Income (Loss) Before Cumulative Effect of Accounting Change (248) (24) NM Cumulative Effect of Accounting Change, Net of Applicable Income Taxes -- -- -- --------- --------- Net Income (Loss) $ (248) $ (24) NM ========= ========= Earnings (Loss) per Common Share (Note 1) Basic Before Cumulative Effect of Accounting Change $ (3.64) $ (0.36) NM Cumulative Effect of Accounting Change $ -- $ -- -- --------- --------- Net Earnings (Loss) per Common Share $ (3.64) $ (0.36) NM ========= ========= Diluted Before Cumulative Effect of Accounting Change $ (3.64) $ (0.36) NM Cumulative Effect of Accounting Change $ -- $ -- -- --------- --------- Net Earnings (Loss) per Common Share $ (3.64) $ (0.36) NM ========= ========= Shares Used for Computation (000) Basic 68,135 67,082 Diluted 68,135 67,082 NM - Not Meaningful Note 1. Earnings (Loss) per Common Share amounts may not recalculate due to rounding. US Airways Group, Inc. NEWS RELEASE CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (dollars in millions, except per share amounts) Six Months Ended June 30, ----------------------------------- 2001 % 2002 (Note 1) Change --------- --------- -------- Operating Revenues Passenger transportation $ 3,034 $ 4,147 (26.8) Cargo and freight 70 90 (22.2) Other 508 497 2.2 --------- --------- Total Operating Revenues 3,612 4,734 (23.7) Operating Expenses Personnel costs 1,762 1,892 (6.9) Aviation fuel 369 622 (40.7) Aircraft rent 269 283 (4.9) Other rent and landing fees 213 238 (10.5) Aircraft maintenance 202 281 (28.1) Other selling expenses 175 217 (19.4) Depreciation and amortization 153 197 (22.3) Commissions 78 167 (53.3) Asset impairments -- 22 (100.0) Other 936 1,023 (8.5) --------- --------- Total Operating Expenses 4,157 4,942 (15.9) --------- --------- Operating Income (Loss) (545) (208) NM Other Income (Expense) Interest income 13 36 (63.9) Interest expense (166) (145) 14.5 Interest capitalized 5 11 (54.5) Other, net (1) 7 NM --------- --------- Other Income (Expense), Net (149) (91) 63.7 --------- --------- Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change (694) (299) NM Provision (Credit) for Income Taxes (160) (97) 64.9 --------- --------- Income (Loss) Before Cumulative Effect of Accounting Change (534) (202) NM Cumulative Effect of Accounting Change, Net of Applicable Income Taxes 17 7 NM --------- --------- Net Income (Loss) $ (517) $ (195) NM ========= ========= Earnings (Loss) per Common Share (Note 2) Basic Before Cumulative Effect of Accounting Change $ (7.86) $ (3.01) NM Cumulative Effect of Accounting Change $ 0.26 $ 0.11 NM --------- --------- Net Earnings (Loss) per Common Share $ (7.60) $ (2.90) NM ========= ========= Diluted Before Cumulative Effect of Accounting Change $ (7.86) $ (3.01) NM Cumulative Effect of Accounting Change $ 0.26 $ 0.11 NM --------- --------- Net Earnings (Loss) per Common Share $ (7.60) $ (2.90) NM ========= ========= Shares Used for Computation (000) Basic 67,975 67,058 Diluted 67,975 67,058 NM - Not Meaningful Note 1. Certain prior year amounts have been reclassified to conform with 2002 presentation. Note 2. Earnings (Loss) per Common Share amounts may not recalculate due to rounding. US Airways, Inc. NEWS RELEASE (A Wholly-Owned Subsidiary of US Airways Group, Inc.) CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in millions) Three Months Ended June 30, ----------------------------------- % 2002 2001 Change --------- --------- -------- Operating Revenues Passenger transportation $ 1,437 $ 2,005 (28.3) US Airways Express transportation revenues 290 287 1.0 Cargo and freight 36 43 (16.3) Other 128 151 (15.2) --------- --------- Total Operating Revenues 1,891 2,486 (23.9) Operating Expenses Personnel costs 811 901 (10.0) Aviation fuel 175 295 (40.7) Aircraft rent 120 129 (7.0) Other rent and landing fees 99 114 (13.2) Aircraft maintenance 75 116 (35.3) Other selling expenses 74 97 (23.7) Depreciation and amortization 70 96 (27.1) Commissions 25 74 (66.2) Asset impairments -- -- -- US Airways Express capacity purchases 278 239 16.3 Other 340 394 (13.7) --------- --------- Total Operating Expenses 2,067 2,455 (15.8) --------- --------- Operating Income (Loss) (176) 31 NM Other Income (Expense) Interest income 8 21 (61.9) Interest expense (85) (76) 11.8 Interest capitalized 1 3 (66.7) Other, net (7) 3 NM --------- --------- Other Income (Expense), Net (83) (49) 69.4 --------- --------- Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change (259) (18) NM Provision (Credit) for Income Taxes (34) (2) NM --------- --------- Income (Loss) Before Cumulative Effect of Accounting Change (225) (16) NM Cumulative Effect of Accounting Change, Net of Applicable Income Taxes -- -- -- --------- --------- Net Income (Loss) $ (225) $ (16) 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) Six Months Ended June 30, ----------------------------------- 2001 % 2002 (Note 1) Change --------- --------- -------- Operating Revenues Passenger transportation $ 2,744 $ 3,815 (28.1) US Airways Express transportation revenues 521 517 0.8 Cargo and freight 69 88 (21.6) Other 251 299 (16.1) --------- --------- Total Operating Revenues 3,585 4,719 (24.0) Operating Expenses Personnel costs 1,632 1,779 (8.3) Aviation fuel 342 589 (41.9) Aircraft rent 241 253 (4.7) Other rent and landing fees 197 227 (13.2) Aircraft maintenance 147 231 (36.4) Other selling expenses 157 200 (21.5) Depreciation and amortization 143 188 (23.9) Commissions 73 155 (52.9) Asset impairments -- 22 (100.0) US Airways Express capacity purchases 536 461 16.3 Other 662 800 (17.3) --------- --------- Total Operating Expenses 4,130 4,905 (15.8) --------- --------- Operating Income (Loss) (545) (186) NM Other Income (Expense) Interest income 18 42 (57.1) Interest expense (167) (145) 15.2 Interest capitalized 2 7 (71.4) Other, net (1) 6 NM --------- --------- Other Income (Expense), Net (148) (90) 64.4 --------- --------- Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change (693) (276) NM Provision (Credit) for Income Taxes (170) (90) 88.9 --------- --------- Income (Loss) Before Cumulative Effect of Accounting Change (523) (186) NM Cumulative Effect of Accounting Change, Net of Applicable Taxes -- 7 (100.0) --------- --------- Net Income (Loss) $ (523) $ (179) NM ========= ========= NM - Not meaningful Note 1. Certain prior year amounts have been reclassified to conform with 2002 presentation. 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 June 30, ------------------------------- % 2002 2001 Change ------- ------- -------- Revenue passengers (thousands)* 12,982 16,582 (21.7) Total revenue passenger miles (millions) 10,969 13,480 (18.6) Revenue passenger miles (millions)* 10,966 13,471 (18.6) Total available seat miles (millions) 14,609 18,275 (20.1) Available seat miles(millions)* 14,606 18,265 (20.0) Passenger load factor* 75.1% 73.8% 1.3 pts. Break-even load factor (Note 2) 87.8% 76.2% 11.6 pts. Yield* 13.11c 14.88c (11.9) Passenger revenue per available seat mile* 9.84c 10.98c (10.4) Revenue per available seat mile (Note 2) 10.96c 12.04c (9.0) Cost per available seat mile (Note 2) 12.25c 12.13c 1.0 Average passenger journey (miles)* 845 812 4.1 Average stage length (miles)* 684 666 2.7 Revenue aircraft miles (millions)* 96 127 (24.4) Cost of aviation fuel per gallon 69.28c 88.12c (21.4) Cost of aviation fuel per gallon (excluding fuel taxes) 63.57c 81.89c (22.4) Gallons of aviation fuel consumed (millions) 252 334 (24.6) Scheduled mileage completion factor* 99.3% 98.7% 0.6 pts. Number of aircraft in operating fleet at period-end 311 423 (26.5) Full-time equivalent employees at period-end 33,902 44,673 (24.1) * Scheduled service only (excludes charter service). c cents Note 1. Includes US Airways' "mainline" 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. US Airways, Inc. NEWS RELEASE (A Wholly-Owned Subsidiary of US Airways Group, Inc.) SELECTED AIRLINE OPERATING AND FINANCIAL STATISTICS (Note 1) (unaudited) Six Months Ended June 30, ------------------------------- % 2002 2001 Change ------- ------- -------- Revenue passengers (thousands)* 24,807 30,775 (19.4) Total revenue passenger miles (millions) 20,551 24,893 (17.4) Revenue passenger miles (millions)* 20,547 24,874 (17.4) Total available seat miles (millions) 28,589 35,520 (19.5) Available seat miles(millions)* 28,584 35,499 (19.5) Passenger load factor* 71.9% 70.1% 1.8 pts. Break-even load factor (Note 2) 87.8% 75.5% 12.3 pts. Yield* 13.36c 15.34c (12.9) Passenger revenue per available seat mile* 9.60c 10.75c (10.7) Revenue per available seat mile (Note 2) 10.72c 11.83c (9.4) Cost per available seat mile (Note 2) 12.57c 12.45c 1.0 Average passenger journey (miles)* 828 808 2.5 Average stage length (miles)* 667 661 0.9 Revenue aircraft miles (millions)* 188 249 (24.5) Cost of aviation fuel per gallon 68.80c 90.91c (24.3) Cost of aviation fuel per gallon (excluding fuel taxes) 63.13c 84.57c (25.4) Gallons of aviation fuel consumed (millions) 498 648 (23.1) Scheduled mileage completion factor* 99.4% 98.2% 1.2 pts. Number of aircraft in operating fleet at period-end 311 423 (26.5) Full-time equivalent employees at at period-end 33,902 44,673 (24.1) * Scheduled service only (excludes charter service). c cents Note 1. Includes US Airways' "mainline" 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 an impairment charge of $22 million recognized during the six months ended June 30, 2001.