By CHRIS KAHN
The Associated Press
Tuesday, January 30, 2007; 7:28 PM
TEMPE, Ariz. -- US Airways Group Inc., which is pushing to buy rival Delta Air Lines Inc. in a hostile takeover bid, on Tuesday said it swung to a profit in the fourth quarter, as strength in both mainline and express operations helped offset high fuel costs.
The company said it posted a profit of $12 million, or 13 cents per share, in the fourth quarter, compared with a loss of $261 million, or $3.27 per share during the same period in 2005.
The results included special items, such as an outstanding fuel hedge contracts, expenses from its September 2005 combination with America West Airlines, and a debt conversion payment, that totaled $74 million. Excluding special items, the company said it posted a profit in the quarter of $86 million, or 91 cents per share.
Analysts surveyed by Thomson Financial forecast a profit of 80 cents per share. Thomson estimates usually exclude special items.
Despite the good news on profits, US Airways shares were down $1.33, or 2.4 percent, to close at $53.10 on the New York Stock Exchange as many airline stocks fell because of surging oil prices. US Airways shares have traded in a 52-week range of $28.35 to $63.27.
Ray Neidl, an airline analyst with Calyon Securities in New York, said crude oil prices, which settled Tuesday up nearly $3 at $56.97 per barrel, dragged on the stock.
"US Airways tends to be a more volatile stock _ they go up more in an up market, down faster in a down market, and today's a down market because of oil."
Shares of American Airlines, United Airlines, Northwest Airlines Corp., and Continental Airlines Inc. also were down in trading Tuesday. Southwest Airlines and Delta Air Lines shares were unchanged at the end of trading.
US Airways' revenue grew 9 percent to $2.79 billion from $2.56 billion during the same period a year earlier. Analysts expected revenue of $2.84 billion.
For the full year 2006, US Airways reported a net profit of $303 million, or $3.32 per diluted share, including special items of $204 million.
The company reported a net loss of $335 million, or $10.65 per share, for 2005. However, US Airways officials said it would be inaccurate to compare its full-year earnings from 2005 to 2006 because the carrier used different accounting practices before and after America West acquired the former US Airways in September 2005.
"We are extremely pleased," US Airways CEO Doug Parker said in a conference call with analysts, noting that 2006 was the first full year of combined operating and financial results from America West Airlines and the former US Airways.
"When we merged these two companies back in October of 2005, there were a lot of skeptics as to whether this would work," Parker said.
During 2006, the company added $59 million to its profit-sharing program, including $11 million from the fourth quarter.
The airline also plans to hire more employees this year, especially at Philadelphia International Airport, which had been understaffed following the former US Airways bankruptcy.
"I think you will see us, given the size of that operation, in a continuous recruiting mode from now until forever," President Scott Kirby said of the carrier's Philadelphia hub.
US Airways continues to negotiate with its pilots unions without much progress. Though Parker has offered to bring all pilots up to the more lucrative America West contract, the union wants more.
"I don't see us moving in the direction of a ratifiable agreement unless the company is willing to put some substantial money on the table," said Capt. John McIlvenna, chairman of the America West pilots union. "And they can afford to do it."
The pilots are planning rallies outside company headquarters in Tempe on Thursday and at Washington Reagan National Airport on Feb. 6 to publicize their displeasure with their contract negotiations.
Meanwhile, Parker said he would hold Delta creditors to a Thursday deadline on US Airway's $9.8 billion offer for the Atlanta-based carrier.
Parker wants Delta's creditors committee to request postponing a Feb. 7 bankruptcy hearing that involves Delta management's reorganization plan.
He also wants the creditors to call on both companies to begin the federal regulatory process and a due diligence process that would open Delta's books for US Airways.
If those conditions aren't met by Thursday, Parker said US Airways would rescind its bid.