US Airways Group (LCC)

Q4 2012 Earnings Call

January 23, 2013 11:30 am ET

Executives

Daniel Cravens

William Douglas Parker - Executive Chairman, Chief Executive Officer, Chairman of Labor Committee, Chairman of Us Airways and Chairman of Awa

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

J. Scott Kirby - President

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

Robert D. Isom - Chief Operating Officer and Executive Vice President

Analysts

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

Hunter K. Keay - Wolfe Trahan & Co.

Daniel McKenzie - Hudson Securities, Inc., Research Division

Kevin Crissey - UBS Investment Bank, Research Division

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

Michael Linenberg - Deutsche Bank AG, Research Division

Justine Fisher

Glenn D. Engel - BofA Merrill Lynch, Research Division

John D. Godyn - Morgan Stanley, Research Division

Savanthi Syth - Raymond James & Associates, Inc., Research Division

Presentation

Operator

Good day, and welcome to the Fourth Quarter 2012 US Airways Earnings Conference call. Today's conference is being recorded. [Operator Instructions] And now, I'd like to turn the conference over to your moderator, Managing Director of Investor Relations, Mr. Daniel Cravens. Please go ahead, sir.

Daniel Cravens

Thanks, Sandra, and welcome, everybody, to the US Airways Fourth Quarter 2012 Earnings Conference Call. Joining us on the call today are Doug Parker, our Chairman and CEO; Scott Kirby, our President; Derek Kerr, our Chief Financial Officer; and Elise Eberwein, our EVP of Corporate -- or People and Communications; and also Robert Isom, our Chief Operating Officer. Also, in the phone joining us is Steve Johnson, our EVP of Corporate.

Like we typically do, we're going to start with Doug. He'll provide an overview of our financial results. Derek will then walk us through the details on the quarter and provide some color on our 2013 guidance. Scott will then follow with commentary on the revenue environment and our operational performance. And then after you hear from those comments, we'll open the call for analysts questions, 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 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 those risks and uncertainties can be found in our earnings press release issued this morning, our Form 10-Q for the quarter ended September 30 of last year 2012 and also our 2011 Form 10-K. In addition, we'll 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. A webcast of this call is also available on our website and will be archived on the website. The information 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 this morning for the call, 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, and thank you, everyone, for being on with us. Derek will cover our quarterly results, financial results in detail here in a moment, but I want to start by focusing on the full year 2012. The US Airways team did a phenomenal job in 2012 that started with another great year of operational reliability, led by our Chief Operating Officer, Robert Isom. Our 32,000 hard-working team members produced the best operating reliability in our history, which is really saying something since US Airways led all network carriers in on-time performance over the period from 2008 to 2011. But in 2012, we did even better, with all-time company records in the important customer metrics of on-time performance, completion factor and baggage handling.

That operating reliability, of course, is valued by our customers, and that's showed in our revenue performance.

Also, in 2012, we set new company records for total revenue, total traffic, load factor, yield, revenue per ASM, and net record revenue performance, combined with some very strong cost discipline, led to the record profitability that we reported today. Our net income, excluding special charges for 2012 was $537 million. That's the highest in our company's history and nearly 5x our 2011 profit of $111 million.

And when a company produces a yield like that, it usually bodes well for our shareholders, and we're happy to report that was the case for US Airways in 2012. Our stock increased 166% over the course of 2012, which was the largest increase of any company in the Fortune 500. And we were able to accomplish all of this while pursuing a strategic alternative that consumed a significant amount of the management team's time and attention. So I've been in the airline business now 26 years. I've been CEO for over 11 of those, and this is unquestionably the best all-around performance I've seen by an airline team, and we couldn't be prouder of the work of our 32,000 team members.

So looking forward, we've turned this momentum into 2013. We're very pleased with our strategic positioning, and extremely well-prepared for whatever may lie ahead. And with that said, I'm going to turn it over to Derek, who will walk you through the numbers, and then Scott will give you some more color on the revenues and the outlook. Derek?

Derek J. Kerr

Thanks, Doug, and good morning, everyone. As we announced in our press release early this morning, for the full year 2012, the company recorded a record net profit, excluding special items, of $537 million or $2.79 per diluted share versus a net profit, excluding special items, of $111 million for the full year in 2011. This is an increase of 384%, almost 4x.

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