US Airways Reports Fourth Quarter and Full Year Profit

[Pi brat]

You lost me. US did not hedge and spent 10.47 cents more per gallon than AA (which did hedge) in the first three quarters of 2011. That extra dime plus per gallon meant that US paid $114 million more than AA's hedged price. When US employees get their profit sharing checks, keep in mind that the 2011 profits were harmed by DP's poor fuel price management.

In every year since the merger, AA's hedged fuel price was lower than US except for 2010. That's DP's only year when the combined US paid less for fuel than AA. Wonder what DP's record will be if he manages to take over AA? Will AA go unhedged or will AA adopt DP's poor hedging record? Neither option is as favorable as AA's results with its hedging program.

I guess I had bad/incomplete numbers because I thought they came in a little less. Are those numbers in one place, or did you get them from the individual airline reports?

 

[FWAAA]

I guess I had bad/incomplete numbers because I thought they came in a little less. Are those numbers in one place, or did you get them from the individual airline reports?

I pulled the numbers from the individual airlines' financials, net of hedging gains or losses - so they represent the price paid:

2006 ...US paid 8.1 cents/gal more than AA
2007....US paid 2.9 cents/gal more than AA
2008....US paid 1.4 cents/gal more than AA
2009....US paid 9.3 cents/gal more than AA
2010....US paid 7.0 cents/gal Less than AA
2011....US paid 10.47 cents/gal more than AA (first nine months)

I put this together to counter someone who was posting about the management brilliance of Parker and Kirby and how they would finally bring competent management to AMR if US took over AA. US stopped hedging fuel because of the dismal performance - I posted that the translation was "We're not very good at it" which set in motion a rant about how fuel prices didn't reflect reality and that speculators and others distorted the market. My response: Don't care why fuel costs what it does - the post-merger history of US is that it has spent several hundred million dollars more on fuel than it would have at AA's prices. Since the merger happened in 2005, I didn't look at those numbers, nor did I bother going back to 2001 when Parker took over US.

2010 was the first year without any hedging residue (US stopped acquiring new hedges in 2008 but 2009's results included some hedging losses) and that year was Parker's one post-merger year where US beat AA on fuel prices. AA won't report its 4th quarter results for a while, so the 2011 comparison is for the first three quarters.

 

[diamondcutter]

I pulled the numbers from the individual airlines' financials, net of hedging gains or losses - so they represent the price paid:

2006 ...US paid 8.1 cents/gal more than AA
2007....US paid 2.9 cents/gal more than AA
2008....US paid 1.4 cents/gal more than AA
2009....US paid 9.3 cents/gal more than AA
2010....US paid 7.0 cents/gal Less than AA
2011....US paid 10.47 cents/gal more than AA (first nine months)

I put this together to counter someone who was posting about the management brilliance of Parker and Kirby and how they would finally bring competent management to AMR if US took over AA. US stopped hedging fuel because of the dismal performance - I posted that the translation was "We're not very good at it" which set in motion a rant about how fuel prices didn't reflect reality and that speculators and others distorted the market. My response: Don't care why fuel costs what it does - the post-merger history of US is that it has spent several hundred million dollars more on fuel than it would have at AA's prices. Since the merger happened in 2005, I didn't look at those numbers, nor did I bother going back to 2001 when Parker took over US.

2010 was the first year without any hedging residue (US stopped acquiring new hedges in 2008 but 2009's results included some hedging losses) and that year was Parker's one post-merger year where US beat AA on fuel prices. AA won't report its 4th quarter results for a while, so the 2011 comparison is for the first three quarters.

US made a profit for a full year and is not in BK ....but who knows down the road what will happen...let the speculation begin .


I wish only the best to all AA employees during these trying times!!!

 

[FWAAA]

US made a profit for a full year and is not in BK ....but who knows down the road what will happen...let the speculation begin .

True, but the US profit would have been substantially larger if US could manage its fuel costs as effectively as did AA. That's the entire point. No more, no less.

And let's be serious. If the US pilots weren't the leaders in cutting off their noses to spite their faces, their pay raise alone would more than wipe out the US profits. I saw an estimate a few weeks ago that AA would have spent $2.2 billion less on labor costs last year if it enjoyed US labor costs. $2.2 billion a year? That would be enough to make AA highly profitable.

 

[diamondcutter]

True, but the US profit would have been substantially larger if US could manage its fuel costs as effectively as did AA. That's the entire point. No more, no less.

And let's be serious. If the US pilots weren't the leaders in cutting off their noses to spite their faces, their pay raise alone would more than wipe out the US profits. I saw an estimate a few weeks ago that AA would have spent $2.2 billion less on labor costs last year if it enjoyed US labor costs. $2.2 billion a year? That would be enough to make AA highly profitable.

Well then I guess all the hard working employees need to take a big paycut . Then airline management can make even more poor choices and still pull in a high paycheck . By no means am I bashing AA . The way I look at it is we are all in this mess together. Every airline that made profits could have been higher for a number of reasons ...just sayin. By the way all US employees should be proud of their efforts and the progress THEY have made on the DOT stats in the last few years.

 

[700UW]

True, but the US profit would have been substantially larger if US could manage its fuel costs as effectively as did AA. That's the entire point. No more, no less.

And let's be serious. If the US pilots weren't the leaders in cutting off their noses to spite their faces, their pay raise alone would more than wipe out the US profits. I saw an estimate a few weeks ago that AA would have spent $2.2 billion less on labor costs last year if it enjoyed US labor costs. $2.2 billion a year? That would be enough to make AA highly profitable.

And your numbers are fuzzy math, AA is quite larger than US in terms of employees, so your numbers about them saving $2.2 billion is distorted, as your not comparing apples to apples, your comparing apples to oranges.

 

[FWAAA]

Well then I guess all the hard working employees need to take a big paycut . Then airline management can make even more poor choices and still pull in a high paycheck . By no means am I bashing AA . The way I look at it is we are all in this mess together. Every airline that made profits could have been higher for a number of reasons ...just sayin. By the way all US employees should be proud of their efforts and the progress THEY have made on the DOT stats in the last few years.

I expect AA employees will suffer as AA reduces its labor expenses just like every other airline that went thru Ch 11 during the past decade. Dunno if AA will bring its labor costs down far enough to match the US labor costs. Some of the reduction will be via work rule changes that increase efficiency and reduce employee headcount and some will probably come from paycuts by some workgroups. Some of the savings will probably come from changes to the AA pensions.

 

[USA320Pilot]

US Airways Group's CEO Discusses Q4 2011 Results - Earnings Call Transcript: January 25, 2012

* During the quarter, we completed the slot transaction with Delta Air Lines, whereby, we received certain slots at Reagan National Airport, the right to provide new service to Brazil and a cash payment of $66.5 million in return for certain slots at New York's LaGuardia Airport. Under the provisions of our Citi term loan, net cash was restricted from use by the company for 1 year unless we pay down the term loan or replaced the cash with eligible collateral. Subsequent to closing, the company was able to post unencumbered collateral in the Citi loan which allowed the majority of the $66.5 million in cash to become unrestricted.

* During the quarter, we also exercised our call right to repurchase 113 slots from Republic for $47 million. These slots have been pledged as collateral for $44 million borrowed from Republic period during the company's bankruptcy in 2005. These slots were already being operated by the company and are now free and clear.

Click here to read the transcript.

 

[BoeingBoy]

Wonder if the slots became the collateral for the Citi loan....US wouldn't want to have any assets that were owned free and clear....

Jim

 

[USA320Pilot]

delete

 

[SparrowHawk]

True, but the US profit would have been substantially larger if US could manage its fuel costs as effectively as did AA. That's the entire point. No more, no less.

And let's be serious. If the US pilots weren't the leaders in cutting off their noses to spite their faces, their pay raise alone would more than wipe out the US profits. I saw an estimate a few weeks ago that AA would have spent $2.2 billion less on labor costs last year if it enjoyed US labor costs. $2.2 billion a year? That would be enough to make AA highly profitable.

Not to mention the nearly half billion in "Ancillary Revenue" such as bag fees.

Frankly, given the relative health of the Industry, I thought US's performance was dismal.

Spirit, an airline less than a tenth of their size will likely make more money in net dollar terms. They are pretty close after 3 quarters to equaling US. So unless NK stinks out the joint, Spirit, (Made up of US East Execs will outperform the vaunted Sand Genius and he merry band of Frat Buddies.

 

[700UW]

You cant compare Spirit to US, totally two different airline concepts.

 

[diamondcutter]

Not to mention the nearly half billion in "Ancillary Revenue" such as bag fees.

Frankly, given the relative health of the Industry, I thought US's performance was dismal.

Spirit, an airline less than a tenth of their size will likely make more money in net dollar terms. They are pretty close after 3 quarters to equaling US. So unless NK stinks out the joint, Spirit, (Made up of US East Execs will outperform the vaunted Sand Genius and he merry band of Frat Buddies.

your spirit charges many many fees along with all the airlines, with the exemption of SW. A comparison makes no sense . I'm proud of all the hard working employees of US . A profit for a full year along with higher fuel cost. kudos to the workers for rising up the ranks on the on the DOT stats. Now go ahead and start your bashing.

 

[SparrowHawk]

your spirit charges many many fees along with all the airlines, with the exemption of SW. A comparison makes no sense . I'm proud of all the hard working employees of US . A profit for a full year along with higher fuel cost. kudos to the workers for rising up the ranks on the on the DOT stats. Now go ahead and start your bashing.

The key difference with Spirit's non stop fee mongering and that of US Airways is really rather simple. One (NK) freely & openly admits they're going to charge you a fee come Hell or High Water. The other (US) ducks, dodges and deflects the issue with "The Dog Ate My Homework" type excuses worthy of a sixth grader.

Regardless of business model an airline's bottom line performance is all that matters to Wall Street. NK & US, or any publicly traded company is judged by who made the most in net dollar terms and per share terms. Everything else is window dressing.

No one (Well, not me) questions the work ethic or professionalism of US Airways front line staff. You should be proud that the doors are still open and the company is making money, even if a lot of it is smoke and mirrors. However, the everyday worker who draws a paycheck can only perform as well as those who manage them. Therein lies the problem.