US Airways posts 3Q loss of $865m; inks new financing deal

Philadelphia
Source:
This story is sourced from Pro
See more Pro news »

A "crippling fuel price environment" is being cited US Airways as the driver behind its third quarter net loss of $865 million.

The Star Alliance member says its third quarter earnings include special charges of $623 million of which $488 million constituted a non-cash loss on fuel hedges.

Although US Airways' revenue climbed by 7.4% to $3.3 billion, it saw expenses rise by 39.4% to nearly $4 billion. The average mainline fuel price per gallon - excluding realized gains/losses on fuel hedging instruments - increased 68% year-over-year, notes US Airways.

With expenses far outstripping revenue, the carrier incurred a third quarter operating loss of $689 million compared to the $202 million operating profit recorded in the year-earlier period.

As of 30 September, the airline had $2.3 billion in total cash and investments, of which $0.7 billion was restricted.

"Fortunately, oil prices have recently fallen to levels well below those experienced in the third quarter, but at the same time concerns have increased about the impact the global economic crisis may place on demand for air travel," says US Airways chairman and CEO Doug Parker.

He believes, however, that US Airways is well positioned to manage through turbulent times.

Earlier today, the company announced it has raised $950 million in new financing and near-term liquidity commitments, a portion of which is being used to prepay debt and increase the carrier's cash.

This indicates that investors and business partners are confident in US Airways, says Parker.

He adds: "While it is difficult to make projections in such volatile times, based on what we know today which includes the current price of fuel, we expect 2009 will be a much better year than 2008 for both US Airways and our industry."