US Airways sees improving unit costs in Q1

Washington DC
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US Airways anticipates unit costs excluding fuel to be flat to increase by 2% during the first quarter, as unit revenue growth slows as well.

The Tempe, Arizona-based carrier's guidance expects a two-percentage point improvement in consolidated cost per available seat mile (CASM) excluding fuel compared to its guidance two months ago of a 2% to 4% increase, according to an investor update today.

Improvements in passenger revenue per available seat mile (PRASM) are also down. US Airways reports that the metric was flat in March on account of the US federal government budget cuts called the sequester that went into effect on 1 March, following a 1% increase in February and a 3% increase in January.

US Airways has a focus city at Ronald Reagan Washington National airport, where it is the largest carrier.

By comparison, PRASM rose 8.2% during the first quarter of 2012 with a 10% increase that January, 7% that February and 8% that March.

US Airways anticipates that it paid an average of $3.22 to $3.27 per gallon of fuel in the quarter, which is up from guidance of $3.16 to $3.21 per gallon in January.

For the full year, capacity is expected to grow by 3.5%, which is up from an expected increase of 3% in January. The growth is attributed to upgauging to Airbus A321s from Boeing 737-400s and increased long-haul flying.

Consolidated CASM excluding fuel will be either down 1% to up 1% during the year, which is an improvement on previous guidance that said it would be flat to up 2%.

The addition of nine 79-seat Bombardier CRJ900s to replace nine 50-seat Embraer 145s in the US Airways Express fleet will result in a one-percentage point decrease in CASM excluding fuel growth in the segment, according to the airline. The metric is now expected to grow by 2% to 4% this year.