US Airways reports gains in 2nd quarter

Steve Marcus / file photo

A US Airways passenger jet takes off from McCarran International Airport.

By Richard N. Velotta (contact)

Thursday, July 23, 2009 | 7:12 a.m.

+ By passenger volume, US Airways is the No. 2 carrier at McCarran International Airport.

+ The airline today announced a partnership with Gogo Inflight Internet to provide Wi-Fi access on 50 of its A321 aircraft and will roll out the program early next year.

- The airline has initiated a program announced last quarter for passengers to prepay baggage fees of $15 for the first bag and $25 for the second online 24 hours in advance of a flight with an additional $5 charged at the airport.

+ The company reported ancillary revenue of more than $100 million for the quarter.

+ “At US Airways, we took aggressive action to address this weakening demand by reducing capacity, introducing additional a la carte revenue streams and prudently controlling costs. These steps are having a positive impact as evidenced by our $334 million year-over-year improvement in earnings excluding special items and fuel hedging transactions.” – CEO Doug Parker

- July 22 stock price: $2.05 (52-week high: $11.24)

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US Airways, the second-busiest air carrier at McCarran International Airport, said it was profitable in second-quarter earnings reported today.

But the Tempe, Ariz.-based carrier based those results on gains from one-time fuel-hedging contracts that resulted in a profit of $58 million, 42 cents a share, for the quarter that ended June 30.

Excluding the special item, the airline showed a loss of $95 million, 77 cents a share, on revenue of $2.66 billion. In the same quarter a year earlier, the airline had a loss of $102 million, $1.12 a share, on revenue of $3.26 billion – an 18.4 percent revenue decline.

Analysts had expected a loss of 84 cents a share.

US Airways has aggressively cut capacity in a bid to be profitable, including slicing nearly half of its flights to and from McCarran from its peak of operations about a year ago. The airline closed its night hub operation at McCarran last summer and more than 60 jobs were eliminated. More recently, the airline announced plans to close its US Airways Club lounge in Las Vegas in September.

US Airways also has been aggressive in generating ancillary revenue and initiated a move announced last quarter to charge $5 more per bag checked at the airport. Passengers checking in 24 hours in advance of a flight will continue to be able to pay fees of $15 for a first bag and $25 for a second on the company’s Web site.

The company said it collected $100 million in ancillary revenue in the second quarter. The airline expanded its Buy on Board snack sales to all flights of more than an hour except on its US Airways Shuttle flights on the East Coast.

While capacity cutting is a major focus, US Airways has continued to slowly develop its international routes from its East Coast hubs. The company inaugurated new service to Birmingham, England; Oslo, Norway; and Tel Aviv, Israel, from its Philadelphia hub and it reinstituted nonstop flights from Charlotte, N.C. to Paris.

The airline also looks to expand its reach into the Middle East with a new code-share agreement with Qatar Airlines.

US Airways also announced today that it has signed an agreement with Aircell’s Gogo Inflight Internet to provide Wi-Fi access on 50 of its A321 twin-engine jet aircraft. The plan to put Internet access on some flights is expected to be rolled out early next year with additional details to be announced prior to the launch.

US Airways is expected to adopt Gogo’s existing pricing plan used on other carriers of the cost based on the duration of the flight and the type of equipment used to access with the company currently charging between $5.95 and $12.95 for the service.