=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/07/27/f= inancial1053EDT0087.DTL --------------------------------------------------------------------- Tuesday, July 27, 2004 (AP) US Airways doubles profit in second quarter, warns of future losses STEPHANIE STOUGHTON, AP Business Writer (07-27) 07:53 PDT RICHMOND, Va. (AP) -- US Airways Group Inc. said Tuesday its second-quarter earnings more than doubled, though the company's top executive expressed disappointment at the results and predicted more losses for the second half of the year. "While we reported a small profit, we should have done significantly better in the second quarter, which is traditionally our best," Bruce R. Lakefield, president and chief executive officer, said in a statement. "Absent an immediate and dramatic reduction in costs, this nominal profit is insufficient, and we will likely be faced with additional second half losses." The Arlington-based airline on Tuesday reported net income of $34 millio= n, or 59 cents a share, in the quarter ended June 30. That compared to a profit of $13 million, or 25 cents a share, in the year-ago period, due to government aid. In the recent quarter, the company benefited from the sale of four aircraft, fuel hedging and a favorable tax audit settlement. Operating revenue increased 10 percent to $1.96 billion in the quarter from $1.78 billion in the year-earlier period. Last week, Standard & Poor's analysts wrote that the long-term viability of US Airways "remains uncertain given the company's weak financial profile, geographically concentrated route network and increasing exposure to low-cost competition." The analysts said the airline's three main hub airports -- Charlotte/Douglas International, Philadelphia International and Pittsburgh International -- are particularly vulnerable because of the amount of US Airways' connecting traffic through those airports. In the first six months of the year, the company lost $143 million compared to a gain of $1.65 billion in the first half of 2003 that was largely associated to reorganization gains from the company's emergence from Chapter 11 bankruptcy protection in March of 2003. Per-share information was not available for that period. Operating revenue rose 11 percent to $3.66 billion in the first half from $3.31 billion in the year-ago period. Passenger revenue per available seat mile in the second quarter rose 3.8 percent to 11.34 cents systemwide. US Airways wants to cut costs by $1.5 billion a year, of which $800 million would come from labor groups' concessions. The company has said it wants to have new labor deals ratified by the end of September. In the spring, Chief Executive David Siegel and then-Chief Financial Officer Neal S. Cohen stepped down after cost-cutting initiatives led to friction with union leaders. On Tuesday, Lakefield said the quarterly results "reaffirm what we have told our labor leaders -- that we must change course now." "I am pleased that we are at various stages of 'at the negotiating table' with most of our unions, but I remain concerned that some labor leaders believe these are typical negotiations that can drag out and lead to a series of insufficient compromises," he said. US Airways' financial status is reviewed quarterly by the Air Transportation Stabilization Board, which provided the airline a loan of $900 million. In March, the loan was renegotiated to give US Airways more time to improve its finances, but the airline could be found in default by the end of September if it doesn't meet certain goals. In morning trading, shares of US Airways rose 14 cents, or 6 percent, to $2.52 on the Nasdaq Stock Market. ---------------------------------------------------------------------- Copyright 2004 AP