US Airways Group reported its fourth quarter and 2007 results. Net loss for the fourth quarter was $79 million, or ($0.87) per share, compared to a net profit of $12 million, or $0.13 per diluted share for the same period last year. Excluding net special items of $37 million, the Company reported a net loss of $42 million, or ($0.45) per share for its fourth quarter 2007. This compares to a net profit excluding special items of $86 million, or $0.91 per diluted share for the fourth quarter of 2006, which included $74 million of net special items.

For the full year 2007, the Company reported a net profit of $427 million, or $4.52 per diluted share, which compares to a net profit before cumulative effect of change in accounting principle of $303 million, or $3.32 per diluted share for the full year 2006. Excluding net special items of $13 million, the Company reported a net profit of $440 million, or $4.65 per diluted share. This compares to a net profit excluding special items and before cumulative effect of change in accounting principle of $507 million, or $5.47 per diluted share for the same period last year, which included $204 million of net special items.
US Airways Group Chairman and CEO Doug Parker stated, "Our 2007 results represent another profitable year since our merger in 2005 and we couldn't be more proud of our 36,000 employees for their outstanding efforts. To recognize their hard work and dedication, we will celebrate these results by distributing $49 million in profit sharing to our team in early March.

"Our fourth quarter results were materially impacted by increases in fuel prices. Had our fuel price per gallon simply remained at last year's fourth quarter levels, our 2007 fourth quarter fuel expense would have been approximately $230 million lower.

"We were particularly pleased with the performance of our operation in the fourth quarter. Our team did an excellent job of taking care of our customers during the peak holiday season under difficult weather conditions. As reported by the Department of Transportation, US Airways was second among the Big Six airlines in on-time performance for the month of November and we believe our December results were even better relative to our peers.

Our employees have done a phenomenal job of restoring US Airways' operational integrity and we thank them for their outstanding work.

"As we begin 2008, our industry appears to be headed for another difficult period due to extremely high oil prices and a potentially softening economy. However, US Airways is well prepared for such an environment. We have a very strong balance sheet and from an operating standpoint, we completed the major integration milestones of obtaining a single operating certificate and completed other systems integrations in 2007. We enter 2008 with a team that is doing an excellent job of taking care of our customers and aggressively managing our expenses. We look forward to continuing that trend during the year ahead," concluded Parker.

Revenue and Cost Comparisons

Mainline passenger revenue per available seat mile (PRASM) in the fourth quarter was 10.51 cents, up 3.9 percent over the same period last year. Express PRASM was 18.49 cents, up 5.2 percent over the fourth quarter 2006. Total mainline and Express PRASM for US Airways Group was 11.83 cents, which was up 4.3 percent over the fourth quarter 2006 on a 4.4 percent decline in total available seat miles (ASMs).

Mainline cost per available seat mile (CASM) at US Airways Group was 12.04 cents, up 9.7 percent versus the same period last year on a decrease in mainline capacity of 4.6 percent versus the fourth quarter of 2006. Fuel was the largest driver of this increase as average mainline fuel price per gallon increased 32.6%. Excluding fuel, unrealized and realized gains/losses on fuel hedging instruments, and net special items, mainline CASM was 8.09 cents, up 5.8 percent from the same period last year.

Chief Financial Officer Derek Kerr stated, "The increase in CASM excluding fuel and special items was largely driven by a continued reduction in capacity and the execution of our operational improvement plan to enhance reliability. That operational improvement plan is working and we anticipate the increase in non-fuel unit costs will be smaller beginning in the second quarter and for the remainder of the year."

Liquidity

As of Dec. 31, 2007, the Company had $3.0 billion in total cash and investments, of which $2.5 billion was unrestricted.

Fourth Quarter Special Items

During its fourth quarter, the Company recognized $37 million of net special items. Expenses for the quarter included a $99 million increase to long-term disability obligations for pilots as a result of a change in the FAA mandated pilot retirement age from 60 to 65, $15 million of merger related transition expenses, a $10 million impairment loss on available for sale auction rate securities considered to be other than temporary, and $5 million related to the reduction of flying at the Pittsburgh hub.

These expenses were offset by a $59 million non-cash credit for unrealized net gains associated with the change in fair value of the Company's outstanding fuel hedge contracts, a $17 million gain recognized on the sale of stock in ARINC Incorporated, $7 million in tax credits due to an IRS rule change allowing the Company to recover tax amounts for the years 2003-2006 for certain fuel usage, a $5 million pension curtailment gain related to the FAA mandated retirement age change, and a $4 million non-cash benefit for income taxes related to the reversal of non-cash tax provision from the utilization of pre-acquisition NOL recorded through the third quarter of 2007 due to the loss recorded in the fourth quarter.