US Airways (LCC) Sees FY12 Capacity Up About 1%; Updates on Ops

US Airways (NYSE: LCC) updated on its capacity outlook for 2012 as well as several other select metrics:

• 2012 Capacity Guidance—2012 total system capacity is expected to be up approximately one percent vs. 2011. Domestic capacity is expected to be up approximately one percent and international up approximately one percent.
  
  
• Fleet - The Company expects to take delivery of 12 A321 aircraft in 2012. These 12 aircraft will be used to replace legacy Boeing 737 aircraft, including retiring the 737-300 fleet. The Company has financing commitments secured for these aircraft.
  
  
• Cash—As of December 31, 2011, the Company had $2.31 billion in total cash and investments, of which $365 million was restricted. The Company expects to end its first quarter with $2.53 billion in total cash and investments, of which approximately $350 million is restricted.
  
  
• Fuel—For the first quarter 2012, the Company anticipates paying an average of between $3.24 and $3.29 per gallon of mainline jet fuel (including taxes). Forecasted volume and fuel prices are provided in the table below.
  
  
• Profit Sharing / CASM—Profit sharing equals approximately 10% of pre-tax earnings excluding special items up to a 10% pre-tax margin and 15% above the 10% margin. Profit sharing is excluded in the CASM guidance given below.
  
  
• Cargo / Other Revenue—Cargo revenue, ticket change fees, excess / overweight baggage fees, first and second bag fees, contract services, simulator rental, airport clubs, and inflight service revenues.
  
  
• Taxes / NOL—As of December 31, 2011, net operating losses (NOL) available for use by the Company is approximately $1.9 billion, all of which is expected to be available for use in 2012. The Company’s net deferred tax asset, which includes the NOL, is subject to a full valuation allowance. As of December 31, 2011, the valuation allowances associated with federal and state NOL approximate $347 million and $61 million, respectively. In accordance with generally accepted accounting principles, future utilization of the NOL will result in a corresponding decrease in the valuation allowance and offset the Company’s tax provision dollar for dollar. As a result, income tax benefits are not currently recognized in the Company’s statement of operations.
  
  To the extent profitable, the Company will use NOL to reduce its federal and state taxable income in 2012. The Company also may be subject to AMT liability and obligated to record and pay state income tax related to certain states where NOL may be limited or not available to be used, if profitable in 2012.
  
  
• Slot Transaction Special Item—In December 2011, the Company closed its agreement with Delta Air Lines, Inc. (“Delta”) to transfer certain takeoff and landing rights at New York’s LaGuardia and Washington D.C.’s Reagan National airports. Under the agreement, Delta received 132 slot pairs at LaGuardia from US Airways and US Airways received from Delta 42 slot pairs at Reagan National. In addition the Company received the rights to operate additional daily service to Sao Paulo, Brazil in 2015 and a cash payment of $66.5 million. To allow other airlines who purchased divested slots from Delta to establish competitive service, the DOT prohibited US Airways and Delta from operating any of the newly acquired slots until March 2012 and from operating more than 50 percent of the total number of slots between March and July 2012.
  
  The transaction resulted in a $147 million gain which the Company fully deferred as of December 31, 2011 due to the DOT operating restrictions. As these restrictions lapse, the Company expects to recognize approximately $73 million of gain in the first quarter of 2012 and $74 million in the third quarter of 2012, both of which will be classified as special items/credits.

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