Maintenance hits US Airways' bottom line
DALLAS (Bloomberg) US Airways Group Inc. said its second-quarter profit fell 14 percent as it spent more for maintenance and improving customer service.
Net income declined to $263 million, or $2.77 a share, from $305 million, or $3.25, a year earlier, the Tempe, Arizona-based airline said in a statement yesterday. Sales slid 0.5 percent to $3.16 billion.
US Airways is installing 600 self-service kiosks at airports and has hired more than 1,000 workers to avoid a recurrence of the snarled flights after storms and computer failures earlier this year. Maintenance costs rose 11 percent, the biggest expense increase in the quarter.
"This revenue performance is clearly disappointing for US Airways, and they're facing a little more cost pressure," said William Warlick, a Chicago-based credit analyst with Fitch Inc.
Excluding a $2 million benefit from fuel hedging, US Airways' profit was $261 million, or $2.74 a share. On that basis, the airline was expected to earn $2.66, the average of seven analyst estimates compiled by Bloomberg. US Airways, the seventh-largest U.S. carrier by traffic, joined American Airlines parent AMR Corp., United Airlines parent UAL Corp., Delta Air Lines Inc., Continental Airlines Inc., Southwest Airlines Co. and JetBlue Airways Corp. in reporting second-quarter profits.
The airline began hiring workers and adding the kiosks after a winter storm and software glitches during a change in its reservation system in March. US Airways hasn't disclosed the cost of the changes. The airline already has added the 1,000 workers and installed 47 of the kiosks.
"Our second-quarter operational reliability has improved versus the first quarter and has continued to improve into the third quarter," chief executive officer Doug Parker said in the statement.
Costs to fly each seat a mile, a measure of efficiency, rose 2.6 percent.
US Airways said in April it would fly its planes less each day and return seven aircraft as they came off leases this year to hold capacity little changed from 2006.
Passenger traffic increased 0.9 percent, while yield, or average fare per mile, slipped 0.5 percent.