Just ahead of its second quarter reporting July 21, US Airways Group (LCC) announced a shopping spree for new aircraft and refinancing of some former leases to the tune of $524 million. US Airways intends to use the proceeds from a type of airline industry finance offering to refinance five Airbus aircraft currently owned by the airline; to finance four Airbus aircraft scheduled to be delivered in September 2011 and October 2011; and to use the balance for general purposes.
Within a week of the first announcement, the company later announced two additional offerings of $83 million and $53 million based on previous offerings that closed Dec. 21, 2010.
In a recent note to clients, J.P. Morgan said, "LCC's guidance follows similar disclosures from American Airlines (AMR), Delta Airlines (DAL), and United Continental (UAL), each of which painted a softer 2Q picture than originally expected. As for the demand picture, a clear trajectory is not yet evident. May demand was firmer than one would have expected, June softer, and certain carriers are suggesting a pickup in July trends.”
J.P. Morgan went on to say its analysts “would be surprised” if shares came under renewed pressure, considering the declines already baked in.
“Recall the supply picture should incrementally improve post-Labor Day as capacity cuts announced earlier this year finally manifest and help to mitigate any revenue softness that may potentially emerge,” bank analysts told investors.
US Airways reported second quarter earnings excluding special items of $106 million in net profit, or 56 cents per diluted share. That was down in comparison to the year before, which was a reported $265 million, or $1.34 per diluted share.
On a GAAP basis, net profit was $92 billion (49 cents per share) vs. $279 million ($1.41 per share). Higher fuel cost was to blame, management said.
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