US Airways Group, Inc.

Transcription

1 US Airways Group, Inc. Bear Stearns 2006 Global Transportation Conference New York May 10, 2006

2 Forward-Looking Statements Certain of the statements contained herein should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These forward looking statements may be identified by words such as may, will, expect, intend, anticipate, believe, estimate, plan, could, should, and continue and similar terms used in connection with statements regarding the outlook of US Airways Group, Inc. (the Company), expected fuel costs, the revenue and pricing environment, and expected financial performance. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving America West Holdings and US Airways Group, including future financial and operating results, the combined companies plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the Company s management and are subject to significant risks and uncertainties that could cause the Company s actual results and financial position to differ materially from these statements. Such risks and uncertainties include, but are not limited to, the following: the ability of the Company to obtain and maintain any necessary financing for operations and other purposes (including compliance with financial covenants); the ability of the Company to maintain adequate liquidity; the impact of changes in fuel prices; the impact of economic conditions; changes in prevailing interest rates; the ability to attract and retain qualified personnel; the ability of the Company to attract and retain customers; the ability of the Company to obtain and maintain commercially reasonable terms with vendors and service providers; the cyclical nature of the airline industry; competitive practices in the industry, including significant fare restructuring activities by major airlines; labor costs; security-related and insurance costs; weather conditions; government legislation and regulation; relations with unionized employees generally and the impact and outcome of the labor negotiations; the impact of global instability including the potential impact of current and future hostilities, terrorist attacks, infectious disease outbreaks or other global events; the impact of the resolution of remaining claims in US Airways Group s Chapter 11 proceedings; the ability of the Company to fund and execute its business plan following the Chapter 11 proceedings and the merger; and other risks and uncertainties listed from time to time in the companies reports to the SEC. There may be other factors not identified above of which the Company is not currently aware that may affect matters discussed in the forward-looking statements, and may also cause actual results to differ materially from those discussed. The Company assumes no obligation to publicly update any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law. Additional factors that may affect the future results of the Company are set forth in the section entitled Risk Factors in the Company s Form 10-Q, for the quarter ended March 31, 2006 and in the filings of the Company with the SEC, which are available at and

3 Nationwide Route Network PWM OAJ MGW LEB AOO ISP RKD ABE ALB AVL AVP BTV BUF CAE CHA CHS CLT CMH CRW ELM ERI FAY GSO GSP HPN ILM ITH LGA LWB MDT MHT ORF PVD RIC ROA ROC SYR TRI TYS OGS MSS HVN ERI ACK MVY ART BFD FKL JHW LBE DUJ JST PQI HYA AUG BHB PHF SBY CHO CVG SHD HGR HTS LYH CKB LNS FLO EWN PGV AHN AGS BLF BKW HHH SWF BGM IPT SCE GCK DDC HYS GBD MHK ALB BUF CAE CHS CMH LGA MDT ORF PVD YYZ SLN SAV TLH CAK CMH DAY YUL CAK CHA DAY HSV TYS YUL CAK YOW LIT SCE BGR JAN GNV MGM MOB SDF XNA GRR JAX LEX PNS EYW LAS GCM BHM STT SXM NAS SDQ BDA BNA JAX MBJ MSY RSW SJU SRQ AUA FPO BGI CZM BZE PLS PUJ SJO SAL GUA PTY KIN LGW FCO MAN CDG FRA MAD MUC AMS GLA YYC YVR SNA PSP YUM OGG SJD PVR SAN LIH MZT SJC HNL SFO HII HMO GYM GDL AUS BOI MEX CUN ORD ATL BDL BOS BWI CLE CMH DCA DEN DFW DTW EWR FLL IAD IAH IND LAS LAX MCI MCO MEM MIA MKE MSP PBI PHL PHX PIT RDU SEA TPA STL ABQ ANC ASE BFL BIL BUR CLD COS DRO DSM ELP EUG FAT FCA FLG FMN GEG GJT ICT IGM PRC JFK RNO SBA SBP SLC SMF TUS LGB MFR MRY OAK OMA ONT PDX SAT KOA TEX YEG AWA US Airways 53 International Destinations (Europe, Mexico and Caribbean) New Service to Hawaii, Portugal, Italy, and Sweden Over 200 U.S. Cities

4 Over $600 Million of Anticipated Annual Synergies Annual Estimated Synergy Value Route Restructuring - Right-sizing total fleet - Eliminate unprofitable flying - Better gauge of aircraft - Add Hawaii service Revenue Synergies - City presence - Improved connectivity - Better asset utilization Cost Synergies - Overhead - Information technology insourced - Facilities Note: Dollars in millions. $175 $175 $250 $600

5 US Airways / America West Blurring the Lines Low-Cost, Full Service Traditional Legacy Traditional Low-Cost

6 First Quarter 2006 Results Reported profit of $65.0 million After special items, profit of $5.0 million* Fuel price constant = $183 million Encouraged by Q1 results and integration efforts to date Completed major refinancing of debt * Special Items include ($mil) : Unrealized gains on fuel hedging (net) ($26), gain on loan forgiveness ($90), merger related transition expenses $46, prepayment penalty / write-off of debt issue cost related to debt refinancing $11, cumulative effect of accounting change ($1)

7 Industry Revenue Environment Much Improved Industry RASM is improving as higher fuel prices drive capacity discipline 25.0 Industry RASM and Capacity (% Variance YOY) % vs Prior Year (5.0) (10.0) Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 RASM ASMs

8 US Revenue Picture LCC outperforming industry due largely to early merger synergies Code-share benefits Improved frequent flyer program Rationalized route network Also helping LCC Reduced East Coast capacity LCC fare restructuring No bankruptcy hangover

9 Improved Balance Sheet Raised $1.25 billion to refinance $1.1 billion in existing debt ($ millions) Previous Debt Payments Restructured Debt Payments ,250 Change (1,250) Cumulative Effect of Restructuring ,071 (179) Also converted 7.5% convertible notes totaling $112.3 million to 3.86 million shares of common stock

10 Integration Update Operations - Number One in on-time performance for both 4Q05 and 1Q06 Cost - Cost Synergies are tracking ahead of targets - Over $200 million built into 2006 Operating Plan vs. $175 million in original merger model Labor - Transition Agreements reached with Pilots (ALPA), Flight Attendants (AFA), Customer Service Agents (CWA/IBT joint venture) - Received single carrier notification from NMB triggering elections for Mechanics (IAM/IBT), Fleet Agents (IAM/TWU) Systems - Back office systems are in process today - USAirways.com and Dividend Miles, May 2006

11 Integration Update Accomplishments to Date Customer-Facing Combined FF programs Comprehensive code-share/star Alliance Combined operations in all but seven airports Consolidated rules/processes/procedures New Barclays credit card People/Culture Labor Transition agreements signed Employee recalls began Beginning to bring reservations offshore work in house Extensive employee communication efforts Financial Synergies $350 million in revenue synergies seen in our current revenue results

12 Integration Update Next 90 Days Customer Facing Combine FF systems Single Web site usairways.com - May 2006 People/Culture Single Employee Web site Employee non-rev online booking Continue to communicate, communicate, communicate Systems Merge back office/accounting systems

13 Summary US Airways Group very well positioned for future success - Leading edge of legacy carrier transformation Very encouraged by progress to date - Outstanding employee group already improving reliability - Integration plans / synergies on track - Industry leading revenue performance Project 2006 profit (including transition costs)

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