Things in the Sky

US Airways put out an investor update with some interesting bits of information. Here’s what I thought were the highlights:

US Airways ended the first quarter with $2.1 billion in cash, with $0.7 billion restricted. It expects the ending cash balance for the second quarter will be $2.25 billion with $0.58 restricted. One major source of cash this quarter was the offering of stock and bonds, which brought in $234 million. So, I think it’s great that the company has more cash, but it seems to me that without that offering, the airline would have seen a decrease in cash, which isn’t too great (correct me if I’m interpreting those numbers wrong).

The next issue was hedging, and by the way I’m reading it, US Airway’s hedging activities from last year are still hurting the company:

The weighted average collar range of the hedges in place is between $3.52 and $3.72 per gallon of heating oil, or between $142 and $151 per barrel of crude oil.

The report later says that hedges resulted in a lost of $0.49/gallon for the second quarter, though this is better than the $0.76/gallon impact in the first quarter. The impact will continue to improve in the third quarter at $0.18/gallon. It looks like it will be unhedged in the fourth quarter, as there is no percentage given that shows how hedged the airline is, and the filing also tells us that “the Company’s restricted cash balance is approximately $45 million of fuel hedge collateral, which will be reduced to approximately zero by the end of the third quarter.” Also of note: “The Company has not entered into any new hedge contracts since the third quarter, 2008.”

In terms of revenue, US Airways expects to earn over $400 million in revenue from its a la carte initiatives. The company also reported that one reason revenues are lower than previously expected is the “reinstatement of complimentary inflight beverages.”

There was an update on the fleet side as well. The company ended 2008 with 354 aircraft and expects to end the year with 351. That number is the result of returns of A320s, 737-300s, and 757s, and deliveries of A320s, A321s, and A330s. Speaking of the A330s, there was this interesting tidbit:

The Company has five A330-200 aircraft deliveries scheduled for 2009 and has taken delivery of 2 aircraft with financing obtained through the manufacturer. The remaining three aircraft do not have backstop financing; however, we are currently evaluating financing alternatives and expect to obtain financing for these aircraft at customary advance rates and on terms and conditions acceptable to the Company. If we are not able to arrange financing on those terms, the Company expects it would seek to negotiate deferrals of deliveries with the manufacturer or financing at lower than customary advance rates, or, if required, use cash from operations or other sources to purchase the aircraft.

The final thing I found important was CASM. According to this filing, the second quarter 2008 mainline CASM was 15.49 cents, and the airline is estimating 11.45-11.69 cents for this quarter, which is a 24.5-26.1% decline. But, if wee look at mainline CASM ex-fuel, special items, and profit sharing, the airline is expecting a 0-2% increase from last quarter (the number is estimated to be between 8.32 and 8.49 cents). So, it’s good that costs are down, but it appears the fast majority of those savings have come from declines in fuel prices. We’re not at the prices we saw this time last year, but that still concerns me a bit.