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    US Airways 4Q income falls as fuel crimps demand

    By BY SAMANTHA BOMKAMP | Associated Press – Wed, Jan 25, 2012

    NEW YORK (AP) — Higher fares and more passengers at the end of the year couldn't offset soaring fuel prices at US Airways Group Inc.

    The big fuel bill lowered the carrier's net income by 35 percent in the final three months of 2011. The results still beat Wall Street's expectations and US Airways stock rose nearly 7 percent in premarket trading.

    The Tempe, Arizona, company earned $18 million, or 11 cents per share, in the fourth quarter. That compares with $28 million, or 17 cents per share, a year earlier. Excluding charges, it earned 13 cents per share.

    Revenue climbed 9 percent to $3.16 billion. The money the airline made to fly a passenger one mile in the fourth-quarter rose 10 percent to a record 15.2 cents, as it raised fares in an attempt to offset a $232 million increase in fuel costs. Ticket prices rose much faster than demand did. Traffic in the fourth quarter, which includes the critical holiday season, rose 1.7 percent. US Airways expects passenger demand to remain strong.

    Analysts surveyed by FactSet, who tend to exclude one-time gains or losses from their estimates, expected a profit of 2 cents per share on revenue of $3.15 billion.

    For all of 2011, the airline earned $71 million, or 44 cents per share, sharply lower than the $502 million, or $2.61 per share, it made in 2010. US Airways said if fuel has stayed the same as in 2010, it would have saved $1.2 billion.

    Also Wednesday, Delta Air Lines Inc. said its net income soared to $425 million in the fourth-quarter as it raised prices while reducing flying to keep costs low. Southwest Airlines Co. reported higher net income last week. It overcame a steep run-up in fuel prices by raising fares and flying fuller planes in the fourth quarter.

    Both airlines saw gains from their bets on the price of fuel. Airlines can lock in the price of fuel through elaborate contracts, called hedges. It pays off when fuel prices are climbing, protecting them from huge losses. US Airways doesn't currently hedge against the price of fuel.

     

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