US Airways Michael Plasmeier
The last 10 years have been full of turmoil for US Airways. At the start of the decause, US Airways was
focused on the business-heavy east cost. 9/11 hurt all airways, but the effect was particular bad on the
east coast where the attacks occurred, and where business travelers had other options. US Airways had
one of the highest costs in the industry until it filed for bankrupcy in 2002. In 2005, US Airways merged
with American West airways and relanched under the “LCC” stock symbol to try to brand itself as a low-
cost carrier. However, in 2008 fuel prices spiked and the recession hit business travel, further delaying
US Airways’ return to profitability.
Total System ASMs
200,000
American
150,000 Continental
Millions
Delta
100,000
Northwest
United
50,000
US Airways
- America West
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Total System ASMs
100000
80000
Milllions
60000
US Airways
40000
America West
20000
0
199519961997199819992000200120022003200420052006200720082009
Total System ASMs were largely steady leading into the decade. In the years before 2001, US Airways
built capacity, which it quickly shed after 9/11. America West was slowing expanding its operations
before the merger with US Airways. In 2007, the merger was finalized and America West’s operations
were absorbed into US Airway’s operations. However, the fuel spikes of 2008 caused US Airways to cut
capacity to near 2001 levels.
Total System RPMs
160,000
140,000 American
120,000
Continental
100,000
Millions
Delta
80,000
Northwest
60,000
United
40,000
US Airways
20,000
America West
-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Total System RPMs
70,000
60,000
50,000
Millions
40,000
US Airways
30,000
America West
20,000
10,000
-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Total System RPMs were largely steady over the decade for US Airways. Drops in ASMs in 2002 and
2008 largely did not affect the miles that passengers actually flew, leading to increased load factors on
US Airways. America West’s RPMs increased in conjunction with its ASMs before the merger. US
Airway’s aggregate load over the decade closely matched its competitors. However, US Airways lost its
industry leading yields after 9/11, which it was never able to recover. Yields eroded to industry average.
Load Factor
90.0% American
80.0% Continental
70.0% Delta
Northwest
60.0%
United
50.0%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 US Airways
Yield
20.00
American
15.00 Continental
Cents/RPM
Delta
10.00
Northwest
United
5.00
US Airways
- America West
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
System Total Operating Revenue
$14.00
$12.00
$10.00
$ Billions
$8.00
US Airways
$6.00
America West
$4.00
$2.00
$-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Despite RPMs remaining somewhat static, System Total Operating Revenue was volatile for US Airways
over the decade. The airline saw a large drop in revenue after 9/11 which never recovered. The merger
with America West complicates matters, causing a large increase in US Airway’s revenue on paper. After
the merger, revenue remained more or less static until 2009, when it took a dive as the recession hurt
business travel. System Passenger Revenue largely followed the same trends, as US Airways large
increase in its cargo business was not enough to offset the drop in passenger revenue in 2009.
Cargo Revenue
$1.200
American
$1.000
Continental
$0.800
$ Billions
Delta
$0.600
Northwest
$0.400 United
$0.200 US Airways
$- America West
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
System Operating Expenses were volatile for US Airways over the decade as fuel costs swung wildly and
US Airways was able to achieve substantial givebacks with its employees during bankruptcy proceedings
in 2002 US Airways was also able to offload its pension liabilities during the same period. US Airways’
efforts in the first half of the decade brought its costs in line with the rest of the industry. During the
decade US Airways was able to half its Labor Cost per Available Seat Mile from 6 cents to 3 cents, largely
through its merger with America West.
System Operating Expenses
$16.00
$14.00
$12.00
$10.00
$ Billions
$8.00 US Airways
America West
$6.00
$4.00
$2.00
$-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Fuel Cost Per Gallon
$3.50
$3.00
$2.50
$ Dollars
$2.00
US Airways
$1.50 America West
$1.00
$0.50
$-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Industry CASM
16.00
14.00 American
12.00 Continental
Cents/ASM
10.00 Delta
8.00
Northwest
6.00
United
4.00
2.00 US Airways
- America West
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Pension and Post Retirement Benefits
2,000
1,500
$ Millions
US Airways Group Inc I
1,000
US Airways Group Inc II
500 America West Holdings Corp
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
System Labor Costs
$4.00
$3.50
$3.00
$2.50
$2.00 US Airways
$1.50 America West
$1.00
$0.50
$-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Labor CASM
6.00
5.00
Cents/Seat Mile
4.00
3.00 US Airways
America West
2.00
1.00
-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
US Airways continues to have difficulty making a profit, with the combined company ending 2009 with a
slight profit of $118 million.
Operating Income
1,000
500
-
US Airways Group Inc I
$ Millions
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
(500) US Airways Group Inc II
America West Holdings Corp
(1,000)
(1,500)
(2,000)
All data is from the MIT Airline Data Project. Downloaded 10/2/2010