US Airways reports 2Q net profit

And now a bit of good news for an airline in a year battered by falling passenger travel and steep fare discounts.

US Airways yesterday reported a net profit of $58 million, or 42 cents a share, for the second quarter despite an 18.4 percent decline in revenue.

Philadelphia's largest airline said that, excluding special items and the impact of fuel hedging, it would have lost $95 million, or 77 cents a share.

Analysts were expecting a wider loss of 84 cents, excluding items. In the same quarter a year ago, the Tempe, Ariz., carrier reported a $568 million loss, or $6.17 share.

This compared with a net loss, excluding onetime items, of $102 million, or $1.12 a share, in the quarter a year ago.

From its operations, US Airways posted a loss of $122 million in the three months ended June 30.

The airline, which transports two-thirds of passengers at Philadelphia International Airport, attributed the financial results to lower jet-fuel prices and "aggressive actions," including "a la carte" fees for things like checked bags and booking changes, which generated more than $100 million in the latest quarter.

US Airways also cut capacity - seats and flights - by 6 percent in the quarter, causing costs to fall more than 2 percent.

The company said it raised $234 million by selling common stock and debt securities. It also secured $700 million in aircraft-financing commitments since March 31.

"While the net profit may have surprised some today," the carrier said in an employee newsletter, "we (along with the rest of the industry) aren't out of the woods yet. The persisting global economic recession drove our revenues down by more than 18 percent in the second quarter versus last year."

Chairman and chief executive Doug Parker said, "We took aggressive action to address this weakening demand by reducing capacity, introducing additional a la carte revenue streams, and prudently controlling costs."

The second half of 2009 "continues to be difficult to forecast," Parker said. "We have seen an encouraging, though modest, improvement in revenues over the past several weeks, but we are not counting on a quick recovery. Instead, we're prepared for a continued difficult environment."

"To that end, we've continued to build up our cash," Parker said.

Total cash at US Airways as of June 30 was $2.3 billion, of which $600 million was restricted. This compared with a first-quarter cash balance of $2.1 billion, of which about $700 million was restricted.

"Post-Memorial Day, we've seen real strength in bookings, while the pricing environment remains weak," president Scott Kirby told investors on a conference call. "We think we see anecdotal evidence that business is improving, or, stating it more accurately, at least it's not as bad as it was."

He said the airline has seen an "uptick" in traffic on its business-oriented East Coast shuttle.

"The fact we've seen some improvement in business demand and a slightly improved pricing environment leads us to think that the late August and September periods will continue to perform better than May and June," Kirby said. "But to be clear, that's only an opinion, and we don't yet have actual evidence."

Parker told investors the company was "studying the economic effects" of selling its 25 Embraer E190 regional jets to further cut capacity.

In a client note, Merrill Lynch analyst Michael Linenberg said it was worth highlighting "that if special items and net realized losses/gains on fuel hedging transactions were excluded, US Airways would have reported a net profit of $40 million - a good indication, in our view, of the underlying strength of the core franchise."

JetBlue Airways Corp. also posted a second-quarter profit yesterday. The New York-based airline said it earned $20 million, or 7 cents a share, compared with a loss of $9 million, or 4 cents a share, in the year-earlier period. JetBlue does not fly out of Philadelphia.

US Airways shares closed up 25 cents, or 12.2 percent, to $2.30. JetBlue closed up 14 cents, or 2.9 percent, to $4.92.

Separately, US Airways announced that early next year in-flight Internet WiFi service will be available on its fleet of 50 A321 aircraft.