Earnings Preview: US Airways

OVERVIEW: It has become a fight for survival within the airline industry. Fuel prices continue to soar, wiping out profits and forcing airlines to aggressively cut costs and flights. Carriers hope to raise fares, though they have a long way to go to cope with fuel costs. US Airways, for example, says an average roundtrip flight now costs about $299 worth of fuel per passenger.

Meanwhile, airlines are losing billions. On Wednesday, Atlanta-based Delta Air Lines Inc. reported a $1.04 billion loss for the quarter and Fort Worth, Texas-based AMR Corp., the parent of American, posted a $1.45 billion loss for the same period. Continental Airlines swung to a $3 million loss.

BY THE NUMBERS: Analysts, on average, expect US Airways to lose $1.21 per share during the second quarter on revenue of $3.27 billion, according to a survey by Thomson Financial.

ANALYST TAKE: Calyon Securities analyst Ray Neidl lowered his loss estimate to $1.12 per share from $1.00 per share for US Airways earlier this month after the carrier posted unit revenues that were lower than expected.

Last week, US Airways said fuel costs have forced it to write off $622 million in goodwill. It also will book an $18 million charge to reflect the declining value of spare parts for its Boeing 737 aircraft.

WHAT'S AHEAD: US Airways passengers can expect fewer flight options, higher fares and more fees. The airline announced during the quarter that it would trim 1,700 jobs and cut seating capacity on domestic flights 6 percent to 8 percent in the fourth quarter, and another 7 percent to 9 percent in 2009. US Airways also created a menu of new charges and fees. Passengers will be asked to pay for sodas, and they will be charged $15 to stow one bag for tickets booked since July 9. US Airways also plans to get rid of a number of in-flight movie systems on domestic flights to save on fuel and other costs.

STOCK PERFORMANCE: US Airways shares were on a steady decline during the quarter as fuel prices rose, falling from $9.20 a share at the start of the quarter to around $2.70 on Thursday.