Original Source: FD (FAIR DISCLOSURE) WIRE
. Tim Hoeksema, Midwest Air Group, Chairman, President & CEO . Scott Dickson, Midwest Air Group, SVP, Chief Marketing Officer . Curt Sawyer, Midwest Air Group, SVP, CFO
The Co. reported that it increased its 2Q05 operating revenue 23% to $131.6m. 2Q05 results were negatively impacted by $16m or 65% increase in fuel expenses, of which $11.7m or $0.67 per share was related to price increases. Q&A Focus: Capacity growth, equity, and cash flow.
A. Key Data From Call 1. 2Q05 net results dropped to an $8.2m loss.
2. 2Q05 operating results fell to $8.2m loss. 3. 2Q05 per-share results dropped to a $0.47 loss. 4. 2Q05 total OpEx increased 27%, or 16% excluding fuel.
S1. 2Q05 Overview (T.H.) 1. Progress Report: 1. MEH has been working very hard to both cut its costs and generate increased revenue. 2. On the cost side, MEH has aggressively pursued every
opportunity to reduce its cost. 3. In mid-2003, the Co. completed the first phase of its cost-cutting efforts through a complete restructuring of the Co.'s business as it successfully averted a Chapter 11 filing. 1. Following that, MEH began a second phase of cost cutting that involved examining all aspects of the Co.'s operation to identify more efficient methods of running its business. 2. The second phase of the Co.'s cost control efforts is ongoing. 3. As a result of the Co.'s probative efforts to cut costs, MEH has made improvements in its unit costs moving from being one of the highest cost carriers in the industry to one of
the lowest. 4. In 2001, MEH's cost per available seat mile (CASM) excluding fuel was $0.105. 5. At the end of 1H05, CASM, ex fuel, was $0.076, a 28% improvement. 6. MEH now compares very favorably to the lowest cost carriers in the country. 4. On the revenue side, MEH's total revenue strategy continues to
prove itself. 1. The Co. implemented this strategy at the end of last year with the goal of increasing revenue through competitive
pricing and increasing passenger loads. 5. In terms of pricing, MEH has transitioned to a more price-sensitive, market-sensitive strategy. 6. To increase ridership, MEH has grown its fleet through the acquisition of new Boeing 717 aircraft, significantly
increased utilization of the existing aircraft, and enhanced
by the Co.'s service and schedule to focus more on networks
and connecting traffic. 1. As a result, MEH posted record highs in operating revenue, passenger traffic, and load factors in 2Q05, while adding significantly to the Co.'s capacity. 7. Increases in revenue per available seat mile (ASM) for 1H05 are among the highest in the industry. 8. Achieved considerable gains in market share in Milwaukee and Kansas City during 2Q05. 9. The Co.'s cash position is stronger than at almost any time in
MEH's history. 10. Two-thirds of the Midwest Airlines' fleet is configured for Signature Service with 2/2 wide leather seating, and all of the Co.'s aircraft feature extra legroom throughout the cabin, offering passengers a value-added travel experience at extremely competitive prices. 11. Earlier in July, MEH was recognized as the world's Best Domestic Airline by Travel+Leisure Magazine, in honor that the Co. has received a seven out of the last ten years. 12. Despite all of the accomplishments, the disappointing fact is that MEH lost $8m in 2Q05. 2. 2Q05 Financial Results: 1. Increased operating revenue 23% to $131.6m. 2. Operating results fell to $8.2m loss from $2.9m loss. 3. Net results dropped to an $8.2m loss from $3.5m loss. 4. Per-share results dropped to a $0.47 loss from $0.20 loss. 5. The increase in revenue reflects 31% increase in passenger traffic due to strong customer demand and response to the Co.'s strategic pricing actions and schedule and service enhancements. 6. The increase in traffic was partially offset by 4% decrease in revenue yield. 7. Total OpEx increased 27%, or 16% excluding fuel. 8. Results were negatively impacted by $16m or 65% increase in fuel expenses, of which $11.7m or $0.67 per share was related to price increases.
9. The Co. also recorded $2.2m, $0.13 per share accrual for
engine overhaul expenses in excess of its …