Daniel Cravens William Douglas Parker - Executive Chairman, Chief Executive Officer, Chairman of Labor Committee, Chairman of Us Airways and Chairman of Awa Derek J. Kerr - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Chief Financial officer of America West Airlines Inc J. Scott Kirby - President

Michael Linenberg - Deutsche Bank AG, Research Division Hunter K. Keay - Wolfe Trahan & Co. Jamie N. Baker - JP Morgan Chase & Co, Research Division Daniel McKenzie - The Buckingham Research Group Incorporated John D. Godyn - Morgan Stanley, Research Division Helane R. Becker - Dahlman Rose & Company, LLC, Research Division Kevin Crissey - UBS Investment Bank, Research Division David E. Fintzen - Barclays Capital, Research Division Glenn D. Engel - BofA Merrill Lynch, Research Division Savanthi Syth - Raymond James & Associates, Inc., Research Division Raymond Neidl - Maxim Group LLC, Research Division Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division

Good day, and welcome to the US Airways Third Quarter Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] And now I would like to turn the conference over to your moderator, Director of Investor Relations, Mr. Daniel Cravens. You may begin.

Thanks, Yvonne, and welcome, everybody, to the US Airways' Third Quarter Earnings Conference Call. Joining us on the call today are Doug Parker, our Chairman and CEO; Scott Kirby, our President; and Derek Kerr, our Chief Financial Officer. Also in the room for the Q&A session are Robert Isom, our Chief Operating Officer; Steve Johnson, our EVP of Corporate; and Elise Eberwein, our EVP of People and Communications. Like we typically do, we're going start the call with Doug and he will provide an overview of our third quarter financial results. Derek will walk us through the details on the quarter and provide some color on our updated guidance. Scott will then follow up with commentary on the revenue environment and our operational performance. And then after we hear from those comments, we'll open the call for analysts Q&A, and lastly, questions from the media. Before we begin, we must state that today's call does contain forward-looking statements, including statements concerning future revenue and fuel prices. These statements represent our predictions and expectations as to future events, but numerous risks and uncertainties could cause actual results to differ materially from those projected. Information about some of these risks and uncertainties can be found in our earnings release issued this morning, as well as our Form 10-Q that was also issued this morning, and our 2011 Form 10-K. In addition, we will be discussing certain non-GAAP financial measures this morning such as net loss and CASM, excluding unusual items -- our net profit in CASM excluding unusual items. A reconciliation of those numbers to the GAAP financial measures is included in the earnings release and that can also be found on our website at usairways.com under the Company Information, Investor Relations section. A webcast of this call is also available on our website and will be archived on our -- archived for approximately 1 month. The information we are giving you on the call is as of today's date and we undertake no obligation to update it subsequently. Thanks again for joining us, and at this point, I'd like to turn the call over to our Chairman and CEO, Doug Parker.

Thank you, Dan, and thanks, everyone, for being on. We reported record third quarter earnings today of $245 million. If you exclude the special items, it was a profit of $192 million. That's our second best third quarter in company history, excluding special items, and it's more than double last year's third quarter profit, excluding items of $95 million. Now the credit for these outstanding results goes to the 32,000 hard-working people at US Airways. They're just doing a phenomenal job of taking care of our customers. We are producing record performance in the all-important customer service area such as completion factor, on-time performance, baggage handling, et cetera. And that operating reliability drives strong customer demand for the product and it keeps our costs down, and that results in outstanding financial performance like we reported today. Looking forward, we expect a continuation of this operating performance. And based on the current forward curve for fuel prices, we now expect to report a profit for the fourth quarter of 2012. So we're very happy with these results. US Airways is extremely well positioned for the remainder of 2012 and beyond. So I'm going to turn it over, as is our custom, for Derek to walk you through more detail on all the numbers, and Scott to talk about the revenues. And before I do -- and then we'll get to questions. But before we do that, as you contemplate your questions, I want to remind everyone, when we get to that point, that US Airways has entered into a nondisclosure agreement with American Airlines that precludes us from discussing any potential combination. So we will not be able to answer any questions today about American or consolidation in general. So please understand that when we get to that part of the call. We are, however, very happy to talk about the results at US Airways and the great job that our team's doing, taking care of our customers. So with that said, I'll turn it over to Derek.

Thanks, Doug. Good morning, everyone. We did file our third quarter 10-Q this morning, and in that Q, as Doug said, we reported a record net profit on a GAAP basis of $245 million or $1.24 per diluted share. This compares to a net profit of $76 million or $0.41 per share a year ago. When you exclude the special items, which I'll talk about in a minute, we reported the second highest third quarter in the company's history, a net profit of $192 million or $0.98 per diluted share versus a net profit, excluding special items, of $95 million or $0.51 per share in the third quarter last year. That's 101% -- 102% increase year-over-year. We are pleased also to have accrued $54 million year-to-date for our annual employee profit-sharing program driven by these outstanding results. The company recognized $14 million of net special operating charges in the third quarter. This expense was primarily related to corporate transaction and auction rate security arbitration costs. In addition, the company recorded $67 million in net nonoperating specials credits, which included a $69 million gain related to the previously announced slot transaction with Delta Air Lines. For the remainder of my comments, I'll exclude the special items. For the quarter, total capacity was 23.2 billion ASMs, up approximately 2.7% from 2011. Our mainline capacity for the quarter was 19.6 billion ASMs, up 2.8% from a year ago, driven by an ASM completion factor improvement of 1.1 points and the use of larger gauge aircraft. Express capacity was 3.64 billion ASMs, up 2.4% from 2011 due primarily to an ASM completion factor improvement of 1.8 points and more active aircraft in the schedule. At this time, last year, we did have 5 express aircraft in Express first installations. So those aircraft were back…

Thanks, Derek. Before discussing the revenue environment, I'd also like to thank all the employees of US Airways for all the hard work and the great airline that we're running today. As has been the case for several years now, our record operational results continued throughout the third quarter. Turning to the revenue environment, I'll start with a review of the third quarter and then give you a little bit of commentary on the outlook going forward. As we discussed in our last earnings call, demand in the third quarter moderated somewhat from the very strong pace we saw in the second quarter. Though even with this moderation, we still set a new record third quarter RASM. Demand was consistent throughout the quarter, with September negatively impacted on a year-over-year basis by the expiration of the ticket tax and a shift in timing of the Jewish holidays. In fact, adjusting for these effects, demand in September was arguably the strongest month of the quarter. Domestic and Latham RASM were each up about 1%, and transatlantic was down 2%. A declining euro negatively impacted transatlantic RASM by over 3 points, so adjusted for the currency effects, the transatlantic performance was essentially in line with the domestic market. During the quarter, leisure demand remained consistent. And as we saw at the end of the second quarter, business demand was strong but not as strong as it was during the first 5 months of the year. Turning to the outlook going forward, we continue to see headline-driven demand with decent headlines leading to very good bookings and bad headlines causing a near-term moderation in bookings. In October thus far, bookings have been strong during the first 3 weeks. The pricing environment at the moment is weaker than you might expect with such strong bookings and record high load factors that with book [ph] yields essentially flat year-over-year. And as a number of analysts have pointed out, however, pricing generally improves during strong booking, load factor periods, but sometimes does so with a lag. Given these recent booking trends, we're cautiously optimistic on demand going forward. Corporate and business travel still feels like they're waiting on some certainty on the election and resolution of the fiscal cliff, but we see a point to enjoy an accelerating demand environment. With that, we currently project October RASM to be up 3%. The comps for November are a little bit more difficult than October, with the Jewish holiday timing helping October and mid-week Halloween and the elections hurting November, but we still expect November RASM to be up 1% to 3%. December looks like it will be back up in the 2% to 4% range. So in conclusion, we continue to run a great airline and the demand environment remains strong, and we're cautiously optimistic about the outlook going forward.

Thanks, Derek. Thanks, Scott. Operator, we are now ready to take questions.

[Operator Instructions] And we will take our first question from Mr. Michael Linenberg.

Yes, 2 quick ones here. Just the capacity for next year, I realize it's early but, Derek, I think through a 2.5% same number of aircraft, but it does look like you're bringing in 5 A330s. Is it fair to say that maybe domestic is not going to grow that much, but it's -- you're going to see a bigger increase on the international side?

I think that's probably right because those 5 airplanes, our current plan for them is 2 of them would be for service to São Paulo. We've got 1 additional European route and then the other 2 would replace 767s, which would then replace 757s and so the 2 757s would come back to the domestic, but essentially that'd be 3 fewer aircraft flying domestically.

Yes, I think, Mike, just from indication, domestic is probably in the 2% range, and international more in the 3.5%, 3% range.

But domestic, there's fewer airplanes but bigger airplanes.

Yes, bigger airplanes, yes.

Perfect. And then just my second question. You've seen it in some of the travel mags, that the GDSs, now that they're starting to facilitate some of the ancillary revenues, some of the things that you can book, from what I've seen is that some of them are not charging the carriers for it. They're doing it -- maybe it's out of convenience or they're allowing them to display it. But there's no cost incurred by the carrier. Is that -- does that make sense? Or is that anything that you're seeing out there? I know you're going to be rolling out your seating program. It's going to be -- I think it's Sabre sticking it up later this year or early next year.

Well, that's a perfect intro, Mike, for, in fact, we rolled out our Choice Seats program with a limited number of travel agencies today. And in fact, I got an update this morning in the first few hours of the day that it's small and it's still beta, but those travel agencies had sold 25 tickets and 2 of the customers had upgraded. So I hope the 8% rate holds to that small data set. I think it's probably too early to say what the long-term economics of all the ancillary revenues are going to be. I would say that it's a customer service. And so it's something that, if I owned a GDS or travel agency, I'd want to offer because the customers demand it. And so I view it more as a customer amenity and sort of a need to have if you're going to sell airline tickets. And you can see that actually in the data with all of carriers, including US Airways, as we've started doing things like selling Choice Seats, that our growth rate on our online direct bookings has gone up and has moved away, in particular, from the online travel agencies. And I think that's a big part of the reason. For what it's worth, at US Airways philosophically, we're happy to let other travel agencies or online travel agencies sell these products. We're not incentivizing them to sell it at the moment, which is your real question. But we're happy and willing to let them sell it if they're willing to make the technology investment to do so and it's something that their customers want, and I think that's really what's driving it more the economics because it's what their customers are demanding.

And we will take our next question from Hunter Keay. Hunter K. Keay - Wolfe Trahan & Co.: So a question for you on, as we think about the -- maybe Scott, as you think about this sort of corporate business travel environment, which has been good, but as you, I think, categorized it, not as good as some of the leisure ones, but there's lumpiness. So how do you think about managing a paid load factor on your domestic premium cabin? I mean, where has it been historically? Because, obviously, you don't want that to get too high. You want to reward your best customers with upgrades, I understand that. But where has it been in the past? And as you think about going forward in periods of particularly lumpiness, how high do you think you can get it? And how high do you think you want it?

Well, if demand gets even stronger for the First Class cabin, that'll be a high class problem. And I think we would want to sell as many First Class tickets as we can. In the real world, that number's probably not going to change dramatically. We're in the low 30s on paid First Class and haven't seen a dramatic change in that of late. We've seen some increase across the Atlantic in Envoy, but not a big change domestically. And that's -- it's a small enough percentage that even if you got real growth in that, it wouldn't, I don't think, negatively impact our frequent flyers because, if you grew from 30% to 35%, that's still a lot of seats available for the frequent flyers. And at the same time, we've added far more First Class seats because, as Derek mentioned in last year's fourth quarter, we converted all of our large regional jets to dual class and so we now have First Class in all those aircraft as well. Hunter K. Keay - Wolfe Trahan & Co.: Okay. And can you talk about how Southwest has been pricing in the last, let's call it, 3 months? Obviously, I'm not asking for anything going forward but they've been kind of erratic and not matching some fare increases, having huge fare sales and then leading another fare increase in their whatever A freight on, obviously, whenever they try to raise fares, everyone matches so you could [indiscernible] be doing more. But have you seen them sort of tinkering more in the past 3 months than you had been in the prior 6 months? Anything strange in how they've been behaving?

Well, I'll do my best to comment in a way that my general counsel, who's sitting next to me, doesn't reach over and try to strangle me. I think Southwest has changed in the last several years. And we do see more tactical initiatives as opposed -- as one of the things you allude to, as opposed to just fare increases or just fare sales. And so from our perspective, seems rational and intelligent. Some of the things are a little harder to understand like the points you pointed out, but you probably have to ask them that question to get a real comment on it. But I certainly think they're more tactical, both in terms of their pricing and in scheduling where they make capacity allocation and reallocation decisions that seem consistent with what we think their profitably is.

And we will take our next question from Jamie Baker. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Doug, question on labor. How should we be thinking about timing for a possible third vote at the AFA? And what sort of sweeteners do you think you need to offer, just given how close the vote was last time? And second, where do you stand with USAPA right now? I know about, I think, 1 week ago, there was a ruling from Judge Silver as it relates to the seniority issue. How does that impact the negotiation trajectory from here?

Yes, Jamie. Well anyway just to review for everyone's benefit, what Jamie is referring to is our flight attendants narrowly rejected a contract that was recommended by their negotiating team and by their leadership. It was 51, 49 against the -- so anyway, the problem is that, that was also endorsed by the National Mediation Board and what we had all been told. And what the advisers [ph] have been told is if indeed this didn't pass this time, we'd have a period of recess to let everyone think about what comes next. So I think that's where we are now, but we'll see. We're waiting for -- our flight attendants will probably lead in the National Mediation Board. We, you certainly should not be expecting any sweeteners from the company. That's the way this works. No votes don't result in sweetened contracts. They result in some time for people to contemplate and come back and see if they want to vote on the contract again or else have some time off to think about it some more. So that's where we stand right now, but you shouldn't be contemplating, putting any higher expenses into your models than what was out there before. As it relates to USAPA, yes, we got a ruling from Judge Silver, but it didn't particularly help the situation in terms of the uncertainty or resolve. The dispute, as it relates to seniority between our pilots, that still needs be resolved. It doesn't appear that our pilots will be able to resolve it themselves still so the company has to figure out what we do about that. But it doesn't appear we're any closer to getting that seniority dispute resolved. And since we don't get that [ph] seniority dispute resolved, we don't appear to be closer to a joint contract. But again, we'll deal with that as it moves forward. But no new news there. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Okay. A follow-up for Scott and actually a question on American, U.S. Air but one that I think you'll answer. I realize the network overlap between Airways and American is considerably smaller than, for example, your overlap with Southwest. Nonetheless, I'm wondering specifically if your RASM forecast has been adjusted in any way given the operational difficulties that American is having.

It has not. And while I'm sure that we received some temporary benefit at the end of September and the beginning of October, it's not a number, we've looked and we could measure. As you point out, we have less overlap with them than United and Delta, for example have. And in any share shift, I think this gets lost in the normal [indiscernible]. I'm sure there was some temporary there that American will get back as they're starting to run better operations. But we couldn't measure it.

And we will take our next question from Dan McKenzie.

Scott, I see the capacity cuts to Europe. And what gives you the comfort that you've got it right? Is it the -- I mean, does the capacity plan assume that things are steady state in that part of the world or does it factor things in? Does it factor deterioration? And I guess what I'm getting at, instead of capacity to PIIGS country, say, being down 18%, how do you know it shouldn't be down, say, 30% or conversely even down 10%?

There's no way for us to know for sure. We make our best estimate. But one of the things that we take a lot of comfort in is that we have significant fleet flexibility in particular because we use 757s in our international service. We can pretty easily reduce our capacity to Europe and reallocate it to domestic or whatever markets are performing better. So -- and additionally, we fly far more capacity in the summer than we do in the winter. We're even more seasonal than others. And because of that, we're flying in the peak, which gives us more comfort on our capacity -- that our capacity during the peak will be profitable. And the combination of flexibility and flying during the peak makes us feel pretty good about our capacity plans for Europe, at least as far out as we can see.

Got it. Okay. Appreciate that. And I guess, the second question here is for Derek. I'm wondering if you can comment on the cash drag from new aircraft coming next year. And I guess I'm just trying to reconcile predelivery deposits relative to my cash flow outlook and I'm wondering if you can comment on whether the majority of aircraft are going to be leased or owned.

Well, right now, we have 21 deliveries. Four of those aircraft are already financed through a double EETC transaction and will cover almost all of the cost of the aircraft. The next 17 we're working on right now, we don't have a plan yet. I think it'll be similar to what we did in 2012, which is a combination of sale leasebacks, debt transactions and double EETCs. I think the double EETC market, as you've seen in the last few transactions, is very hot and a very good market at this point in time. So we may take advantage of that. So we have not really committed to the other 17 aircraft yet. We have RFPs out for sale leasebacks and debt transactions and we have looked at the market. From a PDP standpoint, the real big blip in PDPs was in 2012. We have, because of the fact that the deliveries kind of end in 2015. You'll see actually the net PDP effect of the cash flow in 2013 is really pretty flat. And I'll give that guidance out when we get on the call -- when I give our guidance for everything for 2013, we'll have that in there. So but I've yet to commit to financing on the other 17. We have backstop financing on all of these aircraft from Airbus, but we have not determined the ratio of how we're going to finance the next 17 planes in 2013.

Derek, let me know if I'm wrong,the market's very strong right now for aircraft financing right now you'll hear from them the airline. So it's a matter of Derek and team deciding when the right time to go to the market is, weighing the strength of the market versus how far in advance you're financing them and therefore the carrying cost of the cash. But financing the aircraft is not going to be an issue, and as Derek said, the cash flow from bringing them on in terms of PDP, you've already seen in prior years, and you won't see a big change this year.

We will take our next question from John Godyn.

With thin industry margins improved to levels that I think are much higher than we all had expected years ago given what the GDP environment looks like. Of course, due to a combination of consolidation and reduced low cost carrier competition, forgetting about any benefits from additional consolidation, what inning do you think we're in, in terms of benefiting from the rationalization that's already been occurring? Can we see margins keep moving higher without a better macro outlook?

Well, none of us know for sure, but I certainly think so. And if you -- I did a presentation a couple of months ago at one of the investor conferences we talked about the relationship of GDP to airline revenues. And while it's improved dramatically from 2008, it's still significantly below where it was a decade ago or 20 or 30 years ago. And at a macro level, that to me says there's certainly potential to improve industry revenue performance relative to GDP. That's something that you've seen happen in 2009, '10, '11, '12, and I think it can continue to happen in a rational industry. So I don't know how much more the margin can improve. I don't think we can ever get back to pre-deregulation revenues as a percentage of GDP, but certainly can get meaningfully higher than the industry is today because we've been meaningfully higher, not that far in the past.

And without additional consolidation, are we really focused on sort of this reduced low-cost carrier competition as kind of the key variable for the next couple of years? Or is there something else noneconomic, non-M&A that we should be focused on?

I don't know for sure which of the factors as you can talk about those 2. But also just management teams that, while this is probably one of the most competitive industries in the world, are more rational and don't do things that are going to cause the airlines to lose money. You see that in capacity allocation decisions, pricing decisions and again this still is an incredibly competitive industry, still have margins well below what other industrial companies earn. But an industry that seems to have management, by and large, that's focused on shareholder returns. And I think some of that's been driven, frankly, by guys like you sitting on these calls and airline management teams getting beat up about shareholder returns and doing things to maximize shareholder returns as opposed to market share-driven metrics. And that message has gotten through to the industry and an industry that's focused on that. And because of that, it's outperforming what's happening with GDP.

Just to chime in, this is Doug. In direct response to your question, I'd say we're probably in about the third inning with a lot more to go. And not so much because of any more structural change so much as you're indicating although there certainly could be so much more help but more about, as Scott was getting at, just actions by management teams that haven't all taken hold of them yet. This is just a dramatically different industry now, and you see in the actions of management teams, some of us figuring that out and others not figuring yet. Whenever one figures it out, you get a much more -- an industry that produces much higher profits for shareholders. And it's much better for employees because it's a sound business model that is round and can actually produce profits and downtimes, just not as big. They'll still be cyclical, but a cyclical has profits in all years and really good profits in stronger years and not as high in softer years. But we have a long way to go, and it's mostly just on getting rid of all the old dots, what this industry used to be like and having it replaced with what it can be like.

We will take our next question from Helane Becker. Helane R. Becker - Dahlman Rose & Company, LLC, Research Division: So I just have this one question here. I think you guys pulled forward -- or pushed out actually some maintenance from the third quarter to the fourth quarter. So can -- did you say what maintenance was going to be like for the fourth quarter then?

Yes, maintenance for the fourth quarter should be just a little bit higher than what it was in the third quarter. I think we were at $171 million in the third quarter for aircraft maintenance, and I project it to be in the $175 million, $177 million range for the fourth quarter. So it's just up a little bit in the forecast on a year-over-year -- I mean on a quarter-over-quarter basis. Helane R. Becker - Dahlman Rose & Company, LLC, Research Division: Okay. Are you able to forego maintenance on aircraft as you're returning them next year with the aircraft that are coming in so that we should think about that category as not really increasing much going forward now?

We do have reserves. We always reserve for our aircraft returns, and it just depends on how we do the aircraft returns. Sometimes, we do the maintenance work and return the aircraft. But sometimes, we can -- if the aircraft is never going to fly again, we can work with the lessor and buy out the return conditions. So it just depends on how we do that. But we don't expect any big increase in aircraft maintenance next year, and I'll have that in our guidance when we give out the guidance for 2013. There should be -- we will have -- over the next couple of years, we've had a real high-check cycle in the last 2 years that really comes down over the next 2 years. So there'll be, actually I believe, lower maintenance costs going forward than what we see today. Helane R. Becker - Dahlman Rose & Company, LLC, Research Division: Right. Okay. And then, with how profitable you have been this year, which is obviously a good thing, how should we start thinking about your use of NOLs?

Yes, what we have -- right now, we still have a valuation allowance. So we have a valuation allowance that is on the order of about $125 million at September 30. So it's not as big as other valuation allowances in the industry. Under GAAP, it just depends on whether we reverse this or not. The reversal of that allowance hinges on sustained profitability. And that's not really a bright line test. So it requires significant judgment. We're going to look at that and we'll continue to evaluate our accounting treatment of the val allowance through year end with our auditors. The $125 million would equate to $375 million in pretax earnings. So if it was reversed at the end of the year, we would have P&L taxes beginning in January. If it's not reversed, it will cover the $375 million. So if we made over $375 million, we would start to have P&L taxes. But from a cash tax standpoint, we have significant NOLs where we won't be paying cash taxes for a while. But we could start seeing -- depending on the earnings that we have in 2013, we could start seeing P&L taxes. But I'll know more about that at the end of the year and be able to give guidance on the next call of whether the val allowance stays in place for 2013, which I believe -- I think it will. And then -- but I'll give that guidance out on the call, January call. Helane R. Becker - Dahlman Rose & Company, LLC, Research Division: Okay. And then can I just ask one more question about the restricted cash? So can you just say what that's related to then?

Yes, there's 2 big chunks of restricted cash, are credit card holdback and reserve and then workers' comp collateral. So of the $350 million or so of restricted cash, about $180 million of that is workers' comp collateral and about another $90 million of that is credit card reserve at this point in time. Then there's some letters of credit collateral that we have out there. So those are the 3 major components of restricted cash.

And we will take our next question from Kevin Crissey.

Scott, I just wanted to just drill down a little bit, just to make sure I understood what you're saying about the October 3% RASM. Were you saying that it was effectively coming from load factor, not so much yield? Is that what you're saying? Was it flat yield? Is that what you said?

That's accurate.

Okay. And then, do you have any stage link changes this quarter? Would it be importantly...

Yes, our stage link has been growing. I believe it grows in the fourth quarter as well. I'm looking at Derek. He's looking it up somewhere.

Yes, in the third quarter, mainline stage link was up about 1.5 points of the ASM increase. And for Express, it was about 2.8 points of the increase.

So we didn't really talk about it, but that negatively impacts our RASM by a little less than a point. It also helps CASM, so I think it's a similar affecting the fourth quarter.

And our next question is from David Fintzen.

Not to belabor the '13 -- the potential -- the '13 guidance or get too far ahead of it, but anything sort of -- obviously, labor contracts aside, anything sort of in landing fees or other, anything inflationary that's sort of lurking out there that, as we're starting to think about '13 CASM, we should be aware of? Or is it just sort of continuation of trends with the upgauging that we should be thinking of?

I would just say continuation of trends with the upgauging.

Okay. All right, that's great. That's helpful. And then maybe for Scott just quickly. With the election and the Halloween placement, the strength in October, are you seeing any of that as sort of business travel moving forward ahead of those events? Or is anything in October that we should read just to get kind of a clean read of the month?

I don't really think so because October -- if you adjust, there's a lot of adjustments with the Jewish holidays and ticket tax and all that stuff, if you adjust for that, October actually is very similar to September which I know a lot of people have written and talked about September as being weak. September was actually, given all the negative adjustments that affected September, a decent month even though, on a year-over-year basis, it wasn't as good. It's just shifting of traffic. So I think October is largely similar to September and our guidance for November, I think, implies some acceleration, which we think we're going to -- which we think we are seeing for September because -- or for November because, in November, you've got the more difficult -- you just have more difficult comps. And so to come in a point, only 1 point lower in November than October implies some acceleration.

We will take our next question from Glenn Engel.

A couple of questions. One, 2 ones, what was Latham RASM growth in the third quarter? And 2, there was a $50 million drop in salary and expenses from the second to third quarter x profit sharing, what drove that?

On the first one, Latham was up 1%, same as domestic. Now I'm looking at Derek. What's your second question?

The other one I had is that if I looked at your performance relative to the industry, and this happened last year as well, it seemed like you underperformed somewhat in July and August and you outperformed in September. And why would that be?

I don't know. We look at it on a stage-adjusted basis when we look at it internally. And internally. we outperformed in all 3 months, we outperformed by more in September based on that metric. I'm not sure what the specific causes of that. There's so much noise in the month-to-month in this quarter with the ticket tax and the hurricane and -- that I don't have a good explanation for why we would have performed better in September than July and August. So I don't think it was a large difference, at least by the way we look at the data.

And on the transatlantic, are you still seeing greater strength from Europe to the U.S. on business than U.S. to Europe?

We are, and in fact, one of the surprising points in this quarter was that European point-of-sale actually grew at a faster rate than domestic point-of-sale. European point-of-sale grew by 13% for us during the third quarter.

Anyway, on your question we couldn't answer, I think the answer and, Derek, correct me if I'm wrong, if there's any real variability in salaries. It's performance-based pay like profit sharing and other performance-based pay. And we started out the year, in the first quarter, not real strong. We had a really strong second quarter that all of a sudden had us into the profits. So that all got booked in the second quarter and you didn't see much in the first quarter and now the third quarter is back to more of a steady state. Is that right Derek?

Even if I stripped out profit share, it's still this $50 million so it could've been incentive somehow lumped in the second quarter...

Profit sharing was $12 million higher and other performance base was about $20 million.

We will take our next question from Savanthi Syth. Savanthi Syth - Raymond James & Associates, Inc., Research Division: What was ancillary revenue in the third quarter? And I was just wondering, as you look out to 2013 and you're starting to get some of these items on GDSs, like, what do you expect the ancillary revenue could do in looking out to 2013?

Ancillary revenue in the third quarter was $146 million, which includes bag fees and other type of items. And we forecast that in the fourth quarter to be about the same. The run rate on the Choice Seats right now, Scott is like $86 million for the year. So the increase in our current revenues would be in that line item from a Choice Seats perspective and how far we can grow that from its $85 million run rate to higher next year.

And that really depends on how far we get on adoption in third party -- with third-party sellers and how long that takes. So I'm more comfortable saying if I look further down the road at some point in the future, I think that's going to be, instead of $86 million like it's going to be this year, that's going to be $300 million to $400 million so a big number. But the timing of when we get from here to there is a little murkier because it depends a lot on third-party adoption. Savanthi Syth - Raymond James & Associates, Inc., Research Division: Got it. And just as a follow-up question on the -- it looks like you're adding seats to the A321s. I'm just wondering if you've done any analysis on what you expect the contribution to be or what the cost increase per aircraft is for adding the extra seats.

Well, the cost increase is negligible, and so the contribution -- it's 2 seats, the contribution is very high because it's a small capital investment to buy seats. And then the incremental cost associated with those are a little more fuel burn but not very much and then past your selling cost. So if you sell the seats, you pay GDS fees or credit card fees or whatever. But that's probably 90-plus percent gross margin on those seats. Savanthi Syth - Raymond James & Associates, Inc., Research Division: Got it. And what's the timing on rolling out the seats?

It's before summer next year right?.

Yes.

Second quarter -- probably second quarter of next year to have all of them in.

Our next question comes from Ray Neidl.

I'm going to ask a question, I don't know if I'm going to cross the line here with the merger or not but I'll try anyway. You can answer in more of a general way, but American pilots are now -- seems to be negotiating with the management and will be coming up with a contract. And if it's a more expensive this contract with what you had agreed with US Airways, how might that affect your thinking. And the general question I'm getting at is I think Delta is probably the industry standard for pilot's contract and the pilots at other companies will be shooting for that, including US Airways, and how might that affect your labor core structure in the future.

Hey, Ray, I'm sorry, we can't answer that one due to the nondisclosure agreement with American.

Okay. On the...

I can answer the second half on our labor cost -- Alright, the second half as to how any other airlines' labor cost might affect our labor cost. I think we, as we have been for quite some time, have been telling you and been able to do as our people understand, we at US Airways understand that we have a revenue disadvantage to airlines like United and Delta who have larger networks than we do and that requires us to have a cost advantage. And we do, and we need to do that primarily with labor cost, and that's how we do it and our people understand that. It results in conversations that we have to have all the time, that aren't our favorite conversations as we explain that to our employees but they fully understand, the National Mediation Board fully understands. You can't have an airline that has a cost disadvantage -- I'm sorry, that has a revenue disadvantage and has the same cost. Those airlines have existed in the past and they've all gone away. That's not going to happen here. The good news is, because there's such a wide gap and because those airlines are increasing their costs even more, we are able to continue to give nice increases to our employees and still maintain that gap versus United and Delta. And that's what we'll continue to do in the future.

Okay, great. And kind of tied in with that is the economy next year, some economists are saying it's going to be a good year, and it looks like you're still going to see [ph] a pretty good year overall. Other economists are saying we're going to a recession. I'm a little worried myself about the fiscal cliff January 1 and test cliff [ph] January 1. If the worst thing happens, if we do go into a major downturn next year, what flexibility do you have, as some of the other airlines have, of reducing your capacity? I think that's tied in with part of your pilot agreement.

We have pretty limited flexibly to reduce capacity. We're near our minimums on both utilization and fleet size. And because of that, we don't have a lot of ability to dramatically reduce capacity. That said, while I think there would be an industry capacity response to a slowing economy, that would benefit us as well, even if we couldn't meaningfully reduce capacity. And I think this industry, this went to an earlier question about structuring and restructured industry, has demonstrated in the past few years in adverse macro situations, whether it was a weak economy or high fuel prices, that we've been able to respond as an industry. And US Airways is part of that industry and I think we do well. To your question, or I don't know if it was a question, but the comment about the economy for next year, while we don't have a necessarily a better crystal ball than anyone else, but we do see a strong leisure demand. And historically, that's been a pretty good indicator of where the economy is headed. It's more of a leading indicator when leisure demand starts to weaken, that's indicative of consumer spending, retail sales all starting to weaken as well. And leisure demand has held up quite strong for the past several months. So using our internal data, and would feel reasonably good about the economic outlook for the fourth quarter and into 2013.

Okay. And Scott, one last thing, Delta seems to be hell bent on screwing at LaGuardia. They're putting a lot of capacity to make it into a hub. How might that affect your operation, in particular, I was thinking the shuttle operation which really has to be on time.

Well, it's the same number of slots as we had before in there. And Delta is adding capacity by upgauging the aircraft. And so I don't think that, that will affect the operation negatively. In fact, it'll probably do it positively because the regional aircraft fly faster than the turboprops. And so it makes it arguably a more efficient operation at the airport. So I don't think we've seen any impact and don't expect to. And in fact, if anything it should go the opposite direction.

And our next question is from Jeff Kauffman. Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division: A lot of my questions have been answered. Helane hit the maintenance question, so I'll just ask 2 short ones. It's been a year of holiday timing anomalies. Is there anything with the late winter breaks in December where December might actually be a RASM benefit of sort this year?

I think December is -- both November and December are similar to last year. There's no big move in either of those 2 months, which is unusual. Usually there are. Jeffrey A. Kauffman - Sterne Agee & Leach Inc., Research Division: Okay. And a different kind of question. If there was no NDA or consolidation or anything like that, you were just running the airline as it were, would you need $2.4 billion of cash on the balance sheet? And in that scenario, what would you do with it?

Jeff, it's Doug. I think we would. Again, it's a fair question. I think part of the way I'd rephrase the question is if you really believe this industry was now a changed -- a transformed industry that was going to, even in difficult times, be able to make money, which I happen to believe. You probably -- we probably wouldn't hold as much cash, but we feel like we need to see a little more evidence of that before we decide running with less than that. I think that's the case, but that's not worth betting on. We agree with you that it's not the best use of capital to hold cash you don't need. But right now, we think it's best for our shareholders to hold that much for security purposes, given what's happened in this industry in the past even though we don't foresee it in the future. And give us -- we'll see what happens in the years ahead and hopefully, we all can get more comfortable with not holding as much cash. But right now, we're going to hold on to it. Derek wants to add something.

And Jeff, just to clarify a little bit on the maintenance side because you had that same question as I think I said we would be down next year, but I think we're going to be up a little bit next year and then the basic honeymoon type of cost we dip down in 2014. So when we give -- when I give our 2013 guidance, we'll be slightly up on the maintenance side when I give that guidance. But I didn't speak correctly earlier to say we would be down year-over-year in '13. We'll actually be up a little bit on the maintenance cost.

We have now come to the conclusion of the analysts' question-and-answer session. [Operator Instructions] And we will take our first question from Ely Portillo.

I was wondering, given the uncertainty that Scott was mentioning earlier with corporate and business travel, with Charlotte being such a business hub, if you could give any color about how Charlotte is performing and whether you're seeing any difficulties cropping up in this hub.

Charlotte's doing great, and it's doing great in the face of a pretty big capacity growth. That's where most of our capacity growth has been. Charlotte is one of the best hubs in the country because it's a strong business base, and it's got a great catchment area in the entire southeast. It's a very well-run, efficient airport in terms of cost and it's doing really well and doing really well despite significant capacity growth there. We're looking forward -- actually, we have plans to continue growing in Charlotte, including service to São Paulo, hopefully, sometime soon, if we can get the regulatory issues worked out and then even more small city service over the next few years.

And any comment on Southwest entering that market finally with the conversion from AirTran next year?

Well, I mean, they're already -- AirTran serves it and it's just switching to Southwest so I don't think that changes anything at all.

And we will take our next question from Mary Schlangenstein.

I was going to ask about Eagle but I guess I won't irritate you this time around. Scott, I wanted to ask you, you mentioned earlier about the industry cutting capacity again if things start to turn down, and Delta said today that they were going to cut capacity 1% to 3% in the fourth quarter, mostly on international routes. Do you expect that to have any impact on you guys? Or do you not have a lot of significant overlap with them that, that could affect you as well?

Well, it'll probably have a modest impact on us. I don't think it'll be material, but we serve a lot of the same markets in -- or a lot of the same destinations in Europe as does Delta. And so it can have a modest impact, but I don't think it'll be meaningful to us one way or the other.

[Operator Instructions] And we will take our next question from Ted Reed.

Two questions. First of all, did I just understand you to say that you can't negotiate with the pilots until the seniority matter is resolved?

No, that's not what I said. What I said is the seniority matter is still not resolved and clearly, we can't get to a contract until there's seniority list resolved.

Do you feel that you can restart negotiations in the near future following Judge Silver's ruling?

Yes, Ted, again, the -- as I think you know, the NMB recessed those negotiations some time ago. And if the NMB decides it's time to bring them back, we'll of course be there and ready to negotiate as we have been all along. My point is just that you can't get to a joint contract if you don't have agreement on a joint seniority list and we still don't have that. So that's the issue.

All right. This next thing is a little complicated, maybe you won't answer, but you do have an agreement with other the pilots at the other airline and that would also include the seniority list, wouldn't it?

We cannot answer that, Ted, because of our nondisclosure agreement with American.

Okay. The other thing I wanted to ask is following up on what Ely said. So Southwest has changed destinations a bit from what AirTran had. They will fly to Orlando, Houston, Baltimore, Chicago. Does that make any difference to you they did change the destinations as 4 them, they're different? Does that make any difference at all in competing with Southwest?

No.

We will take our next question from Karen Jacobs [ph].

I wanted to ask a question. You suggested during your call that you were not looking to sweeten the offer with the flight attendants. I guess I just wanted to know how do you expect to go about resolving that situation.

Sure. And again, certainly, I'm not trying to negotiate this point -- over this call with our flight attendants. The question was asked what from a financial analysts about whether they should expect to see a sweetened offer. So anyway, look, the flight attendant contract is in the condition I described. We had a narrow rejection of 51% to 49%, we clearly would have liked to have seen it approved as would of AFA, but it didn't happen. So now we -- I believe the process that will take place. Again, we'll follow the lead of the National Mediation Board on this. I believe the process that will take place because there will be some time for everyone to sit and think about next steps. And that's where we are now. We're in that time period. I don't know how long that time period will be but it'll be a little while before negotiations resume. And I fully believe that whenever they re-resume, if that's a word, we don't have much to close. We're at 51%, 49%. So this is not an issue that can't be resolved at some point in time. It's just not going to get resolved next week, I don't think. We're going to have some time here for everyone to think about what we need to do to get it done. And those people include the company, the AFA and the National Mediation Board.

And that does conclude today's question-and-answer session. I will turn it back over to the speakers.

We are done. Thank you all very much for your interest. Thank you for abiding by our limitation on questions. We appreciate that. And first and foremost, thank you for your interest in US Airways, and thanks again to our team for such great results. Goodbye.

Ladies and gentlemen, that does conclude today's presentation. We appreciate your participation.