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 Stephen L. Johnson - Executive Vice President of Corporate & Government Affairs Robert D. Isom - Chief Operating Officer and Executive Vice President

Jamie N. Baker - JP Morgan Chase & Co, Research Division Hunter K. Keay - Wolfe Trahan & Co. Daniel McKenzie - Hudson Securities, Inc., Research Division Kevin Crissey - UBS Investment Bank, Research Division Helane R. Becker - Dahlman Rose & Company, LLC, Research Division Michael Linenberg - Deutsche Bank AG, Research Division Justine Fisher Glenn D. Engel - BofA Merrill Lynch, Research Division John D. Godyn - Morgan Stanley, Research Division Savanthi Syth - Raymond James & Associates, Inc., Research Division

Good day, and welcome to the Fourth Quarter 2012 US Airways Earnings Conference call. Today's conference is being recorded. [Operator Instructions] And now, I'd like to turn the conference over to your moderator, Managing Director of Investor Relations, Mr. Daniel Cravens. Please go ahead, sir.

Thanks, Sandra, and welcome, everybody, to the US Airways Fourth Quarter 2012 Earnings Conference Call. Joining us on the call today are Doug Parker, our Chairman and CEO; Scott Kirby, our President; Derek Kerr, our Chief Financial Officer; and Elise Eberwein, our EVP of Corporate -- or People and Communications; and also Robert Isom, our Chief Operating Officer. Also, in the phone joining us is Steve Johnson, our EVP of Corporate. Like we typically do, we're going to start with Doug. He'll provide an overview of our financial results. Derek will then walk us through the details on the quarter and provide some color on our 2013 guidance. Scott will then follow with commentary on the revenue environment and our operational performance. And then after you hear from those comments, we'll open the call for analysts questions, 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 revenues 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 those risks and uncertainties can be found in our earnings press release issued this morning, our Form 10-Q for the quarter ended September 30 of last year 2012 and also our 2011 Form 10-K. In addition, we'll be discussing certain non-GAAP financial measures this morning such as net loss and CASM, excluding unusual items. A reconciliation of those numbers to the GAAP financial measures is included in the earnings release, and that can be found on our website at usairways.com. A webcast of this call is also available on our website and will be archived on the website. The information we're giving you on the call is as of today's date, and we undertake no obligation to update the information subsequently. Thanks, again, for joining us this morning for the call, and at this point, I'd like to turn the call over to our Chairman and CEO, Doug Parker.

Thank you, Dan, and thank you, everyone, for being on with us. Derek will cover our quarterly results, financial results in detail here in a moment, but I want to start by focusing on the full year 2012. The US Airways team did a phenomenal job in 2012 that started with another great year of operational reliability, led by our Chief Operating Officer, Robert Isom. Our 32,000 hard-working team members produced the best operating reliability in our history, which is really saying something since US Airways led all network carriers in on-time performance over the period from 2008 to 2011. But in 2012, we did even better, with all-time company records in the important customer metrics of on-time performance, completion factor and baggage handling. That operating reliability, of course, is valued by our customers, and that's showed in our revenue performance. Also, in 2012, we set new company records for total revenue, total traffic, load factor, yield, revenue per ASM, and net record revenue performance, combined with some very strong cost discipline, led to the record profitability that we reported today. Our net income, excluding special charges for 2012 was $537 million. That's the highest in our company's history and nearly 5x our 2011 profit of $111 million. And when a company produces a yield like that, it usually bodes well for our shareholders, and we're happy to report that was the case for US Airways in 2012. Our stock increased 166% over the course of 2012, which was the largest increase of any company in the Fortune 500. And we were able to accomplish all of this while pursuing a strategic alternative that consumed a significant amount of the management team's time and attention. So I've been in the airline business now 26 years. I've been CEO for over 11 of those, and this is unquestionably the best all-around performance I've seen by an airline team, and we couldn't be prouder of the work of our 32,000 team members. So looking forward, we've carried this momentum into 2013. We're very pleased with our strategic positioning, and extremely well-prepared for whatever may lie ahead. And with that said, I'm going to turn it over to Derek, who will walk you through the numbers, and then Scott will give you some more color on the revenues and the outlook. Derek?

Thanks, Doug, and good morning, everyone. As we announced in our press release early this morning, for the full year 2012, the company recorded a record net profit, excluding special items, of $537 million or $2.79 per diluted share versus a net profit, excluding special items, of $111 million for the full year in 2011. This is an increase of 384%, almost 4x. On a GAAP basis, the company reported a record net profit of $637 million or $3.28 per diluted share, up 797% over the 2011 net profit of $700 million -- sorry, $71 million. We're very pleased to report the highest annual profit in our company's history, which is particularly impressive, given volatile fuel prices and the state of the economy. When you exclude special items, the company's net profit for the fourth quarter was $46 million or $0.26 per diluted share as compared to a net profit of $21 million, $0.13 per diluted share in the fourth quarter of last year. On a GAAP basis, recorded a net profit of $37 million or $0.22 per diluted share. This compares to a net profit of $18 million or $0.11 a year ago. As previously disclosed, the company's fourth quarter and full year results were negatively impacted by approximately $35 million due to Hurricane Sandy. Please refer to the tables included in our press release for details on the special items. And from now on, I'll exclude the special items to more accurately reflect our performance for the year. Total capacity for the fourth quarter was 21 billion ASMs, up 1.4% from the same period in 2011. Our mainline capacity for the quarter was 17.5 billion ASMs, up 0.7% from a year ago. Express capacity was up 4.8% from the fourth quarter of 2011 to 3.5 billion ASMs due…

Thanks, Derek. Before talking about the revenue environment, I'd like to thank all the employees of US Airways for all the hard work and the great airline that we continue to run even when faced with challenges like Hurricane Sandy. Turning to the revenue environment, I'll start with the review of the fourth quarter, and then give you a little bit of commentary on the outlook going forward. Demand remained strong in 4Q with RASM up 2% -- 2.5% even though it was impacted by Hurricane Sandy in October and November. At US Airways, we continue the long run of strong PRASM growth both in absolute and relative to the industry. This strong PRASM growth relative to the industry is continuing despite our relatively greater capacity growth, which has been driven primarily by larger gauge aircraft. And while this makes relative PRASM growth more difficult, you see the P&L benefit in our CASM ex fuel discipline, which is leading the best-in-class year-over-year margin improvement amongst airlines. For some regional specifics. Domestic RASM was up 2% in the quarter. Latin RASM was down 3%, as industry capacity grew to that region and Transatlantic was up 6%. During the quarter, leisure demand remained strong and business demand was strong also. In fact, corporate revenue is up 9% year-over-year during the fourth quarter. Turning to the outlook going forward, both business and leisure demand remained robust. The beginning of January is the heaviest booking time of the year, and bookings have been up 8% so far compared to last year's already strong bookings. For now, our year-over-year RASM continues to be driven more by higher load factors than yield. On the strong demand environment, it hasn't yet led to increases in yield. A strong demand in load factor environment historically has been a precursor to rising yields. While it's taking some time, I expect that this strong environment will lead to improving yields across the industry, which is how RASM is most likely to take the next sequential step up at some point this year. Continuing the fourth quarter trend, we expect fourth -- first quarter transatlantic RASM to be up even more than domestic. That's consistent with strong European demand and small transatlantic capacity reductions in Q1. As many analysts have pointed out, the year-over-year comps for Q1 are difficult, given that last year's RASM was up 10%, 7% and 8% year-over-year by month last year. The year-over-year comps do get easier as the year progresses beyond Q1. Despite the difficult year-over-year comps, we expect January RASM to be up approximately 3%, followed by RASM up 2% to 4% in each of February and March. So in conclusion, we continue to run a great airline. The demand environment remains strong, and we seem poised to be -- we seem to be poised for an improving yield environment. Doug?

Thanks, Scott. All right. We're going to turn over to questions. Before we do, I need to give what is now becoming standard request before the questions, which is I know many of you would like to ask about the speculation regarding US Airways and American. However, we continue to operate under a nondisclosure agreement, which precludes us from commenting on that situation. So please remember that the purpose of today's call is to discuss US Airways' operations and results, and I thank you in advance for limiting your questions to those topics. So operator, we are ready for questions.

[Operator Instructions] We'll go first to Jamie Baker of New York. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Of New York, yes. Doug, you and I seem to be in relative agreement about a lot of the structural change that's taking place in the industry, the benefits of return-oriented management teams, capacity discipline, ancillary revenue, all the good stuff that everybody listening already knows about, but that shouldn't prevent you personally from wanting more. If you have to compile a short list of additional industry change that you'd like to see over the next 5 years, what would be on the list? I'm happy to throw out taxation and increased institutional ownership to get you started, but I'm obviously much more interested in your opinion.

All right, well, thanks, Jamie. Look, we started -- several years ago, we started talking about all the things the industry needed starting with consolidation. Included on that list was management teams that care more about returns than market share. Included on that list was a better management that work better with labor. And I think all those things, we've made huge progress on. Also on that list, though, was a better understanding by the government of the importance of aviation and a national policy from a national aviation policy from the government, and that hasn't happened. And that's next on the list, and that's where the rest of the value, I think, is going to come from, Jamie, and where it needs to come from. We've got -- everything I've talked about so far is self-help, and the industry had to do a lot of this to get itself right, and I think we've made huge progress in that regard. But we're fighting our own government on a lot of issues, and taxation is high on the list, but there are other issues. Other international carriers don't fight the same battles we do, and we're -- well, the playing field's not particularly leveled. So the good news on that point, I think we're all unified as an industry in our view on that point, and I think we can make some headway there, but it -- that has not -- not only has it not gotten better, it's gotten worse since we started talking about this stuff for the last 7, 8 years. So we -- I think we've stemmed the tide a little bit in the last years. We haven't made much progress, and we need to start making progress in that regard. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Okay, great. And a quick follow-up for Derek. I'm sure somebody will ask, but the ex fuel cost guidance was better than what I had expected, particularly at the mainline and particularly in the second half of the year. What are some of the primary drivers?

From a cost perspective for the year, I think the -- we have -- on the negative side, aircraft maintenance is up a little bit. We're seeing a big decline on aircraft rent as we return aircraft and return them at lower rates. Salaries and benefits are pretty flat year-over-year. So we've got some productivity on the salary side and the benefit side. So it's really -- there's no real big huge negatives going on, and it's pretty flat. I think there's a lot of growth in the back half of the year. That's why you're seeing some of the higher numbers in the fourth quarter than the middle part of the year.

We'll go next to Hunter Keay. Hunter K. Keay - Wolfe Trahan & Co.: So over the past few years, you guys have tended to initiate, generally, the fewest fare increases in the industry among your peers. And Scott, I know you're big more on this fence thing and things like than the actual fare increases that we see in the headlines. But you've also been kind of the second or third mover on a lot of the fee initiatives, and I still consider you guys to be reasonably aggressive. But curious to know how you consider your smaller size in the industry as it pertains to the decision-making process of taking commercial risk.

Well, we are willing to take a lot of commercial risk and have a history of doing that. As far as leading some of the initiatives, I do think that we recognize that we're less likely to be matched, particularly by the network, the other network carriers if we lead an initiative, whether it's a fee initiative or a system-wide pricing increase than if it's led by someone else, and that's just been our history over the years. And so we will lead something that's tactical or specific to US Airways, but large structural changes, we're less likely to lead simply -- at least if they are going to have a market share effect. So new fees, for example, we're less likely to lead those structural changes because we're less likely to be matched than other carriers. Hunter K. Keay - Wolfe Trahan & Co.: But there's some fees out there that you still think are on the table that you just haven't elected to pursue, given your competitive position?

Well, certainly, if you look around, one, [indiscernible] that people have, and two, what things that other airlines are doing or three, things that airlines in the U.S. are doing that aren't being done internationally, it's pretty easy to identify a list of possibility. Hunter K. Keay - Wolfe Trahan & Co.: Okay, no, that's good. I will stop there. I hear you, Steve. And on the -- I've got this theory that RASM has been really boosted by the industry by airlines getting their act together really in the troughs, not so much the peak. Because a lot of investors see $1,000 short haul fares and think how much higher can pricing go, and I tend to think that's truly just better behavior in the trough periods, but the data is not great for me to prove that. So can you help me out? And first of all, tell me if that's true or not. And second of all, help me understand maybe how much more room there is to go in terms of improving volumes and just basically matching supply and demand on trough periods. When I say trough, I mean like Tuesdays and Saturdays, not necessarily just February. Just any kind of color.

Yes, I think you're absolutely right. The industry's gotten much better at off demand. We've done that. One of the best place that the industry's done that is by varying capacity, much more variability in our capacity across the industry than there has been historically. At US Airways, we do something called a flux schedule that -- for, I think, last year, we did it on 104 days of the year. We add an extra bank in Phoenix. So we used the same assets that we have when we find extra bank. We do something similar during the off-peak and on Tuesdays and Wednesdays and Saturdays. It just depends on the time of the year. We canceled banks in both Charlotte and Phoenix, and so we use that to vary capacity during the first half of December. We can't -- we fly 8% fewer seats than we do in the second half of December. So we do that. The whole industry has gotten much better at varying capacity in a much more tactical manner. And as a result, you've seen our load factors go up to levels that 6, 7 years ago no one would have thought was possible. That's really not because the load factor's on the high -- on the peak flights. The 5:00 departure on Friday is the same load factor it was 5 or 6 years ago, but what you've done is prune out of the system a lot of the low load factor flying. And as you pruned it out, you've also increased the load factor on the remaining flights because you just reaccomodated those same customers. So that has happened, and I think you continue to see that going forward. I do think that there's a lot of opportunity still for the industry to improve demand on the peaks, but that's going to require some changes to how people price and yield manage. The reality is there's still an all for awful lot of junk fares out there in the market that tend to be ignored. And no matter what you think of your yield management system, if you've got a $99 fare in the market, some of it's going to find its way onto your aircraft. And even if none of it finds its way under your aircraft, if everyone in the industry has that $99 fare in place, some customers that would have flown, and you were going to fly on some other airline and pay $99. And so an industry that did a better job of keeping the fare structure clean and in place isn't a real opportunity, particularly on the peaks to get higher because a lot of that low-yield stuff winds up flying on peak flights anyway.

We will move next to Dan McKenzie.

Going -- circling back to the corporate revenues up 9% in the fourth quarter, I'm just wondering if you can help us break that down a little bit more? Is that coming more in the international side? Is it coming as a result of the slot transfer with Delta? Is Reagan National boosting that? Are there anything -- is there any additional color you can share there?

Sure. It's a continuation of a trend that's been going on for a couple of years at US Airways with an increasing focus on corporate, a sales team that's doing a great job, an operation that runs great, knowing who we are and knowing who we can go after and what corporate accounts we can go after and what works for us. Domestic was up almost 9%. International was up more. It was up 13%. That continues the trend, though, of growth that we've had, particularly in corporate travel from new accounts out of Europe. We really think growth across the portfolio technology was our strongest in the fourth quarter. Services was second. But we've really seen growth across the portfolio. And really, I think it's about execution and focusing on the corporate accounts where we have either a strategic advantage or a tactical niche that we can fit for those corporations and playing to our strength, and we had double-digit growth for the full year. So there's nothing new that happened in the fourth quarter. It's just continuing to do what we've been doing for the last couple of years.

Yes, I appreciate that. And I guess circling back on Reagan National, can you -- share a little bit about how that's spooling up? I think we're pretty fully into the -- I mean the slot swap, obviously, you implemented the second phase of that last summer. Are revenues ramping up in line with expectations? Any additional color you can share there?

Yes, we're very happy with the slot swap. It's performing right on our expectations for $75 million year-over-year improvement or ongoing improvement in earnings. DCA is doing well, and we're avoiding the losses that we were generating at LaGuardia. So we're very happy with how the slot swap has developed thus far, and expect that to continue going forward.

We'll go next to Kevin Crissey.

Scott, you mentioned that it's load factor more than yield right now. Of -- what do your load factors look like for Jan, Feb, March versus last year to give us a sense of that for the 3% PRASM you're talking about?

My guess is that the load factors are going to be up 2 to 2.5 points in January and February, and up probably 0 to 1 for March. There's a lot of variability in those numbers, but right now, that's what I would guess.

Okay. And then on distribution and maybe this is again for you, is -- any changes that -- what have the recent trends been since you're summarizing the year, maybe the trends in distribution, website percentage of sales and then any thoughts on Google Flights?

Okay, the usairways.com continues to grow, and that share is coming almost exclusively from online travel agencies. It's up to almost 30% of our revenue. That's grown in the last, I think, 3 years from 25% -- 24%, just under 30%. And OTAs have been reduced by almost exactly the same amount. That's a function of more functionality on the website, easy to use website. It's certainly the preferred destination for our frequent and best customers because they know it and use it. It's also, I think, this migration from OTAs, to not only US Airways, but other airlines' direct website. I think it's a function of the fact that we have things like Choice Seats available on our website, and the OTAs haven't invested in the technology to be able to sell that, and customers care about that and are moving because they care about that. For what it's worth, we're happy to let the OTA sell that, and would like to have them sell products like that, but they've got to make the investment and have the willingness to do it. And I think, eventually, that is going to happen, but we've seen a big improvement in direct distribution, which is also from the cost side. As to Google Flight, it's very small for now, and so we'll continue to watch it, but no real commentary on it because it's a very -- it's pretty small right now.

We'll take our next question from Helane Becker. Helane R. Becker - Dahlman Rose & Company, LLC, Research Division: Just 2 questions. One, I saw that the NMB was getting involved in your flight attendant negotiations again. Can you just walk us through a timeline of what's likely to happen? And then my second question is I think you've got $1 billion of debt that's going current at the end of the current quarter. So maybe, Derek, you could talk about -- I mean, I don't expect you to write a check, but maybe you can talk about what the thought is to refinance that.

Thanks, Helane. On the first one, Steve Johnson is actually in Philadelphia working on exactly what you're talking about. So hopefully, Steve can talk. Steve, are you on line?

I am.

Perfect.

Helane, we -- I'm not sure which report you're referring to, but we have been talking to our flight attendants on and off since the second PA was rejected to try to find a way to move forward. Those discussions are continuing here in Philadelphia. Their -- the National Mediation Board is involved in the discussions as they have been, and we're hopeful to find a pathway forward that would allow us to announce something certainly in the next weeks. Helane R. Becker - Dahlman Rose & Company, LLC, Research Division: Okay, in the next weeks, weeks with an s, you said?

Yes. Well, you never know, and I'm frequently too optimistic about how long these things take as they always do take a little bit of time, but we're hopeful that we can get something announced in the very near future, I'll say that. And then there would be a ratification process that would follow if we're successful.

Thanks, Helane. Derek?

Helane, and just one thing to clarify from a cost guidance perspective, it does not -- none of my cost guidance includes any new labor contracts. If the new labor contract is done and complete, we will update our cost guidance to affect that so everything Steve's doing not in the numbers, just so everybody is clear on that. The second thing, Helane, on the term loan, we have a term loan, as you said, becomes current in about 3 months by $1.1 billion. We have left on that term loan with some really good collateral behind it. We have been working with the banks to find the optimal solution for that. We also have other collateral that if you recall was part of the term loan that -- or some spare parts and engines and other things. So we are working today. We've been working over the last month to find the right time and the right transaction. So I believe you'll see us move forward pretty soon on a transaction to do that. And I think it's available, it's there today. I think the market is really strong. We're just trying to make sure we have the optimal collateral package when we go out, but we are -- we're prepared and ready to move in the near future on refinancing some of that, the term loan, that comes due in 2014.

And next we'll move to Michael Linenberg.

Two questions here. Derek, just the -- it looks like over the last couple of quarters, your restricted cash has come down from like 390 to 330 or so. What -- is that seasonal or is it any sort of release because of your improving credit profile?

It is seasonal, but it is, it's the credit card holdback. We have different tiers and levels of credit card holdback, and we have maintained a 10%. We used to be a 15% holdback, we're now at 10% holdback. That could change by the quarters and as things get better, we'll remain at the 10% and hopefully get down to 0%, but that's what it is. It's totally going from a 15% holdback with our MasterCard Visa to a 10% holdback.

Okay, very good. And then a question for Scott, if we look at your capacity growth last year, 2012, you were a little bit ahead of the industry and then we look at -- if I look at your domestic, your plans for domestic, it's up to 7. Right now, you look at the forecast, the consensus forecast for U.S. GDP this year and it's 2%. It's actually coming down a little bit from 2012, which was 2.3? How do you -- when you think about that capacity growth relative to sort of where GDP is, are you at risk of maybe losing some tension in your ability to price to maintain equilibrium? Or as you said, a lot of this is just you're replacing on a one-for-one basis their larger shells? Is it just these aircraft are going into markets where you may be spilling traffic?

Yes, I think it's the latter. As we -- because of the way we're growing, instead of adding new shells, we're up-gauging the aircraft. It does put some pressure on PRASM, but you see a much larger benefit in CASM. And you look at our results for 2012 and I think you'll see the same thing in 2013 that we are leading the industry in terms of margin improvement. And in 2012, despite the fact that we had capacity growing through larger gauge faster than the industry, we were, I think, behind only Delta in terms of year-over-year RASM. So even with the challenge of greater capacity growth, we managed to have strong relative RASM performance and really strong relative CASM ex fuel discipline, leading to the best improvements in margins. So I think that's a formula that worked in 2012 and it's the same formula in 2013.

We'll move next to Glenn Engel.

A few questions. I'll start with Scott. If I'm looking at your ASM by quarter, it looks like the fourth quarter is up 7 to 8 and even if I adjust for Sandy, up 6. So that's a lot of supply for an off-peak quarter. Is that something that concerns you?

Well, we've got a lot of time to see how demand develops. And earlier, I talked about our ability to be flexible on capacity. And so, yes, there's certainly opportunity in the fourth quarter to pull that capacity number back by not buying as much in off-peak periods at the moment. We feel good about -- a lot of it is driven by a combination of higher completion factor, which you pointed out and also gauge. But this year, I don't remember for sure how our guidance developed, but I know that we pulled capacity for the fourth quarter as we got close to it because the demand environment is still strong enough. So we will certainly have the ability to do that again this year. So, for example, in our guidance, we got -- this year, we tactically reduced capacity on days, of week to Europe in a few markets, and that led to capacity being down in Europe. In our business plan, we don't have that happening, but we certainly -- if we get end of the year and either demand is weak or fuel prices are higher or anything else, those are the kind of things -- those are the kind of triggers we can pull to have lower capacity in the fourth quarter.

For Derek, you mentioned that you didn't really include any new contracts in your cost guidance. Have you included your refinancing of the interest you talked about with Helane? Or any -- the fact that your stock price is now about 10% higher than it was the start of the quarter, is that reflected in the numbers?

No, it is not.

And finally on the new aircraft side, can you talk about how much lease expirations fall off this year? And what's roughly your cost of finance for new aircraft right now?

The aircraft fall off, I think our aircraft rent is down year-over-year by something in the neighborhood of about $30 million because we have 21 aircraft that come off. So those will come off. We're renewing some aircraft at lower rates. So year-over-year, aircraft rent should be down by about that much. The last EETC we did was in the range of a little over right around 5% -- 4% to 5%, and that's the last transaction we did from a EETC perspective, and that was just done at the end of 2012.

And just a question for me, Derek. On Glenn's question about the -- that wouldn't be in your cost guidance anyway because it's below the line, right?

Yes, but you give below the line forecast too.

Yes, when we give out interest expense, you're going to get interest expense in the guidance.

[indiscernible] sorry, it was not in the CASM guidance. Got it.

We'll take our next question from John Godyn.

Doug or Scott, when I think back to '06, '07, you used to talk a lot about goals of expanding internationally to improve margins and returns. And today, your margins are really competitive with peers that still have a lot more international exposure. And last quarter, Doug, I think you mentioned that we're in the third inning of the industry rationalization story. So I know you can't talk about specific numbers, but can you give us a sense of how domestic profitability has evolved compared to international in the last few years? And when we think about what the seventh inning might look like, is there a world where legacy airline returns in domestic actually exceed international?

Well, we said that in 2006 and '07, and we have continued to grow internationally, and that growth has done well. For us, international is probably slightly higher margin, but domestic is profitable for us. I think we have the best domestic network, certainly, of the network carriers, and I'm confident that our domestic profitability is the best. We have some great hubs, and we do well domestically. It does lead to an opportunity for international growth for us going forward. I think to your point about is domestic getting better for the industry, domestic, I think, has improved for the industry overall. We started from a higher base and so have improved it at a similar rate. We still have a strongly profitable domestic system, but I think the whole industry has improved. There's been more capacity discipline domestically than there has ever been internationally, and it's much more rational. So I think there's more upside to it because it still, I believe, loses money for at least some of our network competitors. And someday, I think it will be profitable for everyone.

Okay, but when we think about sort of what a next leg up might look like, would you guess that it's balanced across the network? Or do you think sort of domestic has more upside in the next leg up or international? Is there anything you can offer there?

I think domestic has more upside if you just look at the competitive dynamics with low-cost carrier cost coming closer in line with the network carriers, the focus of all the domestic carriers, not just the network carriers, but all the domestic carriers on returns, something that's not always true with our international competitors. I think you'll see more capacity discipline and more rationale in the domestic industry. So I'd bet my chips on the domestic improving faster than international on improvement.

Okay. And Derek, if I could just ask a question on cost, you've done a great job keeping unit cost ex fuel growth low. When we think about sort of what a normalized growth rate might look like multiple years down the line, excluding any kind of labor deal, is this sort of 1% or sort of sub-inflation kind of unit cost on a little bit of capacity growth the right way to kind of do a multiyear model?

Yes.

And we'll go next to Savi Syth. Savanthi Syth - Raymond James & Associates, Inc., Research Division: Just on the regional jet side, American is doing a lot of up-gauging on the regional jet, and it's a significant part of their revenue target. And then you've got Delta and United, who with the new pilot contract, got a lot of scope increase, and I think they are looking to use that as a way of improving revenue and reducing cost. And just wondering what your thoughts was on the regional space, and if we'll see more up-gauging on that side? And what your thoughts on -- what do you see for kind of retirements of 50-seaters and additions of larger jets?

Well, you see us already adding more -- they're not regional jets, but Embraer 190s, 100-seat aircraft. So that's a trend that's happening across the industry and one that makes sense, and that I think we believe will continue going forward. That said, you can also imagine an environment where everyone is trying to get large regional jets and as a result, 50-seat lift becomes -- or that large regional lift becomes expensive and 50-seat regional lift becomes inexpensive, in which case you just go where the economics are. So we're agnostic about whether we have 50 or larger regional jets, 50-seater or larger regional jets. It's all about the economics. And today, the economics of large regional jets are better, but 5 years from now, that might be different. Savanthi Syth - Raymond James & Associates, Inc., Research Division: Got it. Just a follow-up, on the cargo side, you said international yields are down. Any trend changes as you look out to the first quarter and beyond?

Well, we saw improvement in the fourth quarter, and I think we are starting to see improvement. Airlines, in particular, are the marginal capacity in the cargo business. So a little bit of improvement in the cargo business leads to a lot of improvement at passenger airlines, and a little bit of downturn leads to a lot of decline. So if the economies in Europe and you ask which -- at least, for us, most of the cargo revenue is driven by Europe, the trade between Europe and U.S. And if those economies do well, you can see big improvements there.

And we'll go next to Jamie Baker. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Just a quick follow-up, Scott, the comments on the flex scheduling interested me. You said the entire industry has gotten better. Are there any carriers out there that are lagging in this regard? Or is everybody kind of equally as good as US Airways and the story has already run its course?

I can't comment on that. Jamie N. Baker - JP Morgan Chase & Co, Research Division: Okay, well, that certainly implies an answer. So I guess I'll settle for that, and I'll have to figure out who you must be referring to.

And that does conclude the analyst portion of the Q&A session. At this time, we're going to move on to our media. [Operator Instructions] We'll go to Linda Loyd.

US Airways in the city of Philadelphia yesterday announced terms of a 2-year lease extension at Philadelphia airport. The agreement did not include building a fifth new runway that the city and the airport want, and airlines have opposed. If US Airways and American were to merge, would the fifth new runway be needed in Philadelphia?

Linda, I can't answer a speculative question about whether or not we might merge.

No, this is not to ask you if you were going to merge. If you were to merge, if you were, would a new runway be needed?

I'm sorry. Yes, it assumes that we are, which -- anyway, I just can't do that Linda, sorry.

Do you envision a time when a fifth new runway, a fifth runway in Philadelphia would be needed, a scenario?

Right. Let me try and answer your question as best I can, which is we're really happy with today's announcement. I think it shows that US Airways and the city -- and not just US Airways, but all the airlines that serve the city are interested in working together with the city and the airport to make that airport as strong as it possibly can be. We're extremely happy with the leadership of Mayor Nutter and his team including Rina Cutler and Mark Gale who have done just a great job of working with us to get through all this. And what we signed today gets us to the next couple of years, and we'll have bigger decisions to make in the future. We all know that, but this gives us a time to work together, and study those and make sure that we're all on the same page. But we're really happy with where we are right now, and I believe the city is as well, and they deserve a lot of credit for getting this done.

We'll move next to Josh Freed.

I'm curious whether there's been any impact on your fuel sourcing in Philadelphia ever since one of the fuel producers there became owned by a different airline.

No, we haven't had any impact at all.

Okay, so no meaningful changes in pricing or ability to deliver, anything like that?

No, not at all.

Okay, are you able to share any thoughts on what you think of the new livery over at American?

No, we can't.

We'll go next to Ely Portillo.

Sort of in the same vein as Linda in Philadelphia, I was just wondering what you think about the pace and type of improvements that are going on at Charlotte Douglas, and whether you think that a fifth parallel runway or a fourth parallel runway, fifth total, will be needed here in the coming few years.

Robert?

So in terms of the improvements being made, one of the most notable is the opening of the international recheck and international customs hall. That's been a big deal for us, and has really helped with alleviating crowds and improving our ability to connect passengers in getting them to where they need to go. That was a project that has been under works for the last couple of years in partnership with Jerry Orr. We're really pleased with that. As far as some of the other things that you might see coming up, in partnership with the airline and the airport authority, we've got a project going on right now to equip all of our gates with a new product called Safegate, which will help us with marshaling our aircraft in, and ensuring that our aircraft are clear to approach gates. That's a big improvement. We're really pleased with that, and that's going very quickly. And overall, one of the big issues that we've been working with the airport on as well is ensuring that we have the power and air resources at the gate to make sure that our aircraft can be as environmentally friendly as possible, and we'd like to compliment again Jerry and Duke Power for putting us in a position, where later this summer, we'll have new power and air capabilities at a number of our gates, and that really should facilitate as we look forward to the summer. So you can just tell by some of these projects the amount of work that's going on and the partnership, and it really is work that helps us as an airline be as efficient as we can. And I think it creates a really nice traveling experience for our customers.

And any thoughts on whether the fourth parallel runway will be needed in a few years, and they look to start constructing that?

We're just -- on that, again, we work cooperatively with Jerry. And as we take a look at our needs going out to the future, I think we're very pleased with the runway that was opened up just 2 years ago. And we're making great use of it. And should demand require it, we would absolutely work with Jerry and the airport authority on what needs might be.

We'll go next to Mary Schlangenstein.

Scott, I wanted to ask you, you talked about that your bookings are up, demand remains robust and you've got historically high load factors, but yet, you're having -- you and the industry, I guess, are having trouble raising fares. Can you talk a little bit more about what are the obstacles? What's going on that we aren't seeing fare increases more often?

I think this is the kind of question that the General Counsel won't let me answer if -- sitting in the room with you.

Or if you're sitting in a conference room in Philadelphia.

And not skate on thin ice.

Just in terms of even on an industry level, you can't talk about it?

Well, it's the same stuff that we historically have seen in the industry. Just a lot of it is the way people manage fares, and it's complicated. We file tens of thousands of fares and stuff falls through the cracks. I think it's mostly about execution and airlines unintentionally keeping low fares in the market that they don't even know were there.

Next, we'll go to Edward Russell.

I just wanted to ask about the 6 aircraft sale leasebacks, Derek, that you mentioned in your call. I was actually might be able find a little bit more detail on those sale leasebacks.

Well, all I'm try to say is that our planning, just for planning purposes, since we have not obtained financing for those aircraft, that may not be the way that we finance those 6. But for planning purposes, when I do a budget, I have to have an assumption of how do I treat those in a budget. So I just wanted to let everybody know that they're treated that way, and they're in the CASM guidance. But we will come back probably within the next couple of quarters to firm out financing for that, and it could be financed a different way. So we don't have -- of the 23 deliveries this year, 17 of them are firmly financed. We have back -- we have financing for all of them. The other 6, they're not firm-financed. I do have backstop financing for all of those from Airbus, but I don't plan -- I hope to do them in a different way, and all I wanted to do is -- they're that way, planned that way, but they're not firmed up that way.

And we'll go next to Ted Reed.

A couple of questions. First of all, in Philly, you're going to a 12,000-foot runway from a 10,500-foot runway. What can you do with the larger runway that you can't do now?

Ted, right now for our aircraft, it really helps in inclement weather. And our fleet plan is fairly well set with our -- on the widebody side. So for right now, it helps with congestion, and one of the good points about the runway extension is it also offers us new taxi capability. And that, I think, will help us be able to move around the airport quite a bit better and you know that congestion issues in Philly on the ground, not only the extension of the runway, but the new on and off taxi ways will help considerably.

So it doesn't speak to new more destinations at all or new aircraft types?

Not for us, no.

All right. Secondly, Delta repeatedly said on their phone call that 2013 looks like a much better year than 2012 for them. Can you say the same thing?

I think if you just roll through the guidance that we put out today, all the analysts will come out with reports soon, but if you just roll through that guidance, it leads to financials that are better than 2012, and 2012 was already a record.

Okay, last thing. So you talked a lot in earnings release about your strong operational performance, and then you have talked on the call about -- have talked repeatedly in the past about not fuel hedging. So these things seem like strategic advantages that US Airways have, sort of unique strategic advantages. Is there any way to quantify those things, how much they improved in airline's performance that you're able to do those things, your operational improvements and also your lack of fuel hedging?

Yes, we can try, but they're not numbers we want to disclose because they're imperfect. But what we know is this running a good operations is -- running a bad is -- there's nothing more expensive than running a poor operation. So we work very hard to make sure that we run a reliable operation that helps somewhat with the cost, but it also is precisely what our customers want most is to be sure that they can get from point A to point B reliably. We do that better than anybody does, and we're proud of that. So we do it for those reasons. We know it has a positive financial impact both in revenues and in reduced cost, but not a number I can -- we can really quantify precisely. And the fuel hedging point is one that we've talked about in the past. I mean, look, it has certainly been the right decision for the last few years for us. Even in a rising fuel environment, we saved hundreds of millions of dollars versus others who have hedged, but that's less the point than our view that it's the right way. It's the right risk profile, and that indeed hedging -- the result could be by the way that not hedging in some point could hurt us, but it doesn't mean it's wrong either. We do not have to have hedged. The point is more about what's the right way to manage risk within an airline, and we just don't happen to believe that hedging programs -- that airlines can do that, and indeed that you're better off not hedging in terms of managing the risk profile they're on.

Is it fair to say that these are unique strategic advantages that you guys have that other airlines may or may not have?

I think they are focuses of US Airways that -- anyway, on the operating front, it is who we are. It's become a fiber -- it's part of the fiber, the being of US Airways, and to make sure we run a reliable network. We're not the only ones doing that by the way. We should note that our colleagues at Delta are doing as good or better job than us in several months, but we -- but it's important to them as well, but I think that's part and parcel of who we are and has been for quite some time to make sure we run a reliable airline, and yes, that's a strategic advantage. Fuel hedging, I would call, more tactical and something anyone can do. Those are just decisions people make in terms of mitigating risk, and we happen to like our decision on that point.

Last, this is definitely the last thing, but why are some airlines focused more on operational performance and other airlines don't seem to and it's so important?

You have to ask them.

And that does conclude our question-and-answer session for today. I'll turn the conference back over to management for any closing remarks.

I think we're done. Thank you, all, very, very much for your time. Thanks again for bearing with us on the constraints on the questions. And if you have any further questions, please contact either our Corporate Communications Department or our Investor Relations department. Thanks again. Bye.

And that does conclude today's conference. Again, thank you for your participation.