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Lower fuel bills and higher fares combined to give US Airways a higher-than-expected Q4 profit, the airline reported yesterday. Net income was $12 million, or $0.13/share, versus a loss last year of $261 million, or $3.27/share. Excluding one-time items, profit was $0.91/share, ahead of Street expectations of $0.80. The upside surprise was due in part to US Airways' participation in ten industry-wide fare hikes last year. Revenue rose to $2.8 billion from $2.6 billion a year earlier. Sales rose 8.8% to $2.79 billion. The results reflect fuel hedge costs, debt refinancing, and the 2005 merger with America West that brought US Airways out of bankruptcy. The company earned $304 million for the full year, or $3.50/share, versus a loss last year of $537 million, or $10.64/share. US Airways paid 4.6% less for fuel in Q4 than it did a year ago, but fuel remains its biggest operating expense. The company had no comment on the status of its $9.9 billion hostile bid for bankrupt Delta Airlines, an offer it will retract tomorrow unless Delta's creditors request a delay in a Feb. 7 bankruptcy hearing on the stand-alone plan submitted by Delta managers. US Airways shares fell 2.4% to close at $53.10. Share prices fell across the sector as the price of crude spiked $1.59 to $55.60.

• Sources: Press release, MoneyCentral (I, II), Bloomberg, New York Times, Reuters
• Commentary: Deal or No Deal? US Airways Reportedly Sweetens Offer by $1B for Delta

• Stocks and ETFs to watch: US Airways Group, Inc. (LCC), Delta Airlines (DALRQ.PK). Competitors: AMR Corporation (AMR), Southwest Airlines Co. (NYSE:LUV), UAL Corp. (UAUA), JetBlue Airways Corp. (NASDAQ:JBLU). ETFs: streetTRACKS DJ Wilshire Small Cap Growth (Pending:DSG)

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Source: US Airways Beats Street on Q4 Profit