US Airways Earnings: An Early Look

With dozens of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

Let's turn to US Airways . The airline has had to deal with many of its competitors consolidating and combining in recent years, but now, it's US Airways' turn to look to grow through a potential merger. Let's take an early look at what's been happening with US Airways over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on US Airways

Source: Yahoo! Finance.

Will US Airways fly higher?
Analysts have been extremely optimistic about US Airways' prospects this quarter, raising their earnings-per-share estimates steadily throughout the past three months. The shares have also reflected that optimism, with the stock soaring between 20% and 25% since mid-October.

The airline industry has been always been a challenging sector to invest in, as the huge capital requirements and razor-thin margins give airlines almost no wiggle room to deal with shocks like high fuel costs and economic slowdowns. That's why so many airlines have declared bankruptcy over the years.

But the big question for US Airways is whether American parent AMR will agree to a merger. The company said earlier this month that it expects to make a decision soon on whether to emerge from bankruptcy as an independent company or to merge. With AMR's unions supporting a merger, things look promising for US Airways, especially since a merger would give US Airways access to American's international routes. The international side of the business has gotten incredibly important, with Delta Air Lines looking into a combination with Virgin Atlantic in order to get more space at London's Heathrow Airport.

Still, the domestic part of the airline business has also been looking brighter. Mergers by United Continental and Southwest Airlines have helped rein in overcapacity, and huge ancillary fees for baggage, onboard food, and other amenities have pushed profits higher.

In its report, look for signs that US Airways has made progress in its discussions with American. If it goes much longer without snagging a new partner, US Airways could easily fall behind in the consolidation race.

Find solid winners
If you want the top ideas for winning stocks, follow Motley Fool co-founder David Gardner as he seeks out revolutionary stocks that produce market-crushing returns. Take advantage of the last few days of David's invitation to tour his Supernova service. Don't wait; click here to get instant access without delay.

Click here to add US Airways to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

The article US Airways Earnings: An Early Look originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Southwest Airlines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.