U.S. Airways to Pare Flight Routes, Jobs
US Airways Group Inc., which sounded upbeat about traffic rebounding when it announced a smaller-than-expected third-quarter loss earlier this month, Wednesday unveiled a major route retrenchment and job cuts aimed at returning the company to profitability.
The sixth-largest U.S. airline by traffic, US Airways said it is realigning its operations to focus almost exclusively on flights from its three domestic hubs: Charlotte, N.C.; Philadelphia; and Phoenix.
It also will retain a big presence at Washington's Reagan National Airport and keep its US Airways Shuttle service on the East Coast. By the end of next year, flights touching those cities and routes will account for 99% of US Airways' capacity, compared with 93% today, the company said.
As a result, the Tempe, Ariz., company said it will cut about 1,000 of its 32,400 jobs next year, including 600 airport workers, 200 pilots and 150 flight attendants. Chairman and Chief Executive Doug Parker said in a letter to employees that "by focusing on our strengths and eliminating unprofitable flying, we will increase the likelihood of returning...to long-term profitability." The company plans to close crew bases in Boston and Las Vegas and at New York's LaGuardia Airport.
US Airways said it will suspend service to five European destinations—Birmingham, U.K., and London's Gatwick Airport; Milan; Stockholm; and Shannon, Ireland—because of weak trans-Atlantic revenue trends. The company also said it will give up its unused route authority to serve Beijing from Philadelphia until economic conditions improve, although it said it retains the option for reapplying to the Department of Transportation for that route authority in the future.
Domestically, US Airways will trim its flights from Las Vegas, drop service to Colorado Springs, Colo., and Wichita, Kan., and redeploy its 15 E-190 Embraer regional jets to Boston.
The company posted a net loss of $80 million, or 60 cents a share, in the September quarter, compared with a net loss of $866 million, or $8.46 a share,a year earlier. Revenue declined nearly 17% in the latest quarter, to $2.7 billion. Like other airlines, US Airways was hurt last year by soaring fuel prices and then the recession, which has carried on into 2009. International flights and flights catering to business travelers have borne the brunt of the travel downturn in the recession, and carriers have cut fares and shrunk their operations to get through the turbulence.
US Airways President Scott Kirby last week said the company is seeing strong indications that business traffic is rebounding and that the economic recovery should allow carriers to implement fare increases. "We're seeing improving business demand, an improving pricing environment and core sequential revenue improvements," he told analysts.
Wednesday's steps don't necessarily contradict that confidence. By eliminating unprofitable flying and focusing on its strengths, US Airways hopes to be in a better position to thrive once the economy turns around.
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