Saturday, October 31, 2009

Facing losses, US Airways cutting flights, 1,000 jobs

By Linda Loyd In another sign of tough times for airlines... thumbnail 1 summary

By Linda Loyd

In another sign of tough times for airlines, US Airways Group Inc. said today that it would cut about 1,000 jobs next year, end Philadelphia flights to five European cities, and trim 43.8 percent of daily departures from Las Vegas.

"We cannot continue to operate unprofitably forever," US Airways chairman and chief executive officer Doug Parker said in a memo to employees.

The good news: None of the 200 pilots, 150 flight attendants, and 600 airport passenger and ramp service workers to lose their jobs are based at Philadelphia International Airport.

None of the 600 airport positions to be lost is mechanics who work on airplane maintenance. The Federal Aviation Administration earlier this month proposed a $5.4 million fine against the airline for alleged safety and maintenance lapses.

Many of the job cuts will be in Las Vegas, Boston, and New York's LaGuardia airport, said airline spokesman Morgan Durrant.

Struggling to turn a profit, with volatile fuel prices and a slowly improving economy, Philadelphia's dominant airline said it would close crew bases in Boston, New York, and Las Vegas.

It will end all flights to Wichita, Kan., and Colorado Springs, Colo. The net effect of all the changes is fewer options for the flying public.

US Airways employs a total of 4,200 pilots; 6,300 flight attendants, and 11,500 airport, baggage, gate, and grounds workers. It also has 3,400 maintenance employees.

After these changes next year, 99 percent of US Airways flying will be to or from its three hub cities - Charlotte, N.C.; Philadelphia; and Phoenix - and Washington's Reagan National Airport.

The airline is dropping a planned route to Beijing from Philadelphia that already had been delayed from 2009 to March 2010.

It is suspending flights next year between Philadelphia and London Gatwick airport and Birmingham, England; Milan, Italy; Shannon, Ireland; and Stockholm, Sweden. Only London Gatwick was daily, year-round service. The other four were seasonal between May and October. US Airways still has a daily flight from Philadelphia to London Heathrow.

On its East Coast shuttle, US Airways will fly smaller Embraer-190 aircraft between Boston and New York. Flights will continue almost hourly between Philadelphia and Boston.

"While we are beginning to see some improvement in the business environment," Parker said in the employee memo, "we still reported a loss [of $80 million] for the third quarter and are expected to report another large loss for 2009."

US Airways, the smallest of the so-called "legacy" airlines behind Delta, American, United, and Continental, lost $800 million in 2008.

Daily flights from Las Vegas will be cut from 64 to 36 by February because of high fuel prices and "continued weak demand," the airline said.

"US Airways cuts will make it even more difficult to get to Vegas," said analyst Brian McGill of Janney Capital Markets Inc. in a client note.

US Airways has 12 percent of the market - seats and flights - into Las Vegas, which will shrink to 7 percent beginning in March, McGill said.

"The majority of the cuts are likely to come from long-haul cities such as Charlotte and Philadelphia," he wrote.

"We expect the Strip to become more reliant on the less profitable drive-in customer." Visitors who drive are "15 percent less profitable per day than fly-in customers," McGill said. At its peak in March 2007, US Airways had 112 daily flights arriving in Las Vegas.

"These are difficult decisions," Parker said. "They are, however, the right decisions. By focusing on our strengths and eliminating unprofitable flying, we will increase the likelihood of returning US Airways to long-term profitability."

US Airways has 1,950 flight attendants and 1,150 pilots based at Philadelphia International Airport.

Separately, American Airlines announced it would close its Kansas City, Mo., maintenance base and shut, or shrink, five other maintenance stations in San Francisco, Detroit, Minneapolis, St. Louis, and San Jose, Calif. American has cut flights and reduced its aircraft fleet from more than 900 airplanes to about 600