Air Transport

Faced with an ever-declining operating environment in the USA, Star Alliance member US Airways sees an immediate need to increase revenue and decrease expenses but remains confident in its continued stability.

“For US [Airways], the best thing we can do is manage our costs aggressively and also explore other revenue generating ideas fully,” says management in an employee newsletter dated 3 April.

“Programs like charging for the second checked bag, while they may not be popular with customers, they simply can’t be ignored and must be explored and implemented as they have the potential to generate tens of millions of incremental revenue annually.”

While the amount generated from these programs “isn’t quite enough, on its own, to offset the nearly $1 billion that fuel will add to our 2008 expenses”, says US Airways, “we have to keep looking at these types of programs, and indeed we will”.

US Airways’ reassurance to employees comes on the heels of the closure of Aloha Airlines and ATA Airlines, and an announcement by US charter operator Champion Airlines that it will shutter operations at the end of May due to the soaring cost of fuel and the inefficiency of its Boeing 727-200 fleet in light of this factor.

Additionally, Columbus, Ohio-based new entrant Skybus Airlines on 5 April discontinued operations, and announced plans to file today for Chapter 11 bankruptcy protection.

The no-frills carrier, which operated a fleet of new Airbus A319 aircraft, had sought to transfer to the US market the low-cost model of European carriers EasyJet and Ryanair.

Asked by an employee to specifically address US Airways’ prospects in light of ATA’s demise, and record-level fuel prices, US Airways management says: “These certainly are interesting times, from the housing and credit crunch, to what looks like the next downturn in our industry; employees are right to ask questions.”

“However,” the carrier notes, “the good news is we are always thinking about the future, planning for whatever might come our way, and as Derek Kerr, our CFO, recently outlined, we’ve taken good steps to ensure our balance sheet is strong and our debt payments have been pushed as far out into the future as they can be (we only have very modest debt payments until the year 2014). The immediate need then becomes increasing revenue and decreasing expenses.”

Citing high fuel costs and a potential economic slowdown Phoenix-based US Airways in late February said it expects to post a loss for the first three months of 2008. It would be the second consecutive quarterly loss for the carrier after it lost $79 million during the fourth quarter of 2007.

Source: flightglobal.com sister premium news site Air Transport Intelligence news