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Government subsidies for airlines not likely, says US Airways CEO

US regulators are not likely to support subsidizing the embattled US airline industry as it struggles to counter skyrocketing fuel costs, US Airways chairman and CEO Doug Parker predicted today.

“I don’t think that’s where Congress is going to go,” said Parker in response to a multitude of questions from outspoken shareholder Evelyn Davis during the carrier’s annual shareholders meeting. “What we really need is a better energy policy that allows us not to be so dependent on foreign oil,” says Parker.

In the aftermath of the 11 September 2001 terrorist attacks, government loan guarantees were provided to near-bankrupt or bankrupt carriers through the Air Transportation Stabilization Board (ATSB). Both America West Airlines and US Airways benefited from ATSB loan guarantees in 2002 and 2003, respectively. The two carriers merged in 2005.


Parker’s comments mirror those of US airline lobbying group, the Air Transport Association, which says it is working to secure “a balanced and comprehensive US energy policy that increases US energy independence and results in more predictable and stable energy supply and costs”.

According to ATA figures, US airlines are projected to spend $61 billion on fuel this year, $20 billion more than in 2007. US Airways alone expects its expenses to increase by $2 billion in 2008, which is “a rather large hole to dig out of”, says Parker.
He notes, however, that while the current crisis is “impacting everyone”, US Airways is “relatively well positioned” with a “good bit of cash on the balance sheet”.

Source: Air Transport Intelligence news