Struggling airline reveals restructuring strategy to cut costs, join global alliance and expand regional jet fleet

US Airways has unveiled a three-phase restructuring strategy focusing on a five-fold expansion in the number of regional jets, joining a global alliance and reducing costs in line with other mainline carriers. The plan is a last-ditch attempt by the loss-making airline to survive as an independent operator after the failed United Airlines merger.

Phase one of the so-called "Plan B" aims to boost US Airways' operating profit by $439 million a year. The carrier racked up losses of $269 million in 2000 and expects to post a loss of more $160 million for the third quarter of this year. Near-term remedial measures include:

Deploying 60 yet-to-be-selected 50- to 69-seat regional jets on mainline routes to replace larger Boeing 737-300s and Fokker 100s; Converting 12 Airbus A319s and A320s to larger A321s, increasing the fleet to 33 aircraft; Deferring 30 Airbus narrowbody jet deliveries from 2003-05 to 2006-09 and withdrawing 20 MD-80s; Replacing 34 Boeing 757-200s on transcontinental routes with A321s and redeploying the Boeing twinjet to Florida services; Expanding US Airways Express regional jet flights at Boston, New York LaGuardia and Washington National airports; Joining a "premier global alliance" to boost international traffic.

The Air Line Pilots Association (ALPA) has agreed to reopen talks to raise the current 70-aircraft limit on regional jet numbers operated by Express, but is less receptive to mainline pilots flying regional jets for less pay in the interim. "If they are planning to replace mainline aircraft with small jets - in addition to replacing mainline flying - then management is on the path of declaring war on the US Airways pilot groups," says Chris Beebe, local ALPA chairman.

Phase two of the plan will focus on renegotiating the pilot contract, which is not due to expire until 2003, with the aim of re-equipping Express' predominantly turboprop fleet with new regional jets. US Airways has lagged behind rivals Continental, Delta Air Lines and United in modernising its regional operation. Bombardier, Embraer and Fairchild Dornier recently submitted tenders for up to 250 additional regional jets (Flight International, 7-13 August).

The final phase will aim to cut more than $700 million in labour costs, which are 20% higher than other US majors. Initially, $75 million will be saved by closing its San Diego reservations operation and Albany maintenance centre, shedding 580 jobs. Another cost-cutting target is its low-cost operation MetroJet, where it is threatening to retire 18 of the carrier's 42 737-200s if no labour concessions are made.

Source: Flight International