US Airways To Cut 1,700 Jobs, Reduce Capacity

June 13, 2008

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US Airways said on Thursday it will reduce its work force by 1,700, or about 5 percent, and will cut more capacity than planned and introduce new fees as the airline industry battles record fuel prices and a weakening economy.

The airline will reduce its fourth-quarter domestic mainline capacity by 6 to 8 percent, having previously planned a 2 to 4 percent cut.

For 2009, US Airways plans to cut domestic mainline capacity 7 to 9 percent from 2008 levels.

The airline will also return 10 aircraft to leasing companies and cancel deliveries of two aircraft.

US Airways said its new fees will include the introduction of a USD$15 service fee for a first checked bag for many customers from July 9.

"Our industry is profoundly challenged by the dramatic increase in fuel prices, and we must write a new playbook for running a profitable airline in this new and challenging environment," said US Airways chief executive Doug Parker in a statement.

US Airways said its fuel expense will be about USD$1.9 billion more in 2008 than it was last year.

Other measures to combat fuel prices will include a reduction of the airline's Las Vegas flights.

Effective September 3, US Airways said its Las Vegas night operation will be closed, except for limited night service to the East Coast.

It said daily departures from Las Vegas, which were as high as 141 during September 2007, will drop to 81 with the September 3 changes and Las Vegas daily departures will drop further to 74 by the end of 2008 as aircraft are retired.

Parker said that as demonstration of his confidence in US Airways, he intends to invest the equivalent of his 2008 salary in the company.

US Airways, which merged with America West Airlines in 2005, made an unsuccessful bid for Delta Air Lines last year and recent talks with United Airlines ended without a merger.

The airline is the latest of the major US carriers to announce large cutbacks as they grapple with a weakening economy and unprecedented oil prices, which have doubled in the past year.

Continental Airlines said on Thursday it will cut flights from its hubs to more than 40 domestic and international destinations as of September 3.

United Airlines has announced plans to cut jobs and flights, following a similar move by American Airlines.

(Reuters)