US Airways Group Inc. joined the stampede of airlines cutting costs and looking to boost revenues after markets closed Thursday, announcing plans to axe flights, shrink its fleet and eliminate 1,700 jobs as well as increasing or adding a number of fees.
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The airline in a statement said it would reduce its fourth-quarter domestic flying by 6% to 8%, return 10 aircraft and cancel the leases of two other planes due to arrive in future years. US Airways said the job cuts, which it hopes to accomplish through attrition and voluntary leaves of absence but could include furloughs, were a result of the reduced flying.
The hardest hit US Airways market will be Las Vegas, where the airline will end its extensive late-night operation. Overall daily departures from Las Vegas, where US Airways competes extensively with discount king Southwest Airlines Co., will fall from a high of 141 in September 2008 to 74 by the end of 2008. The airline is also closing luxury clubs in Baltimore and Raleigh, N.C., cargo operations in Burbank, Calif., Colorado Springs, Colo., and Reno, Nev., and its arrival lounges in Munich, Rome and Zurich.
While the airline looks to cut its costs, it is also adding fees. US Airways joined American Airlines Inc. and United Air Lines Inc. in announcing its intention to charge $15 for a first checked bag, and also said it would charge for nonalcoholic beverages and for redeeming frequent flier award tickets, as well as service fees for using call centers.
The cuts come as all airlines are retrenching as they try to survive soaring fuel prices, which have increased 90% in the last 12 months and 200% since 2000. US Airways estimated that its total annual fuel expense will be $1.9 billion more in 2008 than a year earlier, meaning the airline will spend on average $299 in fuel costs alone to carry one passenger on a round-trip journey. That is up from just $70 per passenger in 2000. - Lou Whiteman
See US Airways statement
See Dealscape post on cuts at other airlines
See Dealwatch: Airlines
