General Lee
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Press ReleaseSource: US Airways
US Airways Accelerates Business Model Transformation
Thursday June 12, 4:12 pm ET
TEMPE, Ariz.--(BUSINESS WIRE)--US Airways (NYSE: LCC - News) today announced that it is making additional domestic capacity reductions, reducing headcount and implementing several new revenue initiatives to help expedite the airline’s return to sustained profitability in this new and challenging environment.
Major changes and initiatives announced today include:
-- Reducing fourth quarter domestic mainline capacity by six to eight percent on a year-over-year basis. -- Returning 10 mainline aircraft in 2008 and 2009, canceling the leases of two A330 aircraft that were scheduled for delivery in 2009, and planning to reduce additional aircraft in 2009 and 2010. -- Decreasing staffing levels by approximately 1,700 employees across the airline's system as a result of the reduced flying. -- Introducing a first-checked-bag service fee of $15. -- Introducing a new in-flight beverage purchase program. -- Amending the airline's Dividend Miles frequent flyer program. -- Increasing the fee associated with the airline's employee guest and parent discounted travel pass program.
US Airways Chairman and CEO Doug Parker said, “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. We are taking every action to operate a strong and competitive airline, while ensuring that our customers have continued access to competitively-priced air travel.”
The airline cited the high cost of fuel as the primary force working against the entire U.S. airline industry and US Airways, of note:
-- The cost of jet fuel has increased more than 90 percent over the last 12 months (and more than 200 percent since 2000). -- US Airways estimates its total annual fuel expense (mainline and Express) will be $1.9 billion more in 2008 than it was in 2007 when the airline reported a net profit of $427 million. -- In 2008, fuel represents 39 percent of total (mainline and Express) expenses; in 2000, fuel represented 14 percent of the airline's total expenses. -- At current fuel prices, US Airways will spend an average of $299 in fuel costs alone to carry one mainline passenger on a roundtrip journey, which is up from an average of $151 in 2007, and $70 in 2000.
Capacity Reductions
In response to the sustained surge in record high fuel prices, the airline will reduce its fourth quarter domestic mainline capacity by six to eight percent on a year-over-year basis. The airline had previously planned a two to four percent decrease in domestic mainline capacity in its fourth quarter 2008. Domestic mainline capacity for 2009 is planned to be reduced seven to nine percent from 2008 levels.
Available Seat Miles Year-Over-Year Change 2Q 3Q 4Q FY08 FY09 Domestic -1% to -3% -0% to -2% -6% to -8% -3% to -5% -7% to -9% International +6% to +8% -0% to -2% +4% to +6% +3% to +5% +6% to +8% Total Mainline -1% to + 1% -0% to -2% -4% to -6% -1% to -3% -4% to -6% Express +7% to +9% +9% to +11% -1% to +1% +4% to +6% +0% to +2% Total System +0% to +2% +0% to +2% -3% to -5% -0% to -2% -3% to -5%
The airline is taking the following steps to achieve its capacity reduction goal: -- Fleet Reduction: The reduced flying is accomplished by returning 10 aircraft to lessors and canceling deliveries of two additional aircraft in early 2009. Aircraft coming out of the fleet include the return of six Boeing 737-300 aircraft by the end of 2008, four Airbus A320 aircraft in the first half of 2009, and the cancellation of leases of two A330-200 wide-body aircraft that had been scheduled for delivery in the second quarter of 2009. The airline is also planning to reduce additional aircraft in 2009 and 2010.
-- Las Vegas Flight Reduction: Effective Sept. 3, the airline's Las Vegas night operation will be closed, except for limited night service to the East Coast. Historically, both pre-merger America West Airlines and today's US Airways have operated an extensive late-night operation in Las Vegas. However, due to the high cost of fuel, the revenue generated from the Las Vegas night operation no longer exceeds the incremental cost of that flying. As a result, the airline will park those planes overnight, as it does for the majority of its fleet in other markets. Overall, daily departures from Las Vegas, which were as high as 141 during Sept. 2007, will drop to 81 with the Sept. 3, 2008 schedule change. The airline's Las Vegas daily departures will drop further to approximately 74 by the end of 2008 as aircraft are retired from the fleet.
-- Employee Reduction: The reduced flying will require approximately 1,700 fewer positions across the airline's system including roughly 300 pilots, 400 flight attendants, 800 airport employees and 200 staff and management. For front line employees, the staffing reduction is expected to be handled through attrition throughout the summer. Any necessary furloughs following the summer travel season will be offset as much as possible by voluntary leaves of absence as permitted by the respective labor contracts.
Cont'd......
US Airways Accelerates Business Model Transformation
Thursday June 12, 4:12 pm ET
TEMPE, Ariz.--(BUSINESS WIRE)--US Airways (NYSE: LCC - News) today announced that it is making additional domestic capacity reductions, reducing headcount and implementing several new revenue initiatives to help expedite the airline’s return to sustained profitability in this new and challenging environment.
Major changes and initiatives announced today include:
-- Reducing fourth quarter domestic mainline capacity by six to eight percent on a year-over-year basis. -- Returning 10 mainline aircraft in 2008 and 2009, canceling the leases of two A330 aircraft that were scheduled for delivery in 2009, and planning to reduce additional aircraft in 2009 and 2010. -- Decreasing staffing levels by approximately 1,700 employees across the airline's system as a result of the reduced flying. -- Introducing a first-checked-bag service fee of $15. -- Introducing a new in-flight beverage purchase program. -- Amending the airline's Dividend Miles frequent flyer program. -- Increasing the fee associated with the airline's employee guest and parent discounted travel pass program.
US Airways Chairman and CEO Doug Parker said, “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. We are taking every action to operate a strong and competitive airline, while ensuring that our customers have continued access to competitively-priced air travel.”
The airline cited the high cost of fuel as the primary force working against the entire U.S. airline industry and US Airways, of note:
-- The cost of jet fuel has increased more than 90 percent over the last 12 months (and more than 200 percent since 2000). -- US Airways estimates its total annual fuel expense (mainline and Express) will be $1.9 billion more in 2008 than it was in 2007 when the airline reported a net profit of $427 million. -- In 2008, fuel represents 39 percent of total (mainline and Express) expenses; in 2000, fuel represented 14 percent of the airline's total expenses. -- At current fuel prices, US Airways will spend an average of $299 in fuel costs alone to carry one mainline passenger on a roundtrip journey, which is up from an average of $151 in 2007, and $70 in 2000.
Capacity Reductions
In response to the sustained surge in record high fuel prices, the airline will reduce its fourth quarter domestic mainline capacity by six to eight percent on a year-over-year basis. The airline had previously planned a two to four percent decrease in domestic mainline capacity in its fourth quarter 2008. Domestic mainline capacity for 2009 is planned to be reduced seven to nine percent from 2008 levels.
Available Seat Miles Year-Over-Year Change 2Q 3Q 4Q FY08 FY09 Domestic -1% to -3% -0% to -2% -6% to -8% -3% to -5% -7% to -9% International +6% to +8% -0% to -2% +4% to +6% +3% to +5% +6% to +8% Total Mainline -1% to + 1% -0% to -2% -4% to -6% -1% to -3% -4% to -6% Express +7% to +9% +9% to +11% -1% to +1% +4% to +6% +0% to +2% Total System +0% to +2% +0% to +2% -3% to -5% -0% to -2% -3% to -5%
The airline is taking the following steps to achieve its capacity reduction goal: -- Fleet Reduction: The reduced flying is accomplished by returning 10 aircraft to lessors and canceling deliveries of two additional aircraft in early 2009. Aircraft coming out of the fleet include the return of six Boeing 737-300 aircraft by the end of 2008, four Airbus A320 aircraft in the first half of 2009, and the cancellation of leases of two A330-200 wide-body aircraft that had been scheduled for delivery in the second quarter of 2009. The airline is also planning to reduce additional aircraft in 2009 and 2010.
-- Las Vegas Flight Reduction: Effective Sept. 3, the airline's Las Vegas night operation will be closed, except for limited night service to the East Coast. Historically, both pre-merger America West Airlines and today's US Airways have operated an extensive late-night operation in Las Vegas. However, due to the high cost of fuel, the revenue generated from the Las Vegas night operation no longer exceeds the incremental cost of that flying. As a result, the airline will park those planes overnight, as it does for the majority of its fleet in other markets. Overall, daily departures from Las Vegas, which were as high as 141 during Sept. 2007, will drop to 81 with the Sept. 3, 2008 schedule change. The airline's Las Vegas daily departures will drop further to approximately 74 by the end of 2008 as aircraft are retired from the fleet.
-- Employee Reduction: The reduced flying will require approximately 1,700 fewer positions across the airline's system including roughly 300 pilots, 400 flight attendants, 800 airport employees and 200 staff and management. For front line employees, the staffing reduction is expected to be handled through attrition throughout the summer. Any necessary furloughs following the summer travel season will be offset as much as possible by voluntary leaves of absence as permitted by the respective labor contracts.
Cont'd......
