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Friday, June 13, 2008
US Airways to cut 1,700 jobs, reduce capacity
The Business Review (Albany)

US Airways Group Inc. will make additional reductions in the capacity of its domestic flights, cut 1,700 jobs and introduce a $15 fee for passengers' first checked bag as part of a plan to offset rising fuel prices.

The airline, which is the second largest carrier--behind Southwest Airlines--at Albany International Airport will reduce its domestic mainline capacity in the fourth quarter by 6 percent to 8 percent from the year-ago level. US Airways had previously planned a capacity decrease of 2 percent to 4 percent in the fourth quarter.

The carrier will cut staff levels by 1,700 jobs company-wide. Affected employees will include roughly 300 pilots, 400 flight attendants, 800 airport employees and 200 staff and management personnel.

The staffing reductions are expected to be handled through attrition throughout the summer. Any layoffs after the summer travel season will be offset as much as possible by voluntary leaves of absence, the company (NYSE: LCC) says.

The $15 fee for passengers' first checked bag goes into effect for tickets booked on or after July 9. In addition, US Airways will charge domestic coach passengers $2 for nonalcoholic beverages beginning Aug. 1.

"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," says Doug Parker, US Airways' chief executive. "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."

Among its other initiatives, Tempe, Ariz.-based US Airways has instituted a $25 service fee for domestic tickets and a $35 service fee for international tickets purchased through its call-center reservations line. The previous ticketing service fee was $15 for both domestic and international flights.

"The actions we are announcing today, coupled with our strong relative cash position and no material debt payments until 2014, will help US Airways persevere through these unprecedented times for our industry," Parker says. "Although clearly one unfortunate outcome of today's announcement is the furlough of employees, I believe we are taking the right steps to adapt our airline to this new environment."