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US Airways taking new approach
Troubled US Airways is taking off in different directions. Among changes:
• The airline said it would concentrate on direct flights to and from major airports on the East Coast.
• It will dismantle its hub in Pittsburgh, said executives quoted in The New York Times.
• And it will wade into the competitive New York-to-Florida market.
The airline said its new moves would start this fall.
But at the same time, US Airways executives said the company’s continued existence depended on cutting $800 million a year from employee wages and benefits. The airline is pushing unions to accept cuts before the end of September/
Previously, US Airways Group Inc. said its second-quarter earnings more than doubled, though the company’s top executive predicted more losses for the second half of the year.
”While we reported a small profit, we should have done significantly better in the second quarter, which is traditionally our best,” Bruce R. Lakefield, president and chief executive officer, said in a statement.
”Absent an immediate and dramatic reduction in costs, this nominal profit is insufficient, and we will likely be faced with additional second half losses.”
The airline reported net income of $34 million, or 59 cents a share, in the quarter ended June 30. That compared to a profit of $13 million, or 25 cents a share, in the year-ago period, due to government aid.
Standard & Poor’s analysts wrote that the long-term viability of US Airways “remains uncertain given the company’s weak financial profile, geographically concentrated route network and increasing exposure to low-cost competition.”
The analysts said the airline’s three main hub airports — Charlotte/Douglas International, Philadelphia International and Pittsburgh International — are particularly vulnerable because of the amount of US Airways’ connecting traffic through those airports.
US Airways will shift away from the traditional hub-and-spoke route system it has used for a decade, said Mr Lakefield.
The airline has eliminated a third of its flights in Pittsburgh.
The move was viewed by analysts as a defense against the low-fare competition appearing in Philadelphia and other areas.
Report by David Wilkening
David
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