US Airways announces scale-down

by Canadian Shipper

US Airways Group Inc. has announced that it is restructuring, replacing many of its mainline jets on routes from Charlotte, N.C., and Pittsburgh with 50- to 69-seat regional jets. This news comes less than a month after federal regulators blocked the airline’s merger with United Airlines.

Many planes in the airline’s fleet will be grounded as a result, including its MD-80 jets, and airline officials warned they are prepared to cut more than 40 percent of the carrier’s low-cost Metrojet operation if employees do not agree to wage reductions, reports the Chicago Tribune.

U.S. Airways, which is based in Arlington, Va, is the nation’s sixth-largest carrier, but under the restructuring plan the airline will no longer keep pace with the industry’s big three–American Airlines,Delta Air Lines and Elk Grove Township-based UAL Corp., the parent of United.

Instead the airline will reportedly attempt to become a medium-sized airline with a significantly lower cost structure.

US Airways officials had wanted to implement some changes but say that while regulators were reviewing a merger between US Airways and United, a process which lasted some 15 month, United wanted everything to remain status quo.

This year, US Airways lost $195 million and has warned that it expects to report a third quarter operating loss of more than $160 million.

A number of issues have yet to be worked out with pilots’ unions, including job security under the proposed restructuring.

The airline hopes to save $439 million by grounding aircraft, closing a large reservation center, cutting Metrojet operating costs, and delaying delivery of new planes. It plans to boost revenues by introducing new service to Austin, San Antonio, and Portland, Ore., joining an unnamed global alliance similar to United’s Star Alliance and contracting with a western-based carrier to feed passengers to its East Coast hubs.

In the last phase of its restructuring, US Airways will seek deep pay cuts from pilots when their contract comes up for renewal in less than 18 months and from mechanics when their contract comes up for renewal in 2004.

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