US Airways President Scott Kirby said Wednesday the airline could handle fuel costs a bit better if it weren't for labor agreements that affect the size of its fleet.
Kirby said Tempe, Ariz.-based US Airways Group Inc. could trim another 2 percent to 4 percent from its seating capacity if it didn't have pilot and flight attendant contracts in place.
However, that's "not an amount that would have made a material difference to us or the industry at large," Kirby said at a transportation conference in New York sponsored by Merrill Lynch.
Soaring fuel costs have slashed profits throughout the industry. US Airways estimates it will spend nearly $2 billion more on fuel in 2008, paying about $299 in fuel for every roundtrip passenger.
"There's a lot of tickets that are getting sold for $299 or less," Kirby said. "On average, they're not even covering the cost of fuel for the flight. This is really the issue. We have to be able to pass along the cost of fuel."
US Airways currently plans to cut capacity by 6 to 8 percent this year and 7 to 9 percent next year. By offering fewer seats, US Airways and other carriers hope to boost demand, get rid of discounted tickets, and charge higher fares.
In addition to the capacity cuts, US Airways plans to slash 1,700 jobs and raise another $300 million to $400 million by charging for checked bags, soda and other a la carte items.
Meanwhile, the carrier continues to negotiate with its pilots and flight attendants unions.
So far, management hasn't said anything to flight attendants about allowing it to further cut capacity, union leader Mike Flores said.
"We still haven't discussed some of the major issues _ compensation for example," Flores said.
Flores said the airline signed a transitional agreement with flight attendants in 2005 after it combined with America West Airlines. The contract set the minimum number of aircraft that US Airways must maintain, Flores said.
"They're just barely above the minimum aircraft number," he said. "They really can't go below that."
US Airways shares fell 25 cents, or 8 percent, to $3.01 in Wednesday trading.
___
On the Net:
http://www.usairways.com
Terms & Conditions
RSS Headlines
Fool UK