US Airways News & Financials
(Financial news and commentary)

US Airways tanks across the pond

US AIRWAYS' EUROPE SERVICE BY THE NUMBERS   PHI to ... On-time Avg. delay Long delay Amsterdam 46% 41 minutes 3h, 57m Brussels 45% 71m 7h, 56m Frankfurt 43% 46m 3h, 58m Glasgow 17% 89m 8h, 33m London LGW 24% 68m 5h, 17m Madrid 33% 21m 3h, 18m Milan MXP 41% 47m 4h, 0m Paris CDG 46% 38m 2h, 41m Rome 50% 42m 3h, 37m Stockholm 37% 63m 9h, 58m TO PHI from...       Amsterdam 70% 35m 2h, 5m Brussels 45% 62m 8h, 9m Frankfurt 72% 18m 1h, 19m Glasgow 46% 85m 8h, 16m London LGW 45% 49m 4h, 27m Madrid 43% 29m 1h, 9m Munich 34% 102m 9h, 38m Milan MXP 72% 27m 2h, 9m Paris CDG 50% 38m 2h, 1m Rome 45% 49m 2h, 52m Stockholm 62% 79m 11h, 3m KEY: The chart shows average on-time performance and average delay between June 15 and August 15. "Long Delay" refers to the longest delay of the original flight using the original number between June 15 and August 15.  Source: FlightStats.com.      I've been on the road long enough to know that you must always look gift horses from the airlines in the mouth. So when the notoriously shifty bosses at US Airways started offering 20% off the price of its international business-class flights, I started poking around. Even your ever-skeptical columnist was shocked at what I found: a near-collapse of the day-to-day operations of US Airways' Philadelphia-based trans-Atlantic service. Even by this summer's reduced standards, the operation that US Airways runs between Philadelphia and Europe is shocking. How about 17% on-time departures from Philadelphia to Glasgow between June 15 and August 15? Or 24% on-time between Philadelphia and London/Gatwick during the same two-month period. Try two in three flights late to Madrid. In fact, all of US Airways flights to Europe except for one are below the atrocious industry on-time average of just 68%. As you can also see by the chart at left, based on information from FlightStats.com, US Airways' performance from Europe to Philadelphia is nearly as despicable. Just three of 19 routes to Philadelphia operated at or above 70% on-time between June 15 and August 15. The other 16 ran between 32 and 62% on-time. The daily flight from Munich to Philadelphia, for example, operated at just 35%. Lisbon to Philadelphia? Just 37% on-time. The flight from Zurich? Try 41% on-time. It would be bad enough if it were just US Airways' on-time performance that was in tatters. But the physical condition of the transatlantic cabins is disastrous. As anyone who's had the misfortune to fly with US Airways to or from Europe can attest, little works in-flight. There are broken tray tables, busted seats and balky in-flight entertainment systems. The physical shabbiness is apparent in both coach and business-class cabins. Also obvious: Threadbare galleys that afflict both the flight attendants and the passengers. Speaking of flight attendants, little of what has gone wrong at US Airways this summer is their fault. In fact, there are fewer of them than ever on the US Airways flights to and from Europe. Internal statistics passed to me by a disgusted US Airways employee show that dozens of flights in July and August were short-staffed with a reduced crew of flight attendants. Dozens more were flown without even one flight attendant who spoke the language of the flight's European country of origination or destination. Still more were hastily staffed with trainees or reserves when the original crews timed out after long ground delays. Then there are the mechanical issues that caused the long delays, diversions and cancellations. In the June 15 to August 15 period, the Brussels to Philadelphia flight was cancelled six times. In mid-July, the Philadelphia to Athens flight was diverted twice in a week. And as you can see by the "long delay" category on the chart, some of the delays created by the mechanicals were appalling: six hours and five minutes to Shannon; eight hours and 33 minutes to Glasgow; nine hours and 29 minutes from Barcelona. One cursed flight from Munich to Philadelphia this summer was canceled and delayed for a total of 53 hours because US Airways management chose to fly in a part from the United States. Unfortunately, management made the further mistake of putting the part on a US Airways flight to Munich and that flight ran into its own problems with delays and cancellations. Then there was what a local Philadelphia radio station called the "passenger revolt" on Flight 706 to Munich early in August. A series of mechanical delays and aborted takeoffs—not to mention the fact that the original crew needed to be replaced after they ran out of duty time—delayed the 8:20 p.m. departure by almost 11 hours. About 50 passengers couldn't bear the uncertainty and the middle-of-the-night wait at Philadelphia airport and simply went home. "I have been flying for 30 years and have never seen anything like this," one rebel, Larry Hawthorne, told KYW Radio. "I have never seen a bunch of passengers rebel like this. It was a sight to behold." What's caused this US Airways meltdown? The same-old, same-old: management incompetence. The patchwork fleet of Airbus A330s, Boeing 757s and Boeing 767s that US Airways threw together to expand its European networks during the last few years is aging. Management runs the fleet so hard and so long that mechanics have no time on the ground to fix the non-essential flaws like broken seats, video systems and tray tables. And when it comes to the essential mechanical repairs, US Airways management has chosen to warehouse many critical parts at its Phoenix hub. When something goes wrong in Philadelphia, passengers often have to wait for parts to arrive from the desert. And as that woebegone Munich flight showed, US Airways management makes Europe-originating passengers wait while parts are ferried across the Atlantic. Why not just fly fewer international flights more reliably? Even if they wanted to—and they don't seem to want to—US Airways managers insist that they cannot afford to slow down. A multi-sided gate dispute at Philadelphia forces them to use their departure gates or lose them, they claim. But let's be honest. Does the why even matter any more? In the two years since the US Airways-America West merger, US Airways management has proven in a hundred—nay, a thousand—ways that it does not give a damn about its customers, its product, its employees or its reputation. You don't really think they care about the state of its European operation, do you? After all, the bosses sit in corporate headquarters in Tempe, Arizona. They're not going to Europe. For that matter, they don't go to Philadelphia all that much, either. Joe Brancatelli is editor and publisher of JoeSentMe.com, a website for business travelers. He is also the former executive editor of Frequent Flier magazine, travel advisor of Travel Holiday and contributing editor to Travel + Leisure. He can be reached at travel@usatoday.com.

FREQUENT FLYING Small Jets, More Trips Worsen Airport Delays FAA Likes Bigger Craft But Passengers, Airlines Prefer Busy Schedules By SCOTT MCCARTNEY August 13, 2007; Page A1   At 5 p.m. last Wednesday, planes from all over were lining up in the air to land at New York's La Guardia Airport. Over the next hour, 41 flights were scheduled to touch down, but there wasn't room for them all. Thirty-three arrived late, one by three hours. With runway space this scarce, you might think that airlines would use big planes that can carry lots of people. Instead, of those 41 flights, 21 involved small commuter aircraft. Five of them were propeller planes. The nation's air-travel system approached gridlock early this summer, with more than 30% of June flights late, by an average of 62 minutes. The mess revved up a perennial debate about whether billions of dollars should be spent to modernize the air-traffic control system. But one cause of airport crowding and flight delays is receiving scant attention. Airlines increasingly bring passengers into jammed airports on smaller airplanes. That means using more flights -- and increasing the congestion at airports and in the skies around them. At La Guardia, half of all flights now involve smaller planes: regional jets and turboprops. It's the same at Chicago's O'Hare, which is spending billions to expand runways. At New Jersey's Newark Liberty and New York's John F. Kennedy, 40% of traffic involves smaller planes, according to Eclat Consulting in Reston, Va. Aircraft numbers tell the tale: U.S. airlines grounded a net 385 large planes from 2000 through 2006 -- but they added 1,029 regional jets -- says data firm Airline Monitor. As air-travel woes have spread, some aviation officials and regulators, including the head of the Federal Aviation Administration, have begun saying delays could be eased if airlines would consolidate some of their numerous flights on larger planes. Just two problems with that. One is that airlines like having more flights with smaller jets. The other is that passengers like it, too. Illustrating the phenomenon, three airlines flying out of midsize Raleigh-Durham, N.C., send 21 flights a day into La Guardia. All but one of the flights use small planes. That's fine with David Sink, a Durham insurance executive. "There are lots of flights, so time-wise, it worked out well for me," said Mr. Sink recently, taking an American Eagle flight home. Given a choice between more flights or larger planes, he'd prefer more flights. The FAA once could tackle congestion by limiting the number of takeoff and landing slots. But Congress in 2000 voted to phase out slot requirements to open up the airways to competition from low-fare carriers. The FAA sets a limit on how many takeoff and landings it can safely handle at each congested airport, but airlines are free to schedule as they want. If there are too many planes because of overscheduling or just delayed flights stacking up, the FAA slows down the flow of airliners. At La Guardia, for example, the FAA allows 75 aircraft movements -- a takeoff or a landing is one movement -- an hour for commercial airlines in good weather. If high winds or storms drop that rate lower, the FAA asks airlines to cancel or delay flights. And sometimes the bottleneck comes not on runways, but in the air when planes from multiple airports are trying to get a spot on specific routes into or out of the area. Much of the traffic into and out of New York meshes together onto specific routes in the Washington, D.C., area; when there are too many planes, it's like multiple lanes of cars squeezing into a two-lane tunnel. Airport Crowding Trying to tackle airport crowding, the FAA last year proposed a complicated plan to force airlines to increase the average size of the planes they land at La Guardia. FAA Administrator Marion Blakey, questioning the use of many smaller planes and their more-numerous flights, says that "from the standpoint of passengers and from the standpoint of getting the best use out of high-priced real estate, this is not the way we should be going." But the FAA plan encountered fierce opposition and is in limbo. "A solution eludes us," Ms. Blakey says. Smaller cities say they need the small planes in order to be connected to the nation's transportation system. Only with smaller planes can a city the size of, say, Madison, Wis., have nonstop service to La Guardia. Travelers, of course, much prefer nonstops, for speed and reduced hassles. Commercial jetliners on the tarmac at LaGuardia Airport in New York Airlines like the economics of small planes. For one thing, they're usually flown by lower-paid pilots and flight attendants from commuter subsidiaries or contractors. Smaller jets also let carriers bulk up their schedules without flying lots of empty seats. The combination of smaller jets and more numerous flights makes airlines' schedules more attractive to high-dollar business travelers. Those regional jets -- planes with fewer than 100 seats -- don't just flit to small towns. Airlines cram them into their big hubs, too. Delta Air Lines flies regional jets between Atlanta and both Chicago and New York. United Air Lines flies regional jets out of O'Hare to six cities -- Atlanta, St. Louis, Pittsburgh, Salt Lake City, Montreal and Charlotte, N.C. -- all in the 5 p.m. to 7 p.m. rush. Three-quarters of the flights between La Guardia and Toronto are on planes with fewer than 100 seats. The upshot: 20 flights a day, all competing for a shot at a runway. The small-plane conundrum is, at least in part, a byproduct of the financial troubles of the airline industry. After Sept. 11, 2001, airlines grounded older, larger jets that were gas guzzlers. The big jets weren't needed when traffic dropped dramatically after the terrorist attacks. Airlines substituted small regional jets, subcontracting the flying. Now traffic is coming back. But many airlines have deployed most of the widebodies they have in international flying, which is more lucrative because it faces less price competition. And because of their financial woes, U.S. airlines haven't been adding many large jetliners. Since 2002, domestic traffic by mainline airlines has increased 3.6% in terms of revenue-passenger miles, which is the number of miles that paying customers are flown, Airline Monitor says. But traffic on airlines' regional partners -- which fly the smaller aircraft -- is up 196%. The average size of jets flown by U.S. airlines, including the widebodies on foreign routes, is 137 seats, down from 160 a decade ago. Meanwhile, flight delays have worsened every year since 2003, according to the Bureau of Transportation Statistics. In the January-June period four years ago, just under 83% of flights arrived on time; in the comparable period this year, only 72.7% did. The three big airports in the New York area are the worst for late flights. But unlike in Las Vegas, what happens there doesn't stay there: New York's delays cascade across the country. A late arrival for one flight means a late takeoff for another, which will arrive late in Dallas or Seattle or Denver. Or, a flight from Orlando, Fla., to Pittsburgh might be delayed because the Washington-area regional traffic-control facility moves a stream of New York-bound planes to the west around storms -- clogging the route the Pittsburgh flight would use. The problems don't arise just in bad weather. Friday, July 13, saw good weather in most of the country. But in what's called a ground stop, the FAA barred the takeoff of flights headed to Newark. Too much volume forced controllers to keep planes waiting on the ground to take off, sometimes for hours. Continental Airlines says that in 29 of June's 30 days, the FAA imposed a ground stop or ground-delay program on flights headed to Newark. In response to Congress's mandate to phase out slot requirements, the FAA has completely eliminated them at Kennedy. And airlines have poured in more flights. Through May this year, the number of passengers at JFK is up 14% from a year earlier, but the number of flights is up 27%, says the Port Authority of New York and New Jersey, which operates that airport, La Guardia and Newark Liberty. Flights using smaller planes leapt 85% at JFK in that period, says the Port Authority. FAA officials have reduced, but not yet fully phased out, slot requirements at La Guardia. Size Minimums? Searching for a new remedy, the FAA last year proposed minimum average sizes for the planes that fly into and out of La Guardia. Currently, planes using the airport average 98 seats, the agency says. It proposed that airlines' fleets would have to average 105 to 120 seats, depending on how many of their flights went to small communities. The FAA estimated this plan would reduce delays at La Guardia by 37%. "Promoting larger aircraft is the only means to increase passenger access to La Guardia," said the FAA proposal. But opposition from airlines and smaller communities was so strong that the plan is basically dead, says the agency's Ms. Blakey. Foes of the plan included the Port Authority, which considers aircraft size at La Guardia an airport issue. The Port Authority says it could bring about larger planes simply by writing aircraft size requirements into gate leases. It says it's studying such an idea. Former American Airlines boss Robert Crandall says Congress should let the FAA go back to controlling slots, matching scheduling to capacity. Airport overcrowding is "fixable, but it's not fixable without major policy change," the former AMR Corp. CEO said at a recent conference. Another proposal: Change the structure of landing fees. Airports now set them by weight. A small jet pays a smaller landing fee than a large plane, even though its use of the runway is the same. Why not charge a flat fee per landing, suggest some economists -- or even charge the small jets more, to encourage airlines to shift to fewer flights on larger jets? Yet another idea is to tie landing fees to the level of demand through the day, so they'd cost more at peak hours. This would encourage airlines to spread out flights and use bigger planes, says Dorothy Robyn, a consultant at Brattle Group and former aviation adviser in the Clinton administration. She says the current system "guarantees overuse of the air-traffic-control system because airlines aren't charged the true cost." Airlines say tinkering with landing fees, which are only about 2% of total costs, wouldn't change their behavior, because customers want the convenient service possible when they use lots of smaller planes. Carriers say less use of small jets would make it harder for them to offer off-peak flights. "We put [regional jets] into some markets because we don't have demand at certain times," says David Seymour, vice president of operations control at US Airways Group Inc. Airlines add that less use of smaller jets also would reduce connection options for people on long transcontinental or international trips. With its commuter affiliates using smaller planes, US Airways flies nine trips a day from La Guardia to also-congested Philadelphia International Airport. There, most passengers connect to other flights. The arrangement allows US Airways to offer New York customers more options for long trips. Carriers contend that without changing rules, the FAA could do a better job of moving traffic into and out of the Northeast. They note that JFK has four runways, but usually only two are used at once. The reasons are complicated, and include a limited number of permissible flight paths, as well as bottlenecks that can result in the Washington area. A push this year to use three JFK runways at once has had mixed results. An almost decadelong effort to redesign the designated airways around New York to move airplanes faster and more efficiently is still bogged down in regulatory review. Neighborhoods that might face more noise have been trying to derail the plan in Congress. Surge in Flights The FAA says it is doing the best it can with old equipment and a surge in flights. The agency's Ms. Blakey says she thinks airlines will eventually have to switch to larger jets because of the costs that delays impose on the airlines, in inefficient use of planes and fuel. Even such a shift wouldn't fix all the delay issues, though, she says: "La Guardia is always going to be a bottleneck." With delays climbing, airlines face a tough choice unless the FAA can boost capacity. Carriers have to accept delays, or else reduce flight frequency. Not wanting to risk losing passengers to competitors, airlines are showing scant interest so far in consolidating their numerous small-plane flights into fewer flights with bigger planes. On Nov. 4, American Airlines will offer new nonstop flights between New York and Flint, Mich. American will send a morning flight to La Guardia and a flight back to Flint at 6:40 p.m., adding to the competition at La Guardia for precious runway space. The jets American will use: 37-seaters.

No Pact Yet for US Air Pilots

By Ted Reed
TheStreet.com Staff Reporter
6/5/2007 5:06 PM EDT

A controversial ruling on seniority integration for pilots at US Airways and the former America West Airlines is threatening to delay the full operational implementation of the airlines' merger. The May decision by a federal arbitrator came after an interpretation of the merger policy of the Air Line Pilots Association. Many pilots at the former US Airways say it favors less experienced pilots at America West, and they may seek to delay or prevent it from going into effect.

"A specific goal of the ALPA merger policy is to avoid windfalls to one group at the expense of the other, but this integration policy does not do that," says Arnie Gentile, spokesman for the US Airways chapter of ALPA, which for now remains separate from the America West chapter.

Last month, US Airways pilots convinced ALPA's executive council to postpone passing the arbitrator's seniority list to the company, which would have implied endorsement. The next step is unclear, but various scenarios are possible, and most of them are time-consuming.

For instance, US Airways pilots could move to leave ALPA. Or they could seek to delay the pact on a joint contract, which must come before members of the two groups can work together in the cockpit or fly aircraft from the other carrier.

To get an idea of how tedious the process can be, consider that at UPS, it took four years to reach an agreement on the contract signed last year, partially as a result of intraunion battles.

Bill Swelbar, a research engineer in MIT's International Center for Air Transportation and an airline industry consultant, says US Airways pilots have made sacrifices in salary, schedule and pension benefits, and now face making more. But to impede the merger process would raise questions about future combinations, which "would be harmful to labor long-term" Swelbar says.

"The restructuring of the airline industry is not done," he says. "It will have to involve more consolidation. But any management out there is fearful of seniority integration. And unless there is some sort of template to follow, a lot of people are not going to think about mergers of any sort."

The alternative, he indicates, would be allowing a struggling carrier to shut down.

US Airways and America West merged in September 2005. Last year, the combined airline was the industry's most profitable. The accompanying euphoria led CEO Doug Parker, who formerly headed America West, to pursue an unsuccessful merger with Delta that would have created the world's biggest airline.

For the two companies that now make up US Airways, the merger of their reservations systems created severe disruptions, delaying the move to a joint operating certificate -- once expected in June -- until the fall. The seniority ruling poses another challenge.

Currently, three sides are negotiating to combine the America West contract, which became amendable in December, and the US Airways contract that would run until Jan. 1. Last month, the airline offered to raise the America West pilot pay scale by 3%, while boosting US Airways pilot pay as much as 17% in order to equalize the two.

If there is one thing the two pilot groups agree on, it is the proposal's inadequacy. "Dead on arrival," says Gentile. Tanya Bziukiewicz, spokeswoman for the America West ALPA chapter, says it is "concessionary on the America West side," because pilots give up benefits to fund pay raises for US Airways pilots.

US Airways has about 2,400 pilots, as well as 1,500 on furlough. The average age of the pilots now flying is 53. America West has about 1,800 pilots, with an average age of 47.

The proposed seniority formula sorts pilots by aircraft type. Within each grouping, pilots are ranked by seniority at their airline and by a ratio based on how many aircraft each carrier has. Under this formula, the top 517 pilots come from US Airways.

At the next level are about 1,000 US Airways first officers who would likely never become captains because they must retire at 60 and captain seats won't open before then, says Gentile. "Most of our first officers with 20-plus-years experience will not be on the property long enough to make captain because of six-year and seven-year first officers at America West," he says.

Additionally, US Airways pilots get no credit for time spent on furlough or flying at defunct US Airways division Mid-Atlantic Airways. The most senior Mid-Atlantic pilot, hired in 1988, falls below the most junior pilot at America West, who was hired in 2004, Gentile says.

Bziukiewicz said the ruling "was put together by a neutral arbitrator, chosen by pilots from both groups, who reviewed thousands of documents and exhibits and heard testimony from numerous people. It is final and binding."

The arbitrator, George Nicolau, previously resolved seniority issues in US Airways' purchase of the Trump Shuttle roughly a decade ago, she says.

---

US Airways in last place in Consumer Reports poll

Friday, June 01, 2007
By Anya Sostek, Pittsburgh Post-Gazette
 

For its July issue, Consumer Reports surveyed readers to find out which airlines provided the best and worst flying experiences.

And the loser is ... US Airways.

While smaller airlines such as JetBlue, Midwest and Southwest took the top spots, US Airways skidded into dead last out of the 18 airlines included.

And it wasn't a soft landing.

The magazine originally surveyed 23,000 readers in February of this year. After JetBlue had its multi-hour layovers and canceled flights later that month and US Airways stranded passengers because of weather and computer problems in March, the magazine conducted a smaller, follow-up survey in April.

Though JetBlue's ratings were relatively unchanged in the second survey, US Airways' rating fell another 10 points -- to 52 from an already-last 62 on a satisfaction scale of 0 to 100.

The airlines as a whole averaged a satisfaction score of 72, which the magazine noted was worse than the average rate for hotels and rental car companies, but better than that for wireless carriers, cable TV operators and computer tech support.

US Airways fared worst in the category of seating comfort, but also earned low marks in cabin staff service, online booking and on-time performance. The company's highest rating came in ease of check-in, where it rated neutral.

The survey attributed US Airways' poor showing to weather woes and a "long and messy merger" with America West, particularly in terms of problems merging the two airlines' computer systems. America West finished second-to-last in the survey.

US Airways Chief Executive Officer Doug Parker pledged in April to improve customer service, after weather troubles and computer problems stranded thousands of passengers during what Mr. Parker called the worst quarter since the 2005 merger with America West.

Though Pittsburgh was once US Airways' largest hub, the airline's presence here has dramatically diminished in recent years. A further cutback scheduled for July will leave Pittsburgh International Airport with 127 flights per day -- down 76 percent from the more than 500 daily flights in late 2001.

US Airways did not return a call for comment.

 

---

(Anya Sostek can be reached at asostek@post-gazette.com or 412-263-1308.)

 

---

U.S. Airways on-time rate falls to industry-worst for March

By Padraic Cassidy

Last Update: 12:04 PM ET May 7, 2007

NEW YORK (MarketWatch) - U.S. Airways Group's on-time performance in March fell to 55.5%, the worst rate for any carrier measured in the month, according to the Department of Transportation. The DOT air travel consumer report for March said 10.3% of U.S. Airways' flight schedule in the month was late 70% or more of the time. Most of the delays were caused by the carrier, rather than by weather or security, according to the report.

 

---

AP
US Airways Gave CEO $5.9M Compensation
Monday April 16, 7:55 pm ET
By Chris Kahn, AP Business Writer

US Airways Gave CEO $5.9 Million in Compensation Last Year
 

PHOENIX (AP) -- US Airways Chairman and Chief Executive Doug Parker received $5.9 million in compensation last year, according to an analysis of a federal regulatory filing made Monday.

Parker is credited with turning two struggling airlines -- America West Airlines and the formerly bankrupt US Airways -- into moneymakers.

The Tempe, Ariz.-based US Airways Group Inc. is now the fifth-largest domestic airline. It posted a $303 million profit in 2006, and company officials say they've benefited from almost $1 billion in additional revenue, cost savings and other synergies related to America West's combination with US Airways.

Last month, US Airways said it mailed almost $59 million in profit sharing to employees. However, the airline refused to boost staff salaries and has yet to settle labor contracts with its pilots, flight attendants, machinists and fleet service workers.

"Once again, we're seeing corporate America make out like bandits and the front line employees are getting the shaft," John McIlvenna, a pilots union chairman, said after learning how much Parker earned.

Parker, 45, was paid a $550,000 salary in 2006, an amount that the company said has not increased since he took the helm of America West Airlines in September 2001.

He got $1.7 million in performance incentive payments. Parker also received other compensation of $47,947, including personal travel benefits and $11,072 in tax liability payments related to personal travel benefits, personal cell phone use, financial services and golf course club dues.

US Airways also gave Parker stock and options awards that had an estimated value of $3.5 million when they were granted on April 19, 2006.

The Associated Press calculates total pay including executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock and options awards granted during the year.

The calculations don't include changes in the present value of pension benefits or the company's cost of stock and options granted before 2006. The figures can differ from the company's total.

US Airways released its executive compensation figures after the stock market closed. Its shares were up 11 cents, or less than 1 percent, to $45.34 Monday on the New York Stock Exchange.
 

---

Pilots Want Raises By Ted Reed TheStreet.com Staff Reporter 4/17/2007 3:04 PM EDT   Labor has made more than $10 billion worth of annual concessions since 2002 as the airline industry restructured, and now -- with the industry showing signs of health -- it wants to get some money back. Most contracts negotiated during bankruptcies at four of the six legacy carriers won't become amendable until 2009 or later. But contracts at American reopen in the first half of 2008. Additionally, the agreement covering pilots at the former America West, which merged with US Airways reopens in June. Both pilots and management say they are seeking a single contract to cover both pilot groups. The threat of increased labor costs means that "airlines are simply living on borrowed time," JP Morgan analyst Jamie Baker writes in a recent report. "As 2007 wears on, looming labor angst is expected to begin weighing on shares, starting with AMR." Next in line, he says, is Continental where contracts reopen in 2008. (Of the six legacy carriers, only American and Continental avoided bankruptcy following the Sept. 11 attacks.) By the end of the decade, airline labor costs will have risen by $5 billion annually, says Baker, who forecasts record industry profits of $8 billion this year. Top-Level Rewards Labor unrest has become pronounced as executives begin to reap the rewards of turnaround at various carriers. At American, 874 managers are scheduled to receive stock worth about $170 million, according to pilot estimates, as a result of an incentive plan based on relative stock performance from 2004 through 2006. Meanwhile, United disclosed last month that CEO Glenn Tilton received 2006 compensation valued at around $9.4 million, but additional stock awards, vesting over four years, could raise his package's value to nearly $40 million. And US Airways said Tuesday that CEO Doug Parker received a 2006 package worth about $5.4 million. "Everybody's looking to catch up, but management typically does better at the beginning of the cycle than employees do," says aviation consultant Robert Mann. Putting Stock in Labor Talks American flight attendants demonstrated against the carrier's bonus plan in several cities on Tuesday. Pilots will march on the company's Fort Worth, Texas, headquarters on Wednesday, the day American announces first-quarter results. Executives have "decided to reward only themselves for the work of others in a gross violation of management's earlier promise of shared reward for shared sacrifice," Captain Ralph Hunter, the APA's president, said in a prepared statement. US Airways pilots, who have been protesting the slow pace of contract negotiations for months, plan more demonstrations in May. And United unions formed a coalition after the company released its proxy statement last month. Last week, two unions urged members who hold United stock to oppose the company's 10 nominees for the board of directors. "The significant bonuses and stock increases awarded senior management clearly violate the concept of shared sacrifice/shared rewards that all employees expected after the turmoil of bankruptcy," United pilots said in a prepared statement. At all three carriers, says consultant Mike Boyd, "You've got an emotional and cranky workforce, and they have reason to be. You have people who took paycuts of 20% to 30% to 40%. That puts a burden on management to manage more carefully." Boyd consults for American's pilots. The industry could break the cycle of labor dissatisfaction at times of profitability if future contracts link compensation to stock performance, says Mann, who consults for America West pilots. He says labor is likely to oppose such arrangements, preferring straight increases. Still, "there's got to be a different formula, not just performance pay, but a really rich performance package that manages the [contrast] between the appearance of what management gets vs. the appearance of what employees get," Mann says. "If things are good, you can make a heck of a lot more based on performance."

---

April 16, 2007
NTSB Sounds Alarm on Airline Worker Fatigue
ALPA Commends NTSB Action to Highlight Safety Threat

The NTSB, this week, issued recommendations pointing to airline industry worker fatigue as a serious safety threat. The recommendations support ALPA’s longstanding position that it is time to modernize flight- and duty-time regulations.

“ALPA commends the NTSB for making a powerful statement for aviation safety with today’s recommendations,” says ALPA’s president, Capt. John Prater. “This NTSB action is more evidence that fatigue is among the most pressing aviation safety issues of our time.”

The NTSB recommendations were issued in the context of the Comair 5191 accident, but they underscore a decades-old national aviation safety issue. Current federal aviation flight-time, duty-time, and rest regulations are a dated patchwork of rules developed over the past 60 years.

The regulations are fundamentally flawed and fail to take into account today’s science, flight schedules, aircraft equipment, and travel distances. In addition, through the bankruptcy process, work rules that helped safeguard airline pilots against fatigue by limiting flight and duty time have been eviscerated at many airlines.

“Because many pilots have had their salaries cut by 40 to 60 percent, they must fly more hours to make up for that lost pay,” continues Prater. “Many airline managements are making a bad situation worse by hiring as few pilots as possible, scheduling pilots to work the legal workday limit and beyond, and punishing pilots who call in sick because of fatigue.”

When flight- and duty-time limits are pushed to the extreme, unplanned events such as poor weather and mechanical failures can create situations in which pilots may be forced to choose between flying fatigued or risking possible punitive action from their managements.

“The United States needs realistic, science-based flight- and duty-time limits that make certain airline pilots in both passenger and cargo operations are rested and ready to perform under pressure,” concluded Prater. “Today’s recommendations mean that the FAA can seize the opportunity to lead the aviation community toward a modern approach to reducing fatigue. ALPA stands ready to work with FAA and the airline industry to address pilot fatigue.”

---

Market Scan
Airline Stocks Expected To Fly High Come Spring
R.M. Schneiderman, 04.05.07, 1:20 PM ET

As the airline industry heads into the seasonally strong spring season, many carriers will begin seeing the benefits of cost cutting, according to a Thursday note by Calyon Securities.

"Years of cost cutting are now beginning to pay off," said Ray Neidl, an analyst for the research firm.

"Even though we expect all sectors...to rally, we favor the legacy sector in the immediate future since they can better take advantage of the upside cycle with their vast systems, progress in making cost cuts and broad yield management systems."

By historical standards, Neidl said the first quarter -- often the industry's weakest -- shouldn't be terrible.

"We expect an industry loss of $142 million, which is slightly higher than our initial expectations because of severe winter storms...and the spike in oil prices in late March," he said.

Nonetheless, he said those negative factors are already priced into various stocks, which Neidl says appear cheap, having fallen sharply in January.

"Besides heading into the more favorable seasonal time period for airlines, we are looking for 2007 as being a solid year for airline profitability." he said.

Neidl expects the industry to earn $5.9 billion in 2007, most of which will come in the second and third quarters.

His top picks in order are: Alaska Air Group, U.S. Airways Group, AMR, Continental Airlines and UAL.

---

US Airways Pilots Demand Fair Contracts
US Airways pilots demand fair contracts before airline moves to acquire Delta Air Lines

PHOENIX, Nov. 16, 2006
By AMANDA LEE MYERS Associated Press Writer

(AP) US Airways pilots are demanding fair contracts before the airline moves to acquire rival Delta Air Lines Inc.

About 200 of the pilots belonging to the Air Line Pilots Association picketed at Phoenix Sky Harbor International Airport on Thursday, a day after the company announced a hostile cash and stock bid valued at about $8.7 billion for Atlanta-based Delta.

US Airways pilots work under two contracts - one for pilots who came from America West Airlines after it bought US Airways when it was in bankruptcy protection in September 2005, and another for pilots who were always at US Airways. Contract negotiations began shortly after the airlines combined, and there are no deals in sight.

US Airways and America West are still integrating their operations. For instance, to date only 57 percent of America West planes have been painted over with US Airways' logos, a spokesman said.

At Thursday's informational picket, the solemn-faced pilots donned their Navy blue uniforms and caps, walking in a circle and carrying signs that read, "Pilots get nothing, management gets millions" and "Empty promises for a single airline."

"I'm picketing to defend my career, my profession and my family," said pilot Tania Bziukiewicz. "While the company keeps us on these bankruptcy-type wages, they're making multimillions of dollars in compensation packages. That's taking advantage of employees and the situation, and we're here to let them know that we're no longer going to let them do that."

US Airways Chairman and Chief Executive Doug Parker's base salary is $550,000 a year plus stock options. In August, he sold more than 270,000 shares of company stock, netting Parker more than $9 million before taxes.

Parker was not available for comment Thursday.

Airline spokeswoman Andrea Rader said Parker had every right to cash in those stock options.

"A significant piece of his income is what we call at-risk income _ that's money that he may get or may not depending on how well the company is performing," she said. "The company, as you can see, is performing quite well since the merger, and so that's where that element of his income comes from. He cashed in some of that, which he is absolutely entitled to do."

She said it's understandable some US Airways employees are upset about Parker's stock options.

"The careers that they signed on for are very different today than they were 20 or 30 years ago," she said. "There's been a lot of disruption in their pay scales and things. It's completely understandable that people would look at people cashing stock options and say, 'Hey.'"

She said the airline will agree to a single contract for all pilots, but that it will just be a matter of time.

"As you do contract negotiations, you start with the low-hanging fruit, the stuff that you can reach agreement on quickly," she said. "We're moving into some of the economic issues _ wages, seniority scales. But we're absolutely interested in getting to a timely agreement, as well."

Hundreds of other US Airways pilots also planned to picket at the Charlotte Douglas International Airport in Charlotte, N.C.

Prescott resident Lisa Harrs was at Sky Harbor on Thursday for a flight to Chicago on a US Airways plane. She said she had no idea the airline's pilots were dissatisfied. But she said that each pilot deserved a fair contract.

"That makes sense," she said. "If they're all part of the same entity, then everyone should be treated equally."

In October, US Airways' losses shrank to $78 million, or 88 cents per share, from $99 million, or $5.74 per share, a year ago. Total revenue climbed to $2.97 billion from $929 million last year.

Shares of US Airways Group Inc. rose $1.11 to $60.61 in afternoon trading Thursday on the New York Stock Exchange.

---

Market Scan
US Airways Flies Past Q3 Consensus
R.M. Schneiderman, 10.26.06, 5:50 PM ET

US Airways Group beat Wall Street's estimates for the third quarter on Thursday, despite reporting losses due to the heightened security put in place in the aftermath of the attempted terror attacks on U.S. bound planes in London last summer.

The company posted a third quarter net loss of $78 million, or 88 cents per diluted share, on operating revenues of $2.9 billion.

Excluding the special items, however, US Airways posted a net profit of $101 million, or $1.09 per diluted share, beating Wall Street's forecast of $1.01.

Shares of US Airways rose 1.5%, or 73 cents, to $49.24, in Thursday afternoon trading.

In beating the consensus, the company followed better-than-expected earnings by fellow legacy carriers, Continental Airlines and AMR Corporation, despite new security measures.

US Airways chief executive Doug Parker said the burdensome ban on liquids and gels hurt the company's revenue by $30 million to $40 million.

Discount carriers like Southwest Airlines and JetBlue Airways, on the other hand, were more affected by the ban, which led to longer lines and consequently, a greater hassle for passengers.

Last Thursday, Southwest missed consensus forecasts and on Tuesday JetBlue reported roughly in-line results.

Legacy carriers fared better because they "have a bigger percentage of operations internationally and longer haul flights where you would normally check bags," according to Helene Becker, managing director of The Benchmark Company, a market research firm.

However, passengers flying domestically, especially on short-hop flights, may have been less tolerant of the heightened security because other travel options are readily available.

In September 2005, America West Holdings acquired US Airways Group and kept the latter company's name. Roughly one year later, CEO Parker said he was encouraged by how the process was progressing thus far.

"We are one year into our merger and these financial results are further evidence of its success," said Parker. "We still have much work to do, but…we are confident that we are on the right course."

Becker, the Benchmark analyst agreed. "They're never one of the top airlines you think of when you think of customer service," she said. "[But] they clearly are focused on improving the product."

Moving forward, US Airways expects to post a profit for fourth quarter, despite seasonal difficulties.
 

---

Posted on Fri, Oct. 27, 2006

AIRLINE SAYS ITS PROFITABILITY WILL CONTINUE

US Airways flying high

Special costs aside, 3rd-quarter earnings reach $101 million as labor talks loom

STEVE HARRISON
sharrison@charlotteobserver.com

US Airways Group has actually made money flying airplanes for three consecutive quarters -- a result that pleases Wall Street but also raises the stakes in its labor negotiations.

While announcing third-quarter results Thursday, airline Chief Executive Doug Parker also predicted the airline would be bottom-line profitable in the fourth quarter, which is typically a lethargic time for the airlines.

"We're one of the few airlines willing to make that statement," Parker said.

The airline, a merger of the old US Airways and America West, posted a third-quarter net loss of $78 million, due to a number of special items. The biggest was an $88 million expense to reduce the value of unprofitable fuel hedges.

But the airline said that excluding costs related to the merger and locking in fuel prices, it would have made $101 million, or $1.09 a share. That beat analysts' estimates of $1.01 a share.

US Airways stock Thursday closed at $49.43, up 1.9 percent from $48.51 the day before. The stock has more than doubled since the merger in late September 2005.

The Arizona-based airline has its largest hub at Charlotte/Douglas International Airport and bases about 5,000 workers here. The hub is credited with being a strong driver of economic development for Charlotte.

The airline, which posted a blockbuster second-quarter net profit of $305 million, had a rougher third quarter. In addition to the unprofitable hedges, the airline estimated that the bomb scare in Britain in August cost it between $30 million and $40 million in revenue.

But the airline is encouraged about the future.

The Transportation Security Administration's recent decision to allow passengers to carry on small amounts of shampoo and toothpaste has led more short-haul business travelers to fly.

"In the last couple of weeks, we've seen more recovery," said Scott Kirby, the airline's president. "Business travel is back."

Mike Flores, president of the US Airways flight attendants union, said he was surprised at Parker's prediction of a profitable fourth quarter. That declaration strengthens labor's position, he said.

"As every day goes by, they can save because of the merger," Flores said. "They can raise prices and are still booking seats, but they are still holding the line with the unions. We are not going to be among the lowest paid flight attendants in the industry. It's not going to happen."

Flight attendants are planning an informational picket Halloween morning at Charlotte/Douglas and other airports to protest the airline's position that new contracts be "cost-neutral," meaning it doesn't want to spend more on labor than is already budgeted. Pilots are planning similar protests Nov. 16.

Workers at the old US Airways took substantial pay cuts during that company's two bankruptcies, and are now trying to recover their losses.

Pilots, flight attendants and other employees are operating under contracts from their old airlines. US Airways Group is trying to bring them together under a single contract on the way to becoming a fully merged airline.

Parker has said that salary increases in current contracts will be honored, but the airline can't increase pay without becoming less competitive. In addition, the airline said it doesn't have to strike a deal; US Airways insists it can fully merge the airlines while still having two separate labor contracts.

The new US Airways wants to be a hybrid of a low-cost carrier and a traditional airline.

Parker said the airline contributed $12 million this quarter to its employee profit-sharing plan. The airline contributes 10 percent of pre-tax profits, minus special items, to the plan, which totals $48 million for the year.

The airline said its revenue per seat mile increased at America West by 13.1 percent in the third quarter compared with the same period in 2005, while at the old US Airways, revenue per seat mile increased 15.8 percent. An airline's revenue per seat mile, a standard industry measure, is determined by dividing its revenue by the total miles it flies.

Excluding fuel and special items, America West's cost per seat mile increased 3.9 percent; the old US Airways saw costs drop 0.4 percent.

In a conference call with investors and journalists, the airline said it will likely add a few flights to Charlotte in 2007, with the airline restoring some cuts made during the old US Airways' two bankruptcies. Some service to Florida could resume, , as well as flights to Austin and San Antonio, Texas.

Executives said it won't add South American service from Charlotte because there isn't enough local traffic here.

The airline's focus has been in Philadelphia, where it's trying to improve its baggage handling and expand international service. US Airways wants to add three new European destinations from Philadelphia next summer -- Athens, Greece; Brussels, Belgium; and Zurich, Switzerland -- but its plans are in limbo because of a dispute with the airport over gate space.

The Philadelphia airport wants to move Delta into an international terminal to make room for fast-growing Southwest. But moving Delta would deprive US Airways of gates it needs to expand.

"We can't announce the service until they figure that out," Parker said.

The airline is worried because the season for purchasing summer trips to Europe is approaching, and it wants to begin offering tickets.
 

---

US Airways beats Wall Street prediction with $101M profit

By Thomas Olson
TRIBUNE-REVIEW
Friday, October 27, 2006

 

US Airways Group Inc. on Thursday reported a $78 million net loss in the third quarter, which included higher fuel costs and lower revenue when the government restricted passengers' carry-on items.

Results were blunted by $179 million in one-time charges. They included an $88 million charge related to fuel hedge contracts and a $27 million charge related to the merger with America West Airlines a year ago.

But excluding the special charges, the carrier posted an operating profit of $101 million, or $1.09 a share. Wall Street had expected $1.03 a share, according to Thomson Financial's poll of analysts.

"We are pleased to report our third consecutive profitable quarter excluding special items, especially given the new security regulations put into place in August," said CEO Doug Parker.

Parker projected US Airways would show an operating profit in the fourth quarter, as well as for the full year, excluding one-time charges. The winter quarter tends to be the industry's most challenging financially.

Despite the momentum, US Airways does not intend to restore flights in Pittsburgh, where daily departures have plummeted to 164 from their mid-2000 peak of more than 500.

"We don't have any significant plans, up or down, in Pittsburgh," said President Scott Kirby during a conference call.

But in Philadelphia, US Airways intends to launch nonstop service in 2007 to Athens, Brussels and Zurich -- as well as three new destinations in both 2008 and 2009. Specific plans next year hinge on the carrier's ability to secure international gates at Philadelphia International Airport, where officials are trying to shift some gate assignments to accommodate growth plans of Southwest Airlines.

US Airways is hiring about 200 ramp workers and 60 managers in Philadelphia, said Kirby, to combat chronic baggage-handling problems there.

"There's nothing more expensive than running a bad operation," said Parker. "So we feel really good about making the expenditures."

US Airways merged with America West Airlines in September 2005, so results are not comparable to the 2005 quarter.

Quarterly revenue of $2.97 billion was hampered in August and September when the federal government, in reaction to terrorism threats, restricted passengers boarding with liquid and gel items. The action reduced passenger revenue by $30 million to $40 million, the airline estimated, and caused the amount of checked baggage to jump.

Fuel expenses last quarter increased by $179 million over year-ago levels. But it was no more than most of US Airways' peers, said Helane Becker, airline analyst for The Benchmark Group, New York.

"We have a $53 price target on the stock, and we are fairly optimistic about the outlook for the fourth quarter," said Becker, who maintains a "buy" recommendation on the stock.

Kirby said US Airways and America West do not expect to obtain a single operating certificate from the government until "the second half of next year." Last fall, Parker estimated the airline would have the certificate by April 2007, which would streamline recordkeeping and compliance.

US Airways shares closed yesterday at $49.43, up 92 cents.

Thomas Olson can be reached at tolson@tribweb.com or (412) 320-7854.
 

---

Posted on Thu, Oct. 26, 2006

2:34 pm | US Airways loss masks good news

STEVE HARRISON

sharrison@charlotteobserver.com

US Airways Group reported Thursday a third quarter loss of $78 million, with results dragged down by special items such as merger costs and losses due to fuel hedging.

Excluding those items, the airline would have posted a net profit of $101 million, or $1.09 per share, beating Wall Street's estimate of $1.01 per share.

"We're very pleased by today's results," said US Airways CEO Doug Parker. "The merger is doing everything we hoped and more."

The new US Airways was formed in September 2005 when US Airways and America West merged, so year-earlier results are not comparable. The airline is still trying to fully integrate the two airlines, and must combine its reservations systems and get unified labor contracts for its employees.

Parker also said the airline contributed $12 million in the third quarter to its employee profit sharing program, which is now at $48 million for the year.

In a conference call with investors and journalists, the airline said Charlotte will likely see a slight increase in flights in 2007, with the airline restoring some cuts made during the old US Airways' two bankruptcies. Some service to Florida could be restored, as well as flights to Austin and San Antonio, Texas.

Executives said it won't add South American service from Charlotte because there isn't enough local traffic here.

The airline's focus has been expanding international service from Philadelphia, often using narrow-body Boeing 757s that are roughly 20 percent more efficient to operate than widebody Boeing 767s. US Airways wants to add three new European destinations from Philadelphia this summer -- Athens, Brussels and Zurich -- but its plans are in limbo because of a dispute with the airport over gate space.

The airport wants to move Delta into an international terminal to make room for fast-growing Southwest. But moving Delta would deprive US Airways of gates it needs to expand.

"We can't announce the service until they figure that out," Parker said.

The airline is worried because the critical summer season is approaching, and it wants the flights official so vacationers can book flights.

---

Falling Oil Gives Airlines More Lift,
Gaining Altitude in Afternoon Trading

October 26, 2006 - 2:48 p.m.

NEW YORK (AP) - Most airline shares rose in Thursday trading, as oil prices receded and US Airways Group Inc. reported better-than-expected operating results.

The Amex Airline Index rose 2.7 percent, with 10 of 11 components posting gains. Helping all shares was oil falling $1.09 to $60.31 on the New York Mercantile Exchange, as jet fuel is among the industry's top costs.

US Airways shares rose 89 cents to $49.40 on the New York Stock Exchange, outside the index, after the company reported a narrower third-quarter loss. Excluding special items, the carrier's results beat analysts' projections.

Shares of United Airlines' parent UAL Corp. jumped $1.49, or 4.3 percent, to $35.98 on the Nasdaq, after Calyon Securities analyst Ray Neidl boosted his third-quarter profit projections for the carrier reporting next week.

He forecasts earnings of $1.42 per share, up from $1.22, based on new contracts the carrier struck for regional passenger feeds. Wall Street overall, on average, is looking for $1.41, according to an analyst poll by Thomson Financial.

Among other big gainers, Alaska Air Group Inc. rose $1.46, or 3.7 percent, to $41.11, and American Airlines' parent AMR Corp. added $1.01, or 3.7 percent, to $28.27, both on the NYSE.

Continental Airlines Inc. picked up $1.17, or 3.3 percent, to $36.78, Southwest Airlines Co. increased 34 cents, or 2.2 percent, to $15.59 and ExpressJet Holdings Inc. gained 22 cents, or 2.8 percent, to $7.99. All trade on the NYSE.

On the Nasdaq, JetBlue Airways Corp. rose 34 cents, or 2.9 percent, to $12.

The lone decliner in the index was AirTran Holdings Inc., down 9 cents to $10.86 on the NYSE.

The low-cost carrier said it swung to a third-quarter loss, hurt by reduced revenue amid heightened airport security following this summer's thwarted bombing attempts on trans-Atlantic flights.
 

---

US Airways pilots complain about labor contract, plan to picket
 

PHOENIX -- After haggling for months over a joint labor contract, pilots for the newly formed US Airways Group Inc. said Thursday they will begin a series of protests at airports around the country.

The Tempe, Ariz.-based airline, formed last year when America West Airlines acquired the former US Airways, doesn't want to pay more money in salaries as pilots merge contracts.

But union officials say this would be tough on America West pilots, who currently have more lucrative contracts than their counterparts at US Airways. A merger could force them to receive less _ a frustrating development given that the company posted a $305 million profit last quarter, union officials say.

"To force our pilots into a paycut is ridiculous, especially at a time when we're making money," said Tania Bziukiewicz, a union spokeswoman and US Airways pilot.

Bziukiewicz said the pilots will begin picketing airports Nov. 16 to mark the one year anniversary of the start of labor negotiations. The union hasn't decided where to protest, she said, but it's likely the pickets will be at Sky Harbor International Airport in Phoenix and Philadelphia International Airport.

"We expect more of these events as necessary," Bziukiewicz said.

US Airways spokesman Phil Gee said the company respects the pilots' right to voice their opinions in public. But Gee pointed out that the company's desire to keep the joint pilots contract "cost neutral" doesn't necessarily mean that anyone will have to take a paycut.

The union could preserve _ or possibly increase _ pilot salaries if it agreed to curtail overtime, vacations or other benefits that cost money, Gee said.

"For instance, they may make more money, but they could have less flexibility in trips," he said. "They may make more money but have less vacation time." (now there's a plan - reduce our vacation pay. After all, our current pay for a day's vacation is a whopping 60% of a day's pay - 'course the garbage man gets 100%!. Editor)

The unions represent 1,750 active America West pilots and 2,850 active US Airways pilots.

America West pilots, whose contracts currently are due for new negotiations, have considered breaking away and demanding more pay on their own. But Bziukiewicz said they decided they would have more influence if they joined with US Airways.

Representatives from both unions met earlier this month and told pilots of the plan this week in a joint statement.

"Our pilot groups will stand tall and walk together," the statement said. "It is clear that any gains we achieve will only be the result of a hard-fought battle."
 

---

The new US Airways, one year later
Some of the 'heavy lifting' is done, but plenty of work remains
Tom Fontaine, Times Staff
09/24/2006

Happy birthday? The new US Airways Group Inc., created when cash-strapped America West Airlines acquired the twice-bankrupt US Airways, turns 1 year old on Wednesday.

The combined carrier defied analysts' expectations by becoming profitable right away, earning $65 million in the first quarter of this year and $305 million in the second.

But when spokeswoman Elise Eberwein was asked about a recent Arizona Republic newspaper article in which her boss, US Airways Chief Executive Officer Doug Parker, claimed the toughest year of the merger was behind the airline, she laughed and said, "Doug is smoking crack."

Then, taking a more serious tone, Eberwein added, "Our assumption always has to be that the hardest year is yet to come. We can't ever say that all the heavy lifting is behind us. There's a lot of work to be done in the coming year, and we're invigorated by the challenges."

When asked what the airline wanted to accomplish in the coming year, Eberwein quickly responded.

First, she said, US Airways hopes to give profit-sharing payments to employees early in 2007. If the airline is profitable for the entire year, 10 percent of all pretax profits will be shared by its 35,000 employees, 2,900 of whom are based in Pittsburgh.

"The more profitable we are, the bigger their checks will be," Eberwein said.

The payments would be a morale-booster, said Bob DeWitt of Partners for Performance, a consulting group that deals with corporate strategic planning.

"I don't believe it's an entitlement that you get a bonus, but if you do well and, as a whole, increase the company's profits, why not share in the wealth? If executives are cashing in but employees don't feel part of that process, I think it invites bad feelings and a lack of trust," said DeWitt, of Moon Township.

And executives certainly have cashed in this year, making millions selling company stock. Parker exercised options on 272,250 shares that were priced between $6.42 and $29.09 a share and sold them at up to $44.46 a share last month, generating $9 million.

Those stock sales, combined with the company's soaring profits thus far this year, could complicate contract talks between the airline and its bargaining units - but making significant progress toward establishing joint contracts for workers from the two former airlines is another one of the airline's top goals for the coming year.

"We want to get one contract that doesn't increase costs more than they would if we stayed with the separate (existing) contracts. We've got to make sure that we don't go out and increase costs in a way that puts the company right back where it was a year ago," Eberwein said.

But many employees think it's finally payback time, given that the company's profits have been brought about, in large part, by sacrifices made by current and former employees. During the former US Airways' second bankruptcy, the company slashed thousands of jobs and billions of dollars in wages and benefits.

"To expect us to pay for this merger while there are large profits and windfall stock gains, it's not going to happen. We're proceeding in good faith, but it clearly is payback time," said Mike Flores, of the US Airways flight attendants union.

"There will be some tough times ahead if the company doesn't recognize the contributions the airline pilots have made and address their needs. We're not going to stand for others becoming wealthy on our backs," added Capt. Jack Stephan, of the former US Airways' pilots union.

"There's no question much of the financial improvement has come literally at the expense of the employees, current and past, in terms of lost jobs, wages and benefits. I suspect these negotiations will be very challenging," said Randy Nutter, an airline expert who chairs the business department at Geneva College.

While it's unknown how long the labor negotiations might take, US Airways' remaining goals are to merge the combined carrier under one federal operating certificate, one reservations system and one flight operations control center by next spring.

Currently, US Airways has two of each.

Choosing where to locate the merged flight operations control center will have the biggest impact locally. Pittsburgh, Charlotte, N.C., and Phoenix are in the running for the new facility, which could employ up to 600 people.

US Airways has had a control center in Findlay Township for the last 10 years, while the other existing center is in Phoenix, near the airline's Tempe, Ariz., headquarters. Charlotte is in the running because it operates US Airways' largest hub.

The Findlay control center employs 450 people and monitors all of US Airways' East Coast and international flights. Losing it would be devastating in a region scarred by the loss of thousands of jobs and dehubbing of Pittsburgh International Airport in recent years.

"It would be very positive if the center ends up here, both economically and for the message it could send to employees. If it doesn't and (the existing center) has to close, it could reopen some old wounds," Nutter said.



©Beaver County Times Allegheny Times 2006

---

US Airways pilots plan to picket over labor contract

Chris Kahn
Associated Press
Sept. 21, 2006 03:34 PM

After haggling for months over a joint labor contract, pilots for the newly formed US Airways Group Inc. said Thursday they will begin a series of protests at airports around the country.

The Tempe-based airline, formed last year when America West Airlines acquired the former US Airways, doesn't want to pay more money in salaries as pilots merge contracts.

But union officials say this would be tough on America West pilots, who currently have more lucrative contracts than their counterparts at US Airways. A merger could force them to receive less - a frustrating development given that the company posted a $305 million profit last quarter, union officials say. (Not to worry boys - we won't be taking less! Editor)

"To force our pilots into a paycut is ridiculous, especially at a time when we're making money," said Tania Bziukiewicz, a union spokeswoman and US Airways pilot.

Bziukiewicz said the pilots will begin picketing airports Nov. 16 to mark the one year anniversary of the start of labor negotiations. The union hasn't decided where to protest, she said, but it's likely the pickets will be at Sky Harbor International Airport in Phoenix and Philadelphia International Airport.

"We expect more of these events as necessary," Bziukiewicz said.

US Airways spokesman Phil Gee said the company respects the pilots' right to voice their opinions in public. But Gee pointed out that the company's desire to keep the joint pilots contract "cost neutral" doesn't necessarily mean that anyone will have to take a paycut.

The union could preserve - or possibly increase - pilot salaries if it agreed to curtail overtime, vacations or other benefits that cost money, Gee said.

"For instance, they may make more money, but they could have less flexibility in trips," he said. "They may make more money but have less vacation time." (Great spin- let's see, there isn't any "overtime", we get less vacation than a senior "Sanitation Engineer", and are currently paid less than 60% of a day's pay for each vacation day, and yet fly jets worth tens of millions of dollars filled with scores if not hundreds of people 15 hours a day in challenging conditions - ya, let's "curtail" it - seems fair to me. Editor)

The unions represent 1,750 active America West pilots and 2,850 active US Airways pilots.

America West pilots, whose contracts currently are due for new negotiations, have considered breaking away and demanding more pay on their own. But Bziukiewicz said they decided they would have more influence if they joined with US Airways.

Representatives from both unions met earlier this month and told pilots of the plan this week in a joint statement.

"Our pilot groups will stand tall and walk together," the statement said. "It is clear that any gains we achieve will only be the result of a hard-fought battle."
 

---

US Airways honeymoon over
Arizona Republic

Sept. 17, 2006 12:00 AM

The America West-US Airways merger a year ago was greeted with all the enthusiasm of a three-hour flight delay.

One skeptic called the combination of the small Phoenix carrier and a bankrupt airline a high-stakes high-wire act without a net. Another said the $1.5 billion deal "has a lot more going against it than for it." And those were the kinder comments.

The Tempe-based airline's out-of-the-gate profits, moderate merger hiccups and surging stock price silenced the doubters.

Its early success has prompted talk of additional airline mergers, some including the new US Airways in the mix.

Chief Executive Officer Doug Parker, one analyst gushed this summer, "has earned the right to toot his own horn."

Parker relishes the early success.

But as the new US Airways begins its second year, the merger momentum is threatened on several fronts, from labor to the economy to customer service.

"They have a lot of heavy lifting ahead of them," said Robert Mann, an industry consultant in New York. Mann was an early critic who called the results remarkable.

Parker said he believes the toughest year of the merger is behind the airline and is confident it can handle the challenges ahead.

One of the biggest challenges, which is hitting executives sooner than they expected, is labor unrest.

The $305 million second-quarter profit that had Wall Street giddy has the airline's pilots, flight attendants, baggage handlers and other frontline employees expecting more money - soon.

Those on the former US Airways side saw their pay slashed during two bankruptcy cases. Many America West workers were expecting raises before the merger.

Employees on both sides say they won't accept what they're hearing from Parker: that there is little or no money for raises in a combined contract given cost-cutting at other airlines and the industry's still-fragile condition.

From Philadelphia to Phoenix, workers say they want payback from the merger's early success, pointing to the millions of dollars in stock gains by Parker and other top executives since the spring.

"If they (US Airways executives) are not careful, they're going to mess up a good thing," said Charlotte, N.C.-based US Airways Capt. Steven Garnett. "I think we're getting close to the end of the honeymoon period."

Jack Stephan, chairman of the union representing pilots from the old US Airways, is more blunt: "The honeymoon is over," he said.

Employees are angry

US Airways, the nation's fifth-largest airline based on passenger counts, can ill afford unhappy workers. It ranked in the bottom half of the industry in on-time arrivals, baggage handling and complaints in July. The pilots are making noise. A small group picketed in Philadelphia this summer.

Some pilots on the East Coast are so peeved with the pace and tone of negotiations that they are privately threatening to run up the airline's already sky-high fuel bill by ignoring the company's fuel-saving tactics, and they are not going out of their way to help get planes out on time.

Parker said he has seen no evidence of that.

But he is concerned about the shift in attitude among many employees, which stands in contrast to the pep rally-like atmosphere a year ago when he was traveling around the country to talk up the merger. (Standby for future developments Mr. Parker - il partito finito! Editor.)

Parker blames it mostly on the combined airlines' quicker-than-expected turnaround. The $305 million profit compares with a loss of $46 million for the then-separate airlines a year earlier.

"People who went through a lot of pain (at the old US Airways) to save a company now are seeing the company not needing saving, and saying, 'OK, where's mine now?' " he said.

"I fully understand that. Our challenge is to go out and explain to them what the company can and can't do, where other airlines are. . . . None of us want to go back to a situation where we get ourselves uncompetitive with other airlines and start losing money again."

Parker confidently predicts a happier bunch by this time next year. (He's new, what can I say. Editor)

He repeated his assertion, though, that the airline has contracts covering work groups on each side so it doesn't have to rush the talks.

Wouldn't the airline lose out on some of the much-touted financial benefits of combining the America West and US Airways workforces?

"Not as much as we're being asked to (pay) to put the two contracts together," he said. "Not even close."

Betsy Snyder will be watching how events unfold. The Standard & Poor's airline credit analyst said labor negotiations are "still a big question that has to be resolved."

She said a profit-sharing payout should help morale among the 35,000 employees, given how few airlines besides Southwest have them anymore. US Airways will pay out 10 percent of its full-year pre-tax profit.

The airline forecasts a profit for the third quarter and full year, and the fat second quarter certainly gives it a big cushion if it's off target.

Employees aren't counting on it, though, given the airline industry's notorious ups and downs.

US Airways, like most airlines recently, has seen a resurgence because travel demand is booming and airlines have cut flights inside and outside of Bankruptcy Court. The imbalance has allowed airlines to raise fares repeatedly. The question lately, though, is can it continue?

Airlines have repeatedly said yes, that they have not seen resistance to higher fares. But a new obstacle has emerged in the past month: the foiled London terrorist plot and tighter security rules. US Airways, Southwest and other airlines have nudged their revenue forecasts lower for the third quarter as business travel in particular took a hit.

Parker said it's unclear whether it's a short-term blip because of the security hassles or a broader falloff due to a slowing economy. The airline is closely watching business-travel bookings for clues.

"A slowing economy, which some are suggesting, is something all airlines are concerned about," Parker said.

On the plus side: Oil prices have been retreating.
 

---

US Airways: the turnaround story
(Business Authority)
Published on: 8/28/06

by Tony Best

FOR A TIME in 2004 and 2005 Barbados didn't know how it was going to fare.

Would US Airways continue flying, go the way of Pan American World Airways and Eastern Airlines – the carriers which went belly-up more than a decade ago, leaving the island stranded?

That was the case with many Caribbean destinations and United States cities, all of which held their collective breath because of the turbulence US Airways was experiencing as it navigated its operations through not one but two bouts in American bankruptcy court.

But the airline's fortunes have changed in recent months and Barbados is hoping the worst is now behind them.

That relief can be traced to the fact that when the carrier announced its first quarterly earnings, it was one of the airlines whose bottom lines showed a profit.

Just as important, Wall Street expects US Airways to remain in the black at least for the short to medium term.

"It has been a pretty amazing turnaround," said William Warluck, a senior analyst with Fitch Ratings. "They are beating the industry handily."

Lucrative winter

Barbados is now looking for more US Airways flights into Grantley Adams International Airport once the lucrative winter season begins.

"They are up to two days a week with us and we are looking at more growth right through the winter season," said Rob McChlery, the Barbados Tourism Authority's senior business development manager. "I think we will see an increase in the scheduled lift with US Airways. Actually, we fared better than some of our neighbours in that we were able to maintain a service."

After 9/11 and the devastating financial impact the terrorist disaster had on the airline industry, US Airways was hit harder than most. As recently as December 2004, flights were being cancelled, the staff's morale had hit an all-time low, and 10 000 misdirected bags were at different airports in America, reported US News & World Report. Things were so bad that by the beginning of 2005, many airline analysts predicted liquidation was around the corner.

However, a lifeline came in the form of a merger with America West, a regional discount carrier which, after 9/11, was the first airline to secure a government-backed loan that allowed it to survive.

Several factors made the timing right for a merger, including America West's lower cost structure, which enabled it to sell tickets at a lower price.

---

US Airways Group Aug. Load Factor Up 1.9 Points To 79.5%
Wednesday, September 06, 2006; Posted: 08:09 AM

(RTTNews) - US Airways Group Inc. reported load factor of 79.5% for the month of August, up 1.9 points from 77.6% in the year-ago period.

Copyright(c) 2006 RealTimeTraders.com, Inc. All Rights Reserved

---

US Airways Boosts Airbus Order
Wednesday August 30, 9:23 pm ET
By Chris Kahn, Associated Press Writer

US Airways Orders More Airbus Aircraft

PHOENIX (AP) -- US Airways Group Inc. said Wednesday it will buy seven additional Airbus A321 jets to replace retiring aircraft, and modified and accelerated orders for other Airbus planes.

Company spokesman Phil Gee said the new terms outlined by US Airways reaffirms its commitment to the European aircraft manufacturer.

Airbus loaned US Airways about $250 million to help finance its takeover by America West, which was completed last year. As part of the loan, US Airways agreed to buy 20 Airbus A350 planes in 2005.

"They're a great partner of ours," Gee said. "They gave us critical support to help the merger between US Airways and America West."

Gee said the Tempe-based airline has since refinanced the Airbus loan and is no longer beholden to the consortium.

The seven new jets are above a standing order for 30 others. US Airways on Wednesday changed that order, converting an existing order for one A320 aircraft and seven A319 jets to an order for eight A321 planes.

The A321 has a longer range and larger seating capacity than the A320 and A319. Terms of the deal were not disclosed.

Doug Parker, the airline's chairman, president and CEO, said US Airways may use the new planes to either replace older, less efficient aircraft or boost capacity under certain market conditions. To a large degree, U.S. carriers have been shy to add capacity recently, which has given them greater pricing power to raise fares and help mitigate higher fuel costs.

US Airways will accept delivery of the 15 A321 aircraft between July 2008 and 2010. Under its original order, the airline would have received the first Airbus jet in 2009.

US Airways shares rose $1.15, or 2.7 percent, to close at $43.45 on the New York Stock Exchange, as airline shares overall benefited from falling oil prices. The stock has traded between $19.10 and $56.41 since the company emerged from Chapter 11 bankruptcy protection nearly a year ago.
 

---

Airline Analysts Brimming With Hope

By Ted Reed
TheStreet.com Staff Reporter
8/24/2006 12:07 PM EDT

Airline analysts remain an optimistic group, shrugging off a failed fare hike and a broken-up terrorist plot, as the industry's most successful summer in six years draws to a close.

In particular, analysts say they were pleased by the 11.1% growth in July revenue per available seat mile, or RASM, reported Tuesday by the Air Transport Association. Not only that, they appear unbothered by the impending arrival of a seasonal, post-Labor Day slowdown and by the coming tougher year-over-year comparisons.

"RASM gains [are] likely peaking, but so what?" JPMorgan analyst Jamie Baker wrote in a recent report. "Rather than implying weakening demand, these trends merely reflect capacity reality."

Domestic capacity, currently down 6% year over year, will be down just 2% by the end of the year, Baker believes. Year-over-year comparisons will also be more difficult because significant revenue improvements began showing up in the fall of 2005.

Baker expects 4% RASM improvement next year but says that even a little "goes a long way when added to the solid recovery foundation built in 2006." He predicts that, if oil prices remain relatively constant, "RASM improvement in 2007 is likely to propel many [legacy carriers] toward peak margin levels."

Projections aside, what is certain is that this summer has been tremendous. According to a research report from Merrill Lynch analyst Mike Linenberg, the industry's domestic July load factor of 86.9% was the highest monthly load factor found the firm's database, which goes back to 1980.

An effort to raise most business fares by $5 for one-way trips and $7 for round trips was instituted by United Air Lines on Aug. 18. The industry didn't follow, but analyst Ray Neidl of Calyon Securities said he isn't concerned.

"After a series of business fare increases and due to seasonality, it does not surprise us that other airlines are not matching at this time," Neidl wrote in a recent report. The process of raising fares "is only taking a breather until the market sees how demand holds up through the fall shoulder season and whether the economy and demand will hold up going into next year."

Meanwhile, airlines and passengers seem largely unaffected by the Aug. 10 revelation that British authorities foiled a terrorist plot to blow up aircraft on trans-Atlantic flights. Everything is back to normal, says the biggest trans-Atlantic carrier, Delta Air Lines.

"Operations from check-in to baggage claim continue to run smoothly," Delta says, noting that it has completed 98.7% of its flights since the existence of the plot was disclosed, prompting changes in security procedures.

The share prices of the airlines have eased since reaching short-term peaks in the first half of last month. The Amex Airline Index has declined about 15% since July 10.

However, Baker expects rebounds by AMR, Continental Airlines and US Airways. JPMorgan has financial relationships with all three carriers.

Standard & Poor's lowered its outlook on airlines to neutral from positive on Aug. 10, as analyst Jim Corridore cited the terrorist plot, high oil prices and the start of a relatively slow travel period as added risk factors.

Even so, Corridore said it appears that U.S. airlines "are in the midst of a fundamental earnings recovery in a strong revenue environment with non-fuel cost cuts." He says he favors Southwest, US Airways and AirTran.

---

US Airways pilots stage protest

They walked an informational picket line in Philadelphia yesterday, provoked by the CEO's cashing in $9 million in stock options.

By Tom Belden
Inquirer Staff Writer
Posted on Wed, Aug. 23, 2006

Over the last four years, pilots for US Airways gave up billions of dollars in promised compensation to help the airline survive. Now, they want some of it back.

Leaders of US Airways' chapter of the Air Line Pilots Association walked an informational picket line yesterday at Philadelphia International Airport to press the point, handing out brochures that described their company as "a thriving airline" with a $305 million second-quarter profit, less than a year after emerging from Bankruptcy Court protection.

The $6.8 billion in compensation pilots gave up includes pay raises and pension benefits they were to have received since 2002, when the airline began the first of two trips through Chapter 11 and demanded givebacks from employees, said Jack Stephan, chairman of US Airways' chapter of the pilots' union.

The average salary for a US Airways captain has dropped 43 percent, and pension benefits for retirees are 70 percent less than they would have been without the concessions, union spokesman Arnie Gentile said.

US Airways has said it expects to make money for the full year. W. Douglas Parker, the airline's chairman and chief executive officer, recently cashed in $9 million in stock options that date back as far as 1995. Parker was previously CEO of America West Airlines, which merged with US Airways in September and adopted the latter's name.

"We're not going to stand idly by while Doug Parker gets $9 million," Stephan said, as 25 other pilots walked silently in a long rectangular formation on a sidewalk near US Airways' Terminal B ticket counter.

The union said this was the first time it had engaged in informational picketing since the airline came out of bankruptcy protection almost a year ago.

US Airways has integrated many of the operations of the two airlines, but the US Airways and America West contingents of its pilot and flight attendant groups are still working separately. The company and union officials, who represent both US Airways and America West pilots, have been negotiating for nine months over a single contract that would cover employees of both carriers. The airline employs about 2,500 pilots, down from almost 6,000 before Sept. 11, 2001.

In a statement, the union said the negotiations so far had resulted in "little progress... in economic and operational areas" dealing with pay and work rules.

US Airways officials said the company needed to integrate the employees of the two airlines in a "cost-neutral" way. US Airways' pay levels are now the industry norm, and the company must keep them that way to compete with other airlines, they said.

"In 2007, we want pilot costs to not increase any more than they are now in the two separate contracts," senior vice president Elise Eberwein said.

Many pilots on the America West side of the company are scheduled for a pay raise next year, but the vast majority of those living under the pre-merger US Airways contract are not scheduled for an increase until 2009, both union and company officials said.

US Airways' profit soars
Airline reports $305 million on heels of merger

Dawn Gilbertson
The Arizona Republic
Jul. 28, 2006 12:00 AM
 

US Airways didn't just join the parade of profitable airlines in the second quarter; it practically led it, turning more merger skeptics into believers.

The Tempe-based airline, formed by last fall's merger between America West and bankrupt US Airways, reported a $305 million profit for the April-June period on a surge in revenue.

Excluding merger expenses and one-time gains, the profit was $315 million, or $3.25 per share. The average analyst estimate, which had climbed steadily in the past two months as the industry sizzled, was $3.24.

US Airways' profit margin topped every other hub-and-spoke airline and was second only to perennially profitable Southwest Airlines.

Its revenue gains topped all major airlines. Revenue per available seat mile, a key industry benchmark, rose an unheard of 28.8 percent on the old US Airways routes and 18.6 percent at America West. The main driver: average airfares that were up more than 16 percent from a year ago. Total revenue was $3.2 billion.

The upshot for the airline's 35,000 workers - 10,000 of them in the Valley - $36 million in profit sharing so far this year.

It was the airline's second consecutive quarterly profit and a remarkable turnaround from a year ago, when the still single airlines lost a combined $46 million and skepticism about the merger's prospects was high.

And it came despite a fuel bill that was $183 million higher than a year ago because of escalating oil prices.

Betsy Snyder, airline credit analyst for Standard & Poor's, did a double take when she saw the $305 million profit in the headline of the earnings report.

"I couldn't believe it. I had to keep reading," she said. "I was impressed."

Robert Mann, an industry consultant in New York, was an early critic and one of those who said the merger code name should have been Project Dumbbell instead of Project Barbell (for the airline's strengths on opposite coasts).

"It's looking less like a dumbbell," he said after Wednesday's earnings report. "It's pretty remarkable."

The stock market wasn't as impressed. US Airways shares, which have more than doubled since the merger, fell 6.2 percent, to $47.96. All airlines were hurt by a jump in oil prices, and the overall market was flat.

Some analysts said investors might have been concerned that US Airways increased its cost projections for the second half of the year, mostly due to higher fuel prices, which slightly reduced profit estimates for the rest of the year.

High demand, fewer seats

US Airways, like its competitors, is on a much-needed roll because the notoriously cutthroat industry has finally shrunk.

It's the bright side of soaring oil prices. Facing staggering fuel bills, airlines have had to trim unprofitable routes inside and outside of bankruptcy court. The old US Airways' had 13 percent fewer seats than a year ago, America West 2.3 percent fewer. Delta and Northwest, both in bankruptcy, are down considerably and Independence Air went out of business.

Fewer seats, combined with strong travel demand, means airlines can charge higher airfares. And they have, in spades. The turnaround has been so strong, US Airways has already far surpassed the first-year profit projections it showed to investors last year.

It had projected a $150 million profit excluding special items for the year; it hit $315 million in the second quarter alone and is projecting a third-quarter profit.

"It's not great management. It's because a bunch of seats went away," US Airways CEO Doug Parker said on a conference call with Wall Street analysts and the media.

That said, he said US Airways is doing better than most of its peers because of the merger and the benefits it brought.

In addition to shedding unprofitable flights, the two airlines have linked their schedules, cut corporate overhead and wooed back old US Airways customers who fled after customer-service problems and the bankruptcy stigma.

"Our results . . . show what tremendous value can be created through consolidation," Parker said.

Parker and other US Airways executives said they don't see the positive picture changing anytime soon. They said they have seen no customer resistance to higher airfares, something analysts have begun to worry about. Southwest Airlines last week said it has seen limited resistance and Alaska said the same thing.
 

Unfinished work

On the merger front, US Airways concedes it has much work to do, most notably merging the reservations systems early next year and labor negotiations with its pilots, flight attendants and other major work groups.

Both are likely to be thorny. Switching to a single reservation system is a huge technological task, and US Airways admittedly did not shine when it switched to a single Web site and frequent-flier program a couple of months ago. Officials initially said it went smoothly except for a few glitches but now admit to heavy customer confusion and Internet booking problems early on.

They expected a 50 percent increase in calls to their reservations center, and they went up by about 200 percent, said Scott Kirby, executive vice president of sales and marketing.

"We overwhelmed the call center," he said.

Internet bookings have recovered, but the airline still has a backlog of customer questions and complaints. Officials said they hope to have them all addressed shortly.

On the labor front, the goal is to get each work group to a single contract, which would be more efficient, and to merge seniority lists.

Parker is adamant that the new contracts won't increase the airline costs, and the labor groups are adamant that they want to share in the new US Airways' newfound prosperity.

The two pilot groups, both represented by the Air Line Pilots Association, were quick with a joint statement on the airline's blockbuster earnings.

"US Airways continues to post substantial profits on the backs of the pilots of US Airways and America West, and this will no longer be tolerated," said Jack Stephan, chairman of the US Airways pilots' unit. "We have been patient for some time, but with each instance of greater fiscal success, this pilot group expects commensurate returns."

Parker expects a long battle and said a quick resolution is not necessary because all work groups have existing contracts.

"We're not prepared to agree to that (more money), so we're going to be in negotiations for a while, I imagine," he told analysts.

US Airways pilots to picket
Union to ask for wage increase

Dawn Gilbertson
The Arizona Republic
Aug. 21, 2006 12:00 AM

US Airways pilot union leaders on the East Coast plan to picket and hand out leaflets at the Philadelphia airport Tuesday, the highest profile sign yet of growing labor rancor at the merged America West-US Airways.

The US Airways unit of the Air Line Pilots Association says it wants to send a message that pilots won't accept company executives' repeated assertion that there is no money to boost wages and benefits.

The pilot unions of both airlines are negotiating a joint contract that would cover the merged workforce, as are other work groups. Getting each group to a single contract is a key milestone of the nearly 1-year-old merger.

"We should fold up our briefcases and go home if they think for one minute this is going to be a cost-neutral contract," said Jack Stephan, chairman of the US Airways pilots union.

He said "that song will play as well as" the recently introduced "I Make Us Fly" employee marketing campaign, which some employees derided.

Stephan said he only expects a dozen or so union officials at the informational rally in Philadelphia, US Airways' biggest hub in terms of revenue. But the union is already organizing pilots to volunteer for similar action in the future.

In a hotline message to pilots last week, officials said solidarity is needed "to achieve a fair contract and put an end to bankruptcy profiteering here at US Airways."

The pilots union at the former America West isn't participating in the picketing or organizing a similar action at America West hubs in Phoenix and Las Vegas. They seem to be taking more of a wait-and-see attitude in the negotiations.

"As we start to get to the more divisive issues, there's going to be a time when the message is going to be sent clearly to the company that we will not subsidize this merger," said Tania Bziukiewicz, spokeswoman for the America West unit of the pilots union.

US Airways and America West pilots unions have been in negotiations with management, but both sides admit resolution is a long way off.

Employees don't understand how Chief Executive Officer Doug Parker can say money is tight when US Airways reported two consecutive quarterly profits and had one of the highest profit margins in the business in the second quarter.

They also are upset about heavy stock sales by Parker and other top executives and said they, too, should share in the early success of the merger.

US Airways employees in the East are particularly adamant about seeing a payoff because their pay and benefits were slashed during two Chapter 11 bankruptcy cases.

In some cases, they make less than the America West pilots, who worked for a smaller airline and have less seniority. In other cases, the US Airways pilots make more.

The America West pilots are equally adamant about a bump in pay and benefits, as they were due to start negotiations on their next contract this summer before the merger came along. They have said they will start those negotiations if the current negotiations drag on.

Parker has said repeatedly that the new US Airways must keep its labor costs competitive and that current wages are the going rate in the industry given all the cost cutting that has gone on inside and outside of Bankruptcy Court.

He has said management would like to get to a single contract for each labor group to integrate the two airlines but doesn't have to rush it because unions on each side have binding contracts. The US Airways pilots, for example, have a contract that runs through 2009.

US Airways spokeswoman Elise Eberwein reiterated the company's position on Friday.

"You can't drive looking in the rear-view mirror," she said. "We have to look out one year, three years, five years. We have to make sure we're in a position to compete aggressively and that means keeping our costs where they are today."

The pilots union appears ready for long, loud fight.

A note to US Airways pilots on a Yahoo message group last week urged members to get involved. "Our leverage at the negotiating table isn't created by words, but by actions, and next Tuesday your union leadership begins that campaign in Philadelphia," it said.

"But this isn't a spectator sport, and you can't watch it in virtual reality from the comfort of your living rooms. If you want what you deserve, if you want what you paid for, then you'll have to join the Army to make it happen."

US Airways pilots to picket
Philadelphia Business Journal - 4:03 PM EDT Friday

US Airways pilots will conduct an "informational picketing" at Philadelphia International Airport Tuesday to draw attention to their demand for a better contract.

The Air Line Pilots Association International said "the pilots, during the course of two bankruptcies, committed $6.8 billion in concessions to US Airways management so that the airline would survive and become a successful carrier." Now they want "a fair contract that rewards the pilot group for its part in US Airways' remarkable turnaround."

The picketing is scheduled for 9 to 11 a.m., the association said.

Jack Stephan, a spokesman for the association, declined comment Friday on the pilots' specific demands. He said that information would be available during the picketing.

US Airways, which was formed by a merger last fall between America West Airlines and the bankrupt former US Airways, reported net income of $65 million in the first quarter and a profit of $5 million excluding special items. The airline, which is based in Tempe, Ariz., is the dominant carrier at Philadelphia International.

Earlier this month, the union representing the airline's flight attendants criticized US Airways for a 3 percent pay increase earmarked for airline management this fall.

The union said flight attendants were being asked to work without raises, but an airline spokeswoman said the flight attendants' contract calls for step increases for years of service until employees reach the top tier.

US Airways' marketing ploy crashes
Tom Fontaine, Times Staff
08/09/2006
Beaver County Times Allegheny Times
 

US Airways Group Inc. recently launched an internal marketing campaign called "I Make US Fly" that tries to unify employees from the merged company's two former airlines under a set of new corporate philosophies.

The response of many employees to "I Make US Fly," union leaders say, has been "You Make Me Sick."

The colorful campaign literature, which is being distributed to the airline's 35,000 employees, fashions the new US Airways as a worker-driven low-cost carrier with a "business casual" approach.

That approach meets somewhere in the middle of the two former airlines. The old US Airways, which had been based in the eastern United States, was a more formal airline that catered largely to business travelers, while America West, based in Tempe, Ariz., was geared more toward vacation travelers, said company spokesman Morgan Durrant.

"We'll cater to our important business and leisure customers, but not in an overly formal way. ... We're concentrating on what our customers want most, without a lot of fluff," the campaign literature says.

The literature includes customer-service flashcards for each of the airline's employee groups. The No. 1 rule for each of them, from reservation agents and ramp workers to corporate employees: "Being friendly and helpful ... all the time."

Union reps panned the campaign.

"It's birdcage material. It paints everything as a rosy picture, and it's not," Mike Flores, spokesman for the US Airways flight attendants union, said of the literature.

The flight attendants are among a handful of union groups from the former US Airways and America West in the process of negotiating joint contracts with the airline.

After the new US Airways announced it posted a $305 million second-quarter profit, union leaders said they wanted their workers to be rewarded for sacrifices made in the past, including billions in concessions during the former US Airways' two bankruptcies. However, US Airways Chief Executive Officer Doug Parker has said he wants to reach joint contracts without increasing labor costs.

Further riling the rank-and-file, union leaders said, were recent announcements that Parker made roughly $9 million selling company stock last week and that management employees are in line to receive 3 percent pay increases this fall.

"If anyone thinks for one minute that whitewashing serious labor unrest with cosmetics will cover up deep-rooted problems, this airline is in serious trouble," said Capt. Jack Stephan, spokesman for the US Airways pilots group.

"The campaign is nice window-dressing, but if they want to increase morale, they need to do that at the bargaining table," added Capt. Tania Bziukiewicz, spokeswoman for the America West pilots group.

Coca-Cola, which beat out Pepsi to sell its products on the new US Airways' flights, paid to produce the literature and a related video. The cost could not be determined Tuesday.
 

Labor leaders assail US Airways CEO’s $9M stock sale

By Donna Hogan, Tribune

US Airways CEO Doug Parker’s $9 million stock sale, hints of another merger and pay raises for nonunion workers anger labor leaders, who say they want in on the windfall.

The Tempe-based carrier, formed by the merger of America West Airlines and East Coast-based US Airways, is negotiating contracts with several unions aimed at integrating the work forces.

Parker has said the now profitable airline will not give away gains in contract pay boosts.

But labor leader hackles were raised when Parker cashed in old stock options, making nearly $9 million in a half-dozen transactions in two days.

A few weeks earlier, other senior managers also bought and sold stock, pocketing tidy profits.

“It’s galling to see our pilots paid at the bottom of the industry when senior management cashes in at our expense,” said Jack Stephan, chairman of the US Airways pilots group. “We’ve made this windfall possible.”

Stock options, typical corporate perks for top-level management, are not part of a company’s cash pool, and when they are exercised and sold the profits do not affect the company in any way.

Stephan said, however, that Parker’s gesture is symbolic and worrisome for a company (the old US Airways) that “saw CEOs come and go, get rich at our expense, and take off.”

“My question is, if he has so much confidence, why is he bailing out? I wish we had something that shackled management to the stock,” Stephan said.

Meanwhile, flight attendants are taking issue with an average 3 percent pay raise announced last week for nonunion employees.

“There seems to be money available. They are making a profit and giving themselves raises,” said Corey Caldwell, national spokeswoman for the Association of Flight Attendants.

Mike Flores, who represents US Airways’ East Coastbased flight attendants, said Parker’s insistence that all contracts will be negotiated without increasing costs to the airline, means East Coast based attendants, who are already better paid than their former America West peers, may have to take a pay cut.

The flight attendants, like the pilots, are looking for more money or benefits in the negotiations.

“US Airways attendants are not going to go backwards,” Flores said. “We’ve done it three times (during bankruptcy) and we’re not going to do it again. The notion of a no-cost-increase contract is ludicrous.”

The pay boost for nonunion employees is a longtime America West program and not tied to profits, said Phil Gee, US Airways spokesman. It’s meant to give non-contract employees annual cost-of living and merit increases, he said.

“It’s similar to the union step increases,” Gee said. “It’s a perception” that the nonunion employees are faring better than contract workers, he said.

Gee said while US Airways contract pay scales won’t increase, it doesn’t mean individuals won’t get a pay boost, because the contracts have automatic step increases based on time and service.

But most troubling to the International Association of Machinists and Aerospace Workers, who represent fleet service workers, is talk of another potential merger, union spokesman Joseph Tiberi said.

Parker has repeatedly said his airline is profitable because of the merger of America West and bankrupt US Airways, and with two other airlines now in bankruptcy, he might be interested in another hookup.

Tiberi said Parker needs to fix what he has first, and that means getting existing work forces integrated.

“This airline can fail if this isn’t resolved,” Tiberi said. “US Airways won’t find another airline willing to merge when thousands of employees are against it.”

Gee said while Parker made a call to Delta Airlines to say he might be interested if the bankrupt carrier is looking for a partner, there have been no further talks of teaming up. And he said Parker has not contacted Northwest Airlines, which is also in reorganization.

US Airways CEO cashes in to the tune of $9M

By Thomas Olson
TRIBUNE-REVIEW
Saturday, August 5, 2006

Doug Parker, chairman and CEO of US Airways, made about $9 million this week by exercising options granted years ago, according to a securities filing this week.

The pay perk allowed the airline executive to acquire 272,250 shares of US Airways stock at bargain prices -- between $6.42 and $29.09 a share -- on Aug. 1, and then sell them at much higher prices on the open market -- either $44.46 on Aug. 1 or $43.59 on Aug. 2.

It was the first time Parker sold company stock since joining America West Airlines 11 years ago. He received the options over the years prior to the carrier's merger with US Airways when it exited bankruptcy last September, when the securities were converted to newly issued US Airways stock.

Earlier this year, Parker publicly noted he received no bonus last year and gave up $770,000 in other pay, in deference to workers who conceded more than $2 billion during US Airways' two bankruptcies since 2002. Still, he was paid more than $2.4 million in cash and another $9.2 million in securities and other non-cash compensation.

"Please do not take my option exercises as an indication that I believe US Airways is topping out," said Parker in a message to employees on Friday. He also said he would not exercise any of his remaining stock options this year.

Parker spent $3.04 million this week to acquire the shares then sold them for $12.04 million, documents show.

US Airways reserved $36 million, or 10 percent of pre-tax profit last quarter, for the rank-and-file's annual profit-sharing plan. All 35,200 employees are eligible for a share of however much profit is made in 2006, a year in which Parker projects US Airways will finish in the black.

US Airways Flight Attendants Outraged by Management Pay Increases
Management Continues Demand for Cost-Neutral Contract

PHOENIX, Aug. 7 /PRNewswire/ -- While flight attendants from US Airways and America West, both represented by the Association of Flight Attendants-CWA (AFA-CWA), are striving in negotiations to reach a combined contract, the company announced last week that a three percent pay increase for management will take place this fall. This disturbing announcement comes at a time when management continues to insist at the bargaining table that the merged flight attendant contract include zero cost increases, or in other words, takes the worst from both contracts and merges them into one.

"This hypocritical posturing by Parker and his management team for a cost- neutral contract must stop now," said Gary Richardson, America West Master Executive Council President. "The flight attendants at the new US Airways are as integral to the success of this company as any other employee group, including management. We deserve and expect fair enhancements to our wages and working conditions. And yes, we are ready, willing and able to take the steps necessary to secure those enhancements." The majority of America West Flight Attendants have not had a pay increase since their contract became amendable in May, 2004.

Negotiations have been largely unproductive, leaving even non-economic issues unresolved due to management's insistence on the worst of both contracts.

In addition to giving raises to management, CEO Doug Parker cashed in approximately nine million in stock options, and issued the following statement concerning the management increases: "The past year has been more challenging and more successful than many of us anticipated going into the US Airways/America West merger. Today, we are on track for a profitable 2006, even with transition-related expense and with continued high fuel costs and that is good news...I'm delighted that we're in a position to offer increases."

"US Airways flight attendants gave over $154 million per year in contract concessions, including the forced termination of our pensions, in order for the airline to survive and be a partner in the merger," said Mike Flores, US Airways Master Executive Council President. "And now, this management team, who are giving themselves raises and cashing in their stock options hand over fist, demands that our hard work and sacrifice remain unrecognized. It was on the backs of the flight attendants that this merger has been successful, and we are determined that we will obtain a merged contract with improvements in working conditions, benefits and compensation. Our paltry profit sharing yields us at the very best less than three percent of our annual givebacks." (Association of Flight Attendants-CWA, AFL-CIO)

US Airways workers gave and gave, now they might receive

Payback time?

US Airways Group Inc., created last year when cash-strapped America West acquired the twice-bankrupt former US Airways, reported Thursday that it posted a second-quarter profit of $305 million.

In a conference call Thursday, US Airways President and CEO Doug Parker said part of that good fortune would be "shared by employees who are the driving force behind our success."

Through a profit-sharing agreement between the airline and its 35,000 employees, roughly 3,000 of whom are based at Pittsburgh International Airport, if US Airways turns a profit for the year - and Parker predicted it will - then the company will dole out 10 percent of its pretax profits to employees.

The profit-sharing plan "would increase expenses slightly, but those are the kind of expenses we like to incur," Parker said.

If 2006 ended tomorrow, $36 million would be divvied up among the employees.

Amounts would vary between the various labor groups, though airline spokesman Morgan Durrant could not provide the breakdowns, saying they haven't been determined yet.

Employees contacted by The Times said they were pleased to see the airline turn such a large profit in the second quarter, in part because of the profit-sharing payments employees would receive.

But they said those payments, which for many employees will be in the hundreds of dollars, won't make up for the billions that workers at the old US Airways lost in wages and benefits.

While employees concede they will probably never get much of those wages and benefits back, they hope some of it is restored as their unions negotiate joint contracts for workers from the two former airlines.

To date, only the Airline Customer Service Employee Association, an alliance of two unions representing 7,700 customer-service and reservation agents from the former airlines, has reached a final agreement.

The Air Line Pilots Associations and Association of Flight Attendants represented employees at both of the former airlines, and are in the process of negotiating a joint contract.

Baggage handlers and fleet-service workers from the former airlines had been represented by two different unions, but they recently started negotiating a joint contract after electing to be represented by the International Association of Machinists and Aerospace Workers, which had represented employees at the old US Airways, instead of the Transport Workers Union.

It remains unclear whether the IAM or International Brotherhood of Teamsters will represent the new airline's mechanics. The National Mediation Board is expected to decide on the matter in the coming weeks, after which time negotiations on a joint contract will begin.

"The profit sharing will never take the place of what we lost, but it's better than nothing," said Frank Schifano, president of the IAM local that represents mechanics from the old US Airways.

"We hope (the airline) will continue to be profitable, and that we can reap more of those profits in the future. Workers have given many sacrifices to get us to this point," Schifano said.

"They weren't bashful to ask for us to participate in the worst of times. Now we're expecting them to participate in the best of times. After all, nobody would be at this dance if it weren't for the pilots, and the other labor groups, as well," said Capt. Jack Stephan, of the former US Airways pilots' union, on Wednesday, before the quarterly earnings were announced.

"This won't be a concessionary negotiation ... those days are over. We won't be raped and pillaged like we were before with the help of the bankruptcy code," Stephan said.

Capt. J.R. Baker, of the former America West pilots' union, did not return calls from The Times, but echoed Stephan in a press release, saying, "The America West and US Airways pilots have (always supported) our respective companies through bad times, and we intend to share in the success of the new US Airways moving forward." (Beaver County Times)
 

US Airways, America West Pilots Respond to Company Second Quarter Earnings Report
Thursday July 27, 2:57 pm ET

PHOENIX, July 27 /PRNewswire/ -- As US Airways management today announced a $305 million profit for the second quarter 2006, the pilots of America West and US Airways reaffirmed their commitment for a forward- moving collective bargaining agreement that would enable US Airways to achieve millions of dollars in synergies created by the merger of the two airlines.

The America West and US Airways pilots, who are represented by the Air Line Pilots Association, Int'l (ALPA), provided their management teams with billions of dollars in cost savings to ensure the viability of their respective airlines. The contributions of both pilot groups, as well as those made by other employee groups, enabled the successful merger of America West and US Airways. The level of this success has been documented by US Airways Group Chairman, President and CEO Doug Parker, who has stated that US Airways' second quarter profit is the highest among the major hub-and-spoke airlines.

As US Airways continues to post record profits, the pilots of US Airways and America West have been in negotiations with management for nearly nine months to attain a single collective bargaining agreement that recognizes the pilots' contributions and the magnitude of their role in US Airways' turnaround.

"During these negotiations, the America West pilots expect to increase our compensation, enhance our retirement and benefits, and improve our working conditions. Anything less is unacceptable," said Captain JR Baker, Chairman of the America West Master Executive Council (MEC). "The America West and US Airways pilots have each contributed decades of superior service, always supporting our respective companies through bad times, and we intend to share in the success of the new US Airways moving forward."

"US Airways continues to post substantial profits on the backs of the pilots of US Airways and America West, and this will no longer be tolerated. We have been patient for some time, but with each instance of greater fiscal success, this pilot group expects commensurate returns. We are demanding contractual improvements in all areas of our bankruptcy-era contract which will reflect our investment in this corporation," said Captain Jack Stephan, chairman of the US Airways MEC. "We have in no uncertain terms told management that our pilots will only ratify an agreement that recognizes our investment in the airline and rewards our pilots for their sacrifices. If US Airways management intends to capture all the planned synergies of this merger and to have any chance of enjoying labor peace, bankruptcy-era bargaining tactics need to end."

Before the merger was completed, the pilots negotiated and implemented a Transition Agreement to provide key building blocks for the negotiation of a single collective bargaining agreement, an orderly seniority integration process, and integration of the two separate airline operations. Until these three requirements are met, the new US Airways cannot fully capitalize upon the synergies it promised investors. (PRNewswire)

US Airways Earnings Up, Pilots Want More
 

By CHRIS KAHN Associated Press Writer
© 2006 The Associated Press

TEMPE, Ariz. — US Airways Group Inc., the airline formed from America West's acquisition of the bankrupt former US Airways, on Thursday said it swung to a profit in the second quarter and expects a profitable third quarter and full year.

The company posted net income of $305 million, or $3.25 per share, for the April-June period versus a loss of $3 million, or 20 cents per share, a year ago.

There was a good amount of skepticism from others about how well (the merger) would work," President and Chief Executive Doug Parker said. "I'm happy to report today that it's working exceptionally well."

The recent results include $35 million of deal-related expenses, which were partially offset by a $7 million gain from interest income earned on prior year federal income tax refunds, and an $18 million gain related to fuel hedges.

Excluding items, the company posted per-share earnings of $3.35 in the quarter.

Airlines are benefiting from an industrywide reduction of seats on flights, which allows them to increase ticket prices, said Ray Neidl, an analyst with Calyon Securities.

"It's a very robust time for the industry, so they've got a big stiff wind pushing them along," Neidl said.

But they're also being hurt by skyrocketing jet fuel prices. US Airways spent $554 million on jet fuel in the first quarter and $669 million in the second.

The airline's results surprised many analysts, who on average expected earnings of $3.24 per share, according to a Thomson Financial survey.

"It shows how inefficiently the old US Airways was run," Neidl said. "These guys are right now squeezing all the benefits they can out of the merger."

Revenue increased to $3.19 billion from $845 million a year ago. Wall Street expected $3.14 billion in revenue.

US Airways said the quarterly results will allow them to pay out $36 million for employee profit sharing, a first for the merged company.

Despite the profit, Parker said he sees no end to a nine-month contract negotiation with pilots unions for US Airways and America West.

Pilots don't want the merger to force them to take a pay cut. But that would force management to raise the generally lower-paid US Airways pilots to the level that America West pilots have been making.

"Management wants to put those contracts together without increasing the cost," Parker said. "We're going to be in negotiations for a while I imagine."

The pilots union said that's unacceptable.

"US Airways continues to post substantial profits on the backs of the pilots of US Airways and America West, and this will no longer be tolerated," Captain Jack Stephan, chairman of the US Airways pilots union, said in a statement.

"We have been patient for some time, but with each instance of greater fiscal success, this pilot group expects commensurate returns."

Both unions currently are operating under separate contracts. The America West contract is due for changes in December 30. The US Airways contract would be open for changes in December 2009.

The airline said revenue increased to $3.19 billion from $845 million a year ago. Wall Street expected $3.14 billion in revenue.

The company said the second quarter's results are being compared to America West Holdings Corp.'s results for the second quarter of 2005. The acquisition was in September 2005.

On a standalone basis, US Airways reported a profit of $246 million versus a loss of $44 million a year ago. As for America West, on a standalone basis, it reported a profit of $68 million versus a loss of $2 million for the same period last year.

"We are encouraged by a continuing strong revenue environment and an industry that is keeping capacity in check. We anticipate a profitable third quarter and full year 2006," Parker said.

Parker said US Airways still expects to save another $100 million by cutting redundant costs through the merger.

Shares of US Airways Group fell $3.14, or 6.1 percent, to close at $47.99 on the New York Stock Exchange. But its shares have more than doubled since being issued when the merger was completed Sept. 27 (Chron.com)

US Airways Swings to 2Q Profit
 

© 2006 The Associated Press

TEMPE, Ariz. — US Airways Group Inc., the airline formed from America West's acquisition of the bankrupt former US Airways, on Thursday said it swung to a profit in the second quarter and expects a profitable third quarter and full year.

The company posted net income of $305 million, or $3.25 per share, for the April-June period versus a loss of $3 million, or 20 cents per share, a year ago.

The recent results include $35 million of deal-related expenses, which were partially offset by a $7 million gain from interest income earned on prior year federal income tax refunds, and an $18 million gain related to fuel hedges.

Excluding items, the company posted per-share earnings of $3.35 in the quarter.

Analysts, on average, expected earnings of $3.24 per share, according to a Thomson Financial survey.

Revenue increased to $3.19 billion from $845 million a year ago. Wall Street expected $3.14 billion in revenue.

The company said the second quarter's results are being compared to America West Holdings Corp.'s results for the second quarter of 2005. The acquisition was in September 2005.

On a standalone basis, US Airways reported a profit of $246 million versus a loss of $44 million a year ago. As for America West, on a standalone basis, it reported a profit of $68 million versus a loss of $2 million for the same period last year.

"We are encouraged by a continuing strong revenue environment and an industry that is keeping capacity in check. We anticipate a profitable third quarter and full year 2006," said Chairman, President and Chief Executive Doug Parker.

Shares of US Airways Group fell 97 cents to $50.16 in morning trading on the New York Stock Exchange. But its shares are up about 35 percent since the start of the year. (Chron.com)

US Airways Group Inc. reports earnings for the fiscal second quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Analysts are expecting the airline industry to report some of its strongest results since before the terrorist attacks of Sept. 11, 2001, as it rides an improving revenue trend.

Through recent bankruptcy reorganizations, carriers have been pulling seats from the market, limiting capacity. That, coupled with stronger demand from business and international fliers, has allowed airlines to boost revenue through fare hikes.

Carriers need the higher revenue to offset increasing fuel prices, as oil costs have set record levels recently.

US Airways had an East Coast-heavy network before merging in 2005 with America West, which had a strong presence in the Western U.S.

Analysts are looking for the newly combined US Airways to post some of the industry's best results. The combined company also boasts some of the industry's lowest costs.

Lehman Brothers analyst Gary Chase named US Airways as one of his top picks in a second-quarter earnings preview, along with AirTran Holdings Inc. and United Airlines' parent UAL Corp.

EXPECTATIONS: Wall Street is looking for second-quarter profit of $3.31 per share on $3.14 billion in revenue, according to a Thomson Financial analyst poll.

ANALYST TAKE: Lehman Brother's Chase called the improving revenue trends at US Airways "compelling."

The key issue for investors, he said, "is the ability to continue current revenue momentum, particularly in the regional entity and the western hubs (old America West), as well as updates on merger integration undertakings and future integration milestones."

STOCK PERFORMANCE: US Airways stock opened the quarter at $40 and climbed as high as $52.18 in early May before closing the quarter at $50.54 on the New York Stock Exchange. Shares of US Airways ended Monday's NYSE session at $50.05. (wwwChron.com)

US Airways, the country's seventh-largest air carrier, hedged 41% of its fuel cost for the year compared with 39% in June, according to a U.S. Securities and Exchange Commission filing made on Friday. (USA Today)

Fitch Ratings has upped its outlook on US Airways Group from negative to positive, citing an improved debt maturity profile and liquidity position. The improving domestic revenue environment has strengthened US Airways' liquidity position," Fitch said Friday. It said domestic capacity reductions "have driven the first meaningful improvements in domestic industry unit revenue since the post-Sept. 11 collapse." (Yahoo.com)

Six months into the US Airways-America West merger, company executives have nicknamed their efforts to become the nation's dominant low-cost carrier "Extreme Makeover: Airline Edition."

Another reality TV show might better describe the merger and six months of success: "Survivor."

However you view it, Chief Executive Doug Parker's slow, methodical approach to melding the laid back, casual style of America West with the button-down collar, suit-and-tie ways of US Airways is garnering applause.

"I have a huge amount of respect for what Parker has done," said Michael Miller, a partner in the Washington, D.C., airline consulting firm The Velocity Group. "He is creating what could be the best merger in the airline industry, managing the merger as well as any airline has done in recent memory."

One major contributing factor to US Airways success, surprisingly, is high fuel costs -- which are causing many carriers to reduce the number of seats flying, according to both US Airways executives and airline analysts.

Fewer available airline seats, along with continued strong demand, allows airlines to charge more and increase revenue. And US Airways has increased its revenue, on a percentage basis, more than than all other major airlines, compared to a year ago, according to the airline's figures.

"Fuel prices are up sufficiently that they are putting enough financial stress on the system to force a capacity decline," said J. Scott Kirby, US Airlines executive vice president, sales and marketing, during a meeting with reporters on March 10. "And because of the capacity situation, carriers are able to pass through higher fuel costs."

Higher ticket prices increase the amount of revenue spread over available seats.

As an example, during the fourth quarter, US Airways revenue per available seat-mile year-over-year was up 16 percent, tieing low-cost carrier AirTran for best in the industry. Kirby said January's revenue per available seat-mile was more than 20 percent better than in January 2005, and in February, more than 25 percent, "well in excess of our merger plan," Kirby said.

"The revenue side is better all around, a consequence of capacity being cut out of the system, with Delta and Northwest in bankruptcy and robust growth generally," said William Lauer, an airline analyst and head of Tarentum-based Allegheny Capital Management.

The merged company is also benefitting from $1-plus billion in pre-merger pay givebacks by employees and expense cuts, aircraft returns and renegotiated leases, plus a very healthy flying climate.  (Pittsburgh Post-Gazette)

Domestic airlines are still in a scary state, but there were some definite positives to US Airways' first-quarter results reported last week. Consolidating the performances of US Air and America West, revenue per available seat mile rose 23% on a roughly 8% decline in available miles. In short, US Air is raising fares (up about 20% so far this year) and avoiding half-empty planes whenever possible. Believe it or not, it's operating things like -- gasp! -- a business.

Knock on wood: US Airways should be able to maintain these higher fares for at least a little while -- Independence failed, Delta is cutting back, and Southwest  may be under pressure to raise fares to mitigate the expiration of fuel hedges.  (Fool.com)

US Airways surprised Wall Street Tuesday by saying it made money in the first three months of the year -- its first quarterly profit since leaving bankruptcy protection and merging with America West Airlines last fall.

Although fuel prices are approaching record highs, the airline said it made money because airfares are rising faster than the price of oil.

Cutbacks by other carriers are reducing competition and allowing US Airways to raise ticket prices.

The entire industry is seeing big revenue gains, but of the major carriers, only US Airways and Southwest Airlines have said they were profitable in the first quarter.

US Airways, which has its largest hub in Charlotte, said it made $65 million in net income for the quarter, compared with a $259 million loss for the same period last year, before the merger. Subtracting special items such as merger expenses and a forgiven loan, US Airways would have made $5 million.

US Airways' strong financial performance is a crucial milestone for an airline that just over a year ago was battling for survival.

Then, US Airways was reeling after back-to-back bankruptcy filings and repeated rounds of concessions from labor groups.

Now, nearly 12 months after announcing the merger, the airline is proving skeptics wrong by methodically integrating the two airlines. It now has results that show the plan is working.

"With our merger, we set out to build an airline that could be profitable in an extremely challenging environment, and today's results confirm that our outstanding employees are making that goal a reality," Chief Executive Doug Parker said.

On a conference call, some analysts seemed stunned at the company's quick progress.

"Was the old US Airways system really that bad ... or are you guys kind of geniuses?" Calyon Securities analyst Ray Neidl asked Parker and other senior executives.

After a series of analyst upgrades, US Airways' stock shot up 9 percent Tuesday and closed at an all-time high of $51.63.

The airline's newfound profitability could complicate negotiations to reach new agreements with labor unions. The company says it wants agreements that keep costs steady, but some employee groups want a larger piece of the pie.

On Tuesday, US Airways' pilots union sent out a news release saying they'd like to share in the company's success.

"Just as US Airways' stockholders and executives are reaping the rewards of the new US Airways, the pilots of this airline fully expect to receive commensurate returns," said Capt. Jack Stephan, the union's leader.

Former America West Chief Executive Bill Franke, an early skeptic that the merger could be consummated without labor strife, told the Observer that's the usual yin and yang in airline labor negotiations.

"The unions become the sponge," said Franke, who runs a private-equity fund in Arizona. "When times are bad, water gets wrung out of the sponge. When times are good, the sponge wants to be filled."

Some elected officials in cities such as Pittsburgh complain that the airline's cuts have gone too far and say it should start a flight to Europe from Pittsburgh.

Still, the merger has played out largely as Parker said it would.

A year ago, US Airways and America West said they would remove 60 planes from their fleets. They hoped competitors would cut back, too, because of high fuel prices.

That has happened, resulting in less competition and huge increases in revenue. US Airways' revenue rose to $2.7 billion for the quarter -- $308 million more than both carriers' revenue a year ago.

"The integration is going well, and the revenue results are far in excess of our initial expectations," said Scott Kirby, executive vice president of sales and marketing. "While there's a lot of hard work left to do, the future outlook remains very bright." (Charlotte Observer)