US Airways doesn't plan to cut TIA flights

The airline's long-term strategy is unclear. A big question is how much smaller the reorganizing company will be.

By STEVE HUETTEL and J. NEALY-BROWN
© St. Petersburg Times
published August 13, 2002

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US Airways will fly less, ground planes and reduce its workforce while reorganizing its finances in bankruptcy court.

But having slashed flights at Tampa International Airport after the Sept. 11 terrorist attacks, the airline doesn't plan to further reduce its local schedule, said Louis Miller, the airport's executive director.

"They feel that Tampa will certainly support the market as they're serving it today," he said. "I think they're through cutting Tampa."

As recently as August 2001, US Airways was Tampa International's biggest airline. But after closing its low-fare division, called MetroJet, and cutting other flights as air travel slumped, the airline has slipped to No. 3. It currently has just 19 daily jet departures from TIA, about half its peak schedule.

Miller said US Airways chief executive David Siegel told him during a Tampa visit in June that the airline didn't plan to eliminate more flights, and other executives repeated the statement after the company filed for Chapter 11 bankruptcy protection Sunday.

US Airways took pains Monday to convince customers that they wouldn't notice any difference as the carrier repairs its ailing finances through bankruptcy reorganization, a process the airline hopes to complete early next year.

US Airways had completed 97 percent of its flights on time by 5 p.m., the airline said. "Today's seamless performance is due in the greatest sense to the hard work and dedication of our employees and the support of our vendors," Siegel said in a prepared statement.

In an initial bankruptcy court hearing, a judge in Alexandria, Va., approved motions to pay employee salaries and benefits on schedule and honor commitments from its frequent flier program.

Less clear was the company's long-term business strategy. A contract approved by pilots last month would let US Airways reduce its jet fleet from the current 311 aircraft to 245 and lay off hundreds of pilots.

But the company said Monday it hadn't decided how small to shrink US Airways -- or how passengers might be inconvenienced when flights or routes were eliminated.

"We certainly recognize the carrier will be a smaller carrier under Chapter 11," said spokesman David Castelveter. "How much smaller, we haven't determined."

Trading of US Airways shares on the New York Stock Exchange was suspended Monday morning. But investors rushed to take their money out of United Airlines, which is also struggling financially and seeking federal loan guarantees. The price of a share of United parent UAL Corp. closed at $3.80, down $1.40.

Hobbled by chronically high costs, US Airways has struggled in recent years as low-fare competitors moved in on its core routes on the East Coast.

It may have been hit harder by the terrorist attacks than any other major airline. The government closed Washington Reagan National Airport, a big profit center for US Airways, for three weeks, then allowed only limited flights.

US Airways' routes, many of them short hauls, lost a disproportionate number of passengers who decided to drive instead of enduring security-related delays at airports. The airline lost nearly $2-billion in 2001 and more than $500-million this year as air traffic and fares slumped.

The federal Air Transportation Stabilization Board that was created after the terrorist attacks agreed last month to provide $900-million in loan guarantees as long as US Airways delivers on promises to obtain concessions from labor groups, suppliers, aircraft lessors and lenders.

Under bankruptcy protection, US Airways can break contracts it decides are too expensive. Pilots and flight attendants have already approved pay and benefit reductions, but other unions have not.

The bankruptcy judge on Monday approved the use of $75-million in new private financing to pay employees and buy goods and services, the first draw on $500-million that Credit Suisse First Boston and Bank of America agreed to loan the airline to get through bankruptcy.

Meanwhile, US Airways gave travel agents and corporate travel managers a list of answers to questions they might face from travelers.

At Tampa International on Monday, customers with US Airways tickets were mostly concerned about keeping their frequent flier miles, which do not appear at risk so long as the airline stays in business.

When news stories began appearing about airlines' struggles, Kathy Kendall of Greenbelt, Md., began redeeming her miles for tickets for fear that one day they would be worthless.

She knew she wouldn't be stranded in Tampa, after visiting her father in Sun City Center. But "it was a shocking headline on the day I'm flying," Kendall said.

News of bankruptcy didn't rattle Todd Blai of Philadelphia. He has flown on US Airways for more than 30 years.

"It was just a matter of time," he said, because the airline industry was damaged so severely by the terrorist attacks. "I'm cautiously optimistic that they're going to come out of this."

-- Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

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