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US Airways posts $177-million loss

By STEVE HUETTEL
Published April 28, 2004

US Airways Group lost $177-million for the first three months of the year, and executives repeated Tuesday that the airline must cut costs and change its business model to make a profit.

The loss came to $3.28 per share, compared with net income of $1.63-billion, or $24.02 per share, for the same period last year.

That profit came from savings associated with US Airways' emergence from bankruptcy reorganization, the airline said. Without the bankruptcy savings, US Airways would have lost $282-million.

Revenues grew 11 percent to $1.7-billion for the quarter. But operating expenses were up nearly 7 percent, and increased competition from low-cost airlines reduced fares on East Coast routes.

Chief executive Bruce Lakefield, who took over the job after the resignation of David Siegel last week, said he would meet soon with leaders of employee unions about cutting labor costs.

The airline also is looking at revamping its fare structure.

"Our results underscore the need for further changes," Lakefield said. "We clearly have more to do to ensure long-term success, and we must implement a new cost structure and a revenue plan that allows us to return to profitability."

Once the biggest carrier at Tampa International Airport, US Airways has cut its schedule in half since the 2001 terrorist attacks and now ranks No. 3 behind Delta Air Lines and Southwest Airlines.

The airline is expanding its fleet of small "regional" jets for flying to small and mid-sized markets.

With further expansion of low-cost carriers, like Southwest's arrival in US Airways' Philadelphia hub May 9, the carrier hopes to make a profit by cutting costs and flying more passengers at lower fares, said Ben Baldanza, senior vice president of marketing and planning.

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

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