US Airways ended its second bankruptcy reorganisation by merging with profitable America West Airlines to form a new carrier that proclaims itself as the nation’s largest full-service, low-fares airline.
Using the name US Airways, the new carrier is fifth in terms of capacity or available seat kilometres, slightly larger than the lead US low-fare carrier Southwest Airlines – which will be its prime competitor. Combined, the new US Airways will have 360 mainline aircraft, 230 destinations and 38,000 employees, which is not significantly larger than US Airways before it went into bankruptcy in September 2004 – when it had 165 cities, 282 aircraft and 27,000 employees.
But the new airline claims that it has unique factors that will make it a survivor: during its bankruptcy protection, US Airways has cut costs by over $2 billion annually and its unit costs – down over a cent on a seat-kilometre basis since the bankruptcy filing – are now compatible with those of America West, which has been profitable in recent quarters.
The new airline boasts that it will offer full service – assigned seating, avoiding the queues and the so-called “cattle truck” boarding process of Southwest, first-class seating, airport clubs and alliances – at fares competitive with Southwest’s. These features are major selling points that have let America West compete with Southwest at Phoenix and at Las Vegas, major hubs for both. The new company will be based at the America West headquarters near Phoenix.
Its fleet will decline from the 411 mainline jet aircraft operated during its winter 2004-5 schedule to 360 by the fourth quarter of this year, and a further 47 will be removed by the end of 2006; this is part of a transition that will bring in 37 Airbus A320s by 2010, after which the company “anticipates working with Airbus to begin transitioning to an all-Airbus widebody fleet of A350s in 2011”.
US Airways will use these on its transatlantic services to about a dozen European cities. The new carrier will continue this service as well as its north-eastern shuttle and its Star Alliance membership. It will begin services to Hawaii early in December.
A key to the $175 million in annual operating synergies projected will be a fleet of regional jets – which US Airways had earlier seen as the way to survive on its own. Under agreements reached with leaders of both its pilot unions and subject to ratification, the airline’s regional affiliates and subsidiaries will be allowed to fly up to 93 regional jets in the Bombardier CRJ900/Embraer 170/175 size category, with the operation of the planned fleet of larger Embraer 190/195s being allocated to mainline pilots.
Republic Airlines will operate 28 of the E-170s and Mesa Air Group’s America West Express will fly 38 of the 86-seat CRJ900s. The exact size of the mainline E-Jets is still to determined, but delivery is planned for 2007 and 2008.
DAVID FIELD/WASHINGTON
Source: Flight International
