- The Washington Times - Monday, February 11, 2002

US Airways Group Inc., the sixth-largest U.S. carrier, is having a tough time recouperating from a year of staggering financial losses and dimished air traffic following the September 11 terrorist attacks.
The Arlington air career lost $1.97 billion ($29.28 per share) last year. Meanwhile, its stock suffered as well, dropping from a high of $42.74 a year ago, to a low of $3.95 after the attacks. Most recently US Airways' shares have been trading in the $4-$6 range, closing at $4.40 on the New York Stock Exchange Friday.
"I think the stock will trade at a relatively narrow range until we have signs that the economy is recovering and that [US Airways] is recovering," says Helane Becker, an analyst with Buckingham Research, who rates the stock a sell.
US Airways has cut 11,000 jobs and 23 percent of its service since September in an attempt to cope with the loss of travel volume.
In January air traffic continued to be down. US Airways said miles flown by passengers declined 19.5 percent compared to the like month last year. Flight and seat capacity was down 19.3 percent, and the average rate of seats occuppied was to 60.1 percent.
The carrier was particularly hard hit by the terrorist attacks because they led to the closure of Ronald Reagan Washington National Airport one of its main hubs for 24 days. The airport is still not functioning at pre-September 11 capacity; nor is US Airways.
The airline had 186 daily flights before September 11. As of Friday it had 107, says spokesman David Castelveter. The number will go up to 153 by early April but no higher, as per ner federal regulations.
This is causing the company to burn through $3 million more a day than in takes, US Airways executives said last month when the company released earnings.
For its fourth quarter the airline said net sales dropped 33.6 percent to $1.57 billion from $2.36 billion a year earlier. Meanwhile, net income loss widened to $1 billion ($14.89 per share) from $101 million ($1.50).
One thing the airline is pushing for as part of its recovery strategy is the use of more regional jets, which are flown by lower-paid pilots. The company is also closing some reservation centers and retiring older aircraft.
Although the terrorist attacks hurt US Airways, the airline was struggling even before, since its proposed purchase by UAL Corp., the parent company of United Airlines, fell apart in July. The failed deal led to the departure of three top managers, the latest being Rakesh Gangwal, the company's CEO.
Chairman Stephen Wolf took over the job a move some analysts see as negative.
While US Airways was pushing to be bought by United Airlines, top management at US Airways "let the airline completely slide," says Terry Trippler, an independent airline consultant. "They were so absolutely positive the merger would go through and it didn't, and now they are trying to pick up the pieces up. But the pieces are scattered all over the place."
The $4.3 billion deal fell apart after the Justice Department signaled it would fight it because joining the carriers would harm consumers by reducing competition and raising fares.
"You need more than rah-rah-rah, which is all Mr. Wolf seems to be doing," says Mr. Trippler. "That airline needs more leadership. With the current leadership I can't see them making it, because there's basically no leadership."


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide