- The Washington Times - Monday, July 29, 2002

US Airways Inc. and competing airlines are offering deep discounts while teetering on the brink of bankruptcy.
The business move is one of several that show US Airways scrambling for customers and money.
The airline also agreed to joint operations with regional carrier Midway Airlines and formed a marketing alliance with competitor United Airlines Inc.
However, the discounts are attracting the most attention. They were announced more than a week ago by Arlington-based US Airways and were matched immediately by other airlines.
Rather than raise fares to increase income, US Airways lowered them. A New York to San Francisco round trip, for example, costs $238, before charges, on four airlines.
"This was a traditional end of summer, early fall fare sale," said Dave Castelveter, US Airways spokesman. "When you do a fare sale, you do that to generate additional revenues."
So far, he said, the sale has generated new customers and revenue at a time when the airline desperately needs both.
US Airways' losses for its second quarter ended June 30 soared to $248 million from a loss of $24 million for the comparable period last year.
Other airlines are in similar financial shape. Wall Street analysts said the nation's nine largest airlines lost a total of about $1.3 billion in the second quarter of this year. The outlook for the rest of the year is grim.
Mr. Castelveter denied the fare sale or other business moves were last-ditch efforts to stave off bankruptcy but said the airline was reorganizing after massive losses.
"It's part of our restructuring plan," Mr. Castelveter said.
Other parts of the restructuring involve winning concessions from labor unions and renegotiating leases on US Airways' aging fleet.
Federal regulators want US Airways to cut its expenses before they guarantee 90 percent of the emergency $1 billion loan the airline is seeking from its banks. No federal loan guarantee means no loan, which almost certainly would result in a Chapter 11 reorganization for the company, analysts say.
The restructuring also involves market expansion, which has led to the deals with Midway and United.
The agreement with United Airlines allows a passenger to purchase a ticket for either of the airlines and transfer to the other airline without buying another ticket.
"The agreement allows both carriers to complement their route networks in a way that will attract new traffic and boost revenue for both airlines," United Airlines Chief Executive Officer Jack Creighton said last week. "We believe today's agreement is a good strategic fit for both carriers and critical to our recovery efforts."
The pact with Midway Airlines allows US Airways to focus on meeting growing demand for regional flights between Ronald Reagan Washington National Airport and other East Coast airports, such as those in Boston, New York City and Raleigh-Durham, N.C.
Midway Airlines plans to eliminate operation of its six Boeing 737s. Instead, it will begin operating five regional jets in October under the US Airways Express banner. Two additional 50-seat Bombardier CRJ aircraft would be added every three weeks, up to 18 jets by April.
"Midway has regional jets we want to fly and need to fly," Mr. Castelveter said.
Midway Airlines said in a statement that it was trying "to eliminate losses presently being experienced." The Morrisville, N.C.-based airline filed for bankruptcy in August 2001.

Sign up for Daily Newsletters

Copyright © 2019 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