- The Washington Times - Thursday, January 22, 2004

The parent company of United Airlines announced yesterday it would spend up to $22 million to build a new terminal and expand facilities at Washington Dulles International Airport for its United Express passengers.

United Express is UAL Corp.’s commuter jet service designed to compete with low-fare carriers, such as Southwest Airlines and JetBlue Airways.

The announcement coincides with improving fortunes for most U.S. airlines as the nation’s economy picks up. Earnings reports announced this week by airlines showed the financial drought of the last three years appears to be ending.

One exception is Arlington carrier US Airways, which is struggling to cut expenses to avoid another bankruptcy.

UAL says the new terminal and gate would eliminate the need for its commuter jet passengers to transfer to different concourses to catch connecting flights at Dulles. It would include amenities such as a covered walkway to aircraft and food and beverage service.

“We have designed a facility that will provide full customer service capabilities, convenient connections and easy access to United customers at Dulles,” Pete McDonald, United’s executive vice president, said in a statement.

The Metropolitan Washington Airports Authority, which runs Dulles and Ronald Reagan Washington National airports, granted UAL Corp. a permit that will allow construction to begin within a week.

United plans to build a customer waiting area on the C-ramp and a larger United Express passenger terminal and gate south of the C and D concourses. About half of all United Express flights will continue to leave from the C and D concourses.

James E. Bennett, Metropolitan Washington Airports Authority president, said the expanded United Express service would give passengers greater choice in flights and destinations.

United has not determined which subsidiary airline would operate the expanded commuter jet service. Atlantic Coast Airlines, which United has used to operate its commuter jet service at Dulles, announced last year it is breaking away as a separate airline renamed Independence Air.

Only a few miles south in Arlington, US Airways’ management plans to meet as soon as today with representatives of its pilots union to seek ways to reduce expenses.

The pilots want “to get details of what management has been talking about as far as their [business] plan and to get financial data,” said Jack Stephan, spokesman for the US Airways chapter of the Air Line Pilots Association (ALPA).

ALPA has demanded for months that US Airways open its books on its finances and business plan.

The airline needs to cut expenses by at least $300 million this year, according to David Siegel, US Airways’ chief executive officer.

The nation’s seventh largest carrier lost $90 million in the third quarter of 2003, despite a massive cost-cutting campaign that has included layoffs and renegotiating labor contracts. US Airways has about $1 billion in cash, less than half as much as its largest competitors. It has not announced its fourth quarter 2003 results.

Management is likely to ask for further labor concessions from pilots, Mr. Stephan said.

However, any further concessions by pilots “depend on what they plan to do with the over $4 billion in concessions the pilots already have provided,” he said. “We do have a cost problem, but it is not a labor cost problem.”

Airline officials refused to discuss plans for their meeting with the pilots union.

The company emerged from bankruptcy in March after eight months in Chapter 11 reorganization. In recent weeks, its chairman said management has considered selling some of its assets.

Other airlines are more optimistic in their earnings reports and business plans.

“Forthcoming [airline] earnings should increasingly get better from here,” Jamie Baker, an airline industry analyst for the Wall Street financial firm J.P. Morgan, said this week in a note to investors.

American Airlines reported this week it lost $111 million in the fourth quarter of 2003, a big improvement from the $529 million loss it posted a year earlier.

A year ago, parent company AMR Corp. teetered on the edge of bankruptcy before it started an effort to cut costs by $4 billion per year.

Continental Airlines, Southwest Airlines, America West and AirTran Airways all reported profits that rose compared with the fourth quarter of 2002.

Continental reported a net profit of $47 million in the fourth quarter of 2003 despite higher costs. The Houston airline reported a loss of $109 million a year earlier.

Southwest reported a fourth quarter profit that rose 57 percent to $66 million. A year ago, it earned $42 million. However, Southwest also announced that 1,100 reservations agents refused to accept job transfers, which means layoffs are likely.

Meanwhile, Northwest Airlines is expected to start a big expansion of its regional jet routes in anticipation of growing business.

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