- ARLINGTON, Va. (AP) -- Bankrupt
US Airways Group Inc.'s losses widened by 8 percent to $191 million in
the first three months of 2005 as steep fuel costs and cheap fares undermined
the airline's cost-cutting efforts.
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- If you exclude one-time items associated with the company's
bankruptcy, the losses would have been even more severe, at $280 million.
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- The airline, which is seeking a new investor or a possible
merger with America West Holdings Corp. to lift it out of bankruptcy, cut
its personnel costs by 26 percent, or $164 million, from $641 million in
the year-ago quarter to $477 million.
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- The cuts were the result of tough negotiations with the
airline's unions, in which many unions agreed to steep pay cuts to avoid
having an even worse deal forced upon them by the bankruptcy court.
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- But nearly every dollar in personnel savings was gobbled
up by a 58 percent increase in fuel costs. Aviation fuel costs jumped from
$233 million in the year-ago quarter to $368 million.
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- Meanwhile, on the revenue side, the airline continued
to be squeezed by low-fare competitors, including Southwest Airlines Co.,
which last year began operations at US Airways' hub in Philadelphia.
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- Passenger revenue, which accounts for 89 percent of the
corporation's entire revenue, was down 4.4 percent, from $1.51 billion
in the year-ago quarter to $1.45 billion.
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- The revenue drop occurred despite a 6 percent increase
in mainline revenue passenger miles, the standard industry measure for
passenger traffic. That means the airline was carrying more passengers
for less money in an effort to compete with the low-fare carriers.
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- "We find ourselves in the same situation as most
of the industry, where fuel costs cannot be fully recovered through traffic
growth and incremental fare increases," US Airways chief executive
Bruce Lakefield said in a statement.
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- The company reported $513 million in unrestricted cash
as of March 31, compared to $978 million on March 31, 2004. The cash reserves
are crucial to the company's ability to receive continued financing from
the federal Air Transportation Stabilization Board. If cash reserves drop
below $300 million, the ATSB could find US Airways in default on its loan.
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- The second quarter is historically US Airways' best period
from a financial persepctive, and the company had previously projected
that its cash reserves would increase over the next three months. It is
unclear, though, if those projections hold true in the current environment.
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- Lakefield said the airline is continuing talks with potential
investors to provide additional financing that ould allow the airline to
emerge from bankruptcy. Two regional airlines have already agreed to invest
a combined $250 million, but the airline has said it needs at least $100
million more. It has been in talks with America West, the nation's eighth-largest
airline, about a merger deal that would include new financing.
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