News Article - January 25, 2008

  Two of US Airways' three highest-ranking executives were in Philadelphia yesterday talking to airport officials, a sign they may be close to resolving a dispute the airline says hampers its ability to add more overseas flights here. President Scott Kirby said US Airways Group Inc., which has about 60 percent of the traffic at Philadelphia International Airport, did not have "anything substantive" to announce yet on getting more international gates at the airport. But he said he and Robert Isom, the company's executive vice president and chief operating officer, had held a "good meeting" with airport officials.

   Kirby and Isom were dispatched to Philadelphia from US Airways' Tempe, Ariz., headquarters on the same day that the company, in its regular earnings conference call, reported a fourth-quarter loss, but a $427 million profit for all of 2007. On Nov. 7, US Airways threatened to give up what could be a lucrative plan to fly nonstop between Philadelphia and Beijing, because of a dispute with airport administrators over gates. US Airways said the 17 gates it had available to it last summer were not enough to efficiently run its 20 daily flights to Europe, much less add service.

   US Airways said that the shortage would be even worse if the airport allowed Delta Air Lines Inc. to move to Terminal A-East, a combined domestic and international concourse. Delta's move, which in turn cleared more space for Southwest Airlines Co. in the airport's Terminal E, occurred as scheduled the week before Thanksgiving. Kirby said US Airways had yet to meet with Mayor Nutter, who asked the airline to hold off on abandoning the China service until he had a chance to discuss the need for more facilities with airline and airport officials. "We believe we'll be OK this summer, and be able to get back into a growth mode in 2009," Kirby said.

   Airport officials were not available to answer questions yesterday about the meeting with US Airways, airport spokesman Mark Pesce said. The airline plans to add one new European route this year, between Philadelphia International and London's Heathrow Airport, starting March 29. Kirby would not comment on a British newspaper report that US Airways had paid $60 million for a coveted landing slot at Heathrow, one of Europe's most congested airports.

   US Airways recently named a senior vice president, Suzanne Boda, to oversee its East Coast operations, including the Philadelphia hub - the first time a high-ranking officer has been based here. Answering analysts' questions from corporate headquarters, chief executive officer Doug Parker said he believed mergers were inevitable among the six older network airlines - American Airlines, Continental Airlines Inc., Delta, Northwest Airlines Corp., United Airlines and US Airways.

   Discussions about consolidation have picked up steam recently in an effort by airlines to get approval from federal regulators before the Bush administration leaves office, Parker said. US Airways, like other major airlines, lost money in the fourth quarter because of higher fuel costs.

   The airline lost $79 million, or 87 cents a share, in the quarter, compared with a profit of $12 million, or 13 cents a share, during the same period a year earlier. Revenue for the fourth quarter was down 0.4 percent from a year earlier. The full-year profit of $427 million was equal to $4.52 a share. In 2006, the company made $303 million, or $3.23 a share. Revenue for the full year increased 1.2 percent. Parker said the annual results would enable the company to put $49 million into its employee profit-sharing plan.

   US Airways' operations improved in the quarter, with on-time performance in November the second-best among the six major airlines, Parker said. December's on-time performances "were even better relative to our peers," he said. Parker said 2008 would be "a difficult year," with US Airways' fuel costs rising $800 million over last year if projections for oil prices are accurate.

   But, he said, he was encouraged that other airlines had indicated they intended to hold down capacity, or the number of airplane seats for sale, enabling carriers to keep fares higher.

Source - Philadelphia Inquirer