US Airways to Cut Fleet, Takes $91M Charge

Bankrupt US Airways Group Inc. (search) took a $91 million charge for terminating employee pension plans on Wednesday and said it would shrink its mainline fleet by another 10 aircraft this summer.

The seventh-largest domestic carrier also said its load factor, or the percentage of available seats that are filled each month, fell 3.9 percent to 75.9 in April.

US Airways said the decline was partly due to the shift in Easter holiday travel from April in 2004 to March in 2005. US Airways said its load factor for the year through April was up 1.2 percent at 73.9 percent.

In disclosing its noncash expense, US Airways said it lost a measure of equity when it turned traditional defined benefit pension plans over to government insurers as part of its attempt to cut costs and survive bankruptcy. The pensions cover flight attendants, baggage handlers and other ground workers. The pilots' plan was terminated in 2003.

The $91 million charge for pensions resulted in a net loss for the first three months of 2005 of $282 million, or $5.13 a share. The revised figure compared with a loss of $191 million, or $3.48 per share reported last Friday.

Additionally, US Airways said it would reduce its mainline fleet by another 10 aircraft in August. Some flights to the Caribbean and Florida, which tapers off in summer, will be canceled. The airline does not plan to eliminate service to any cities because of the change or furlough any employees.

The aircraft will be identified in the coming weeks and will most likely include planes that are not fuel efficient or that have expensive maintenance coming up. US Airways paid $368 million for fuel in the first quarter, more than double for the same period a year ago.

US Airways is gradually reducing its fleet to save money. The airline started the year with 281 mainline planes and will have 266 next week. By the end of August, the fleet will stand at 253 planes.

The airline says the reduction has had little impact on operations since it overhauled schedules and changed the way it operates aircraft to improve efficiency.

The changes are designed to make US Airways as viable as possible as it seeks potential investors. The company is in talks with America West Airways (AWA) on a possible merger. Mesa Air Group (MESA) has also emerged as a possible investor.

"As we continue to talk with potential investors, the elimination of unprofitable flying is a key topic of conversation," said Bruce Ashby, US Airways executive vice president of marketing and planning.