USAir posts loss, will cut 25 flights at BWI

January 26, 1991|By Maria Mallory

Closing out 1990 with fourth quarter losses totaling $221 million, USAir Group Inc., parent company of airline carrier USAir, announced yesterday a major restructuring plan that includes a reduction in the number of flights departing from its hub at Baltimore-Washington International Airport.

The restructuring, for which the airline set aside a special charge of $90 million during the quarter, includes eliminating 25 daily departures from BWI and 20 from Cleveland, and grounding 18 small planes that fly to several West Coast cities.

The moves will take effect May 2, the airline said.

Though service from Baltimore will be cut to 126 daily departures from 151, BWI will remain one of USAir's five national hubs, spokeswoman Susan J. Young said.

The Baltimore operation is USAir's third-largest hub, but that rank could fall after the cutbacks.

Specific schedule changes at BWI have not been determined, and it is too early to tell how they will affect USAir's approximately 3,150 workers at BWI, Ms. Young said.

"Once all of these plans have been finalized, we will discuss them with our employees," she said.

The company has not announced any changes in its operations at Washington National or Dulles International airports.

In Cleveland, departures will drop to 31 daily from 51, and the city will no longer be a "mini" hub for USAir.

More than 400 USAir employees on the West Coast could face layoffs or termination as a result of the restructuring.

The airline is grounding its BAe-146 planes that flew to Bellingham, Wash., Portland, Ore., and six California cities, saying the planes cost too much to operate in that market.

Canceling those flights accounted for $44 million of the restructuring charge against fourth-quarter earnings.

An additional $46 million will cover costs incurred in terminations and relocations of employees resulting from the route cancellations.

USAir flights to Los Angeles International Airport and San Francisco International Airport will remain unchanged.

USAir said the restructuring was necessary because of weak demand for air travel, skyrocketing fuel prices and an overall slowdown in the nation's economy during the past year.

"During 1990, and more particularly the fourth quarter, the airline industry was faced with soft domestic traffic caused by a weak national economy, huge increases in the price of jet fuel and widespread, unrealistic fare discounting," Edwin I. Colodny, USAir Group chairman and president, said in a statement released yesterday.

"Most of these factors continue to be present. It is unrealistic to think the airline industry economic environment, which is adversely impacted by the gulf war, will change significantly in 1991."

USAir isn't the first airline to scale back operations in the face of a lagging market for air travel. Gregory F. Robison, who tracks the airline industry for Argus Research Corp., said USAir's cutbacks comes as no surprise at a time when the nation's carriers are trying to minimize losses resulting from weak demand.

Both American Airlines and TWA have announced cutbacks in flights in recent weeks, and Eastern Airlines closed down altogether last week.

"The market is soft, so why keep flying all these planes around that aren't full enough to be protecting your earnings," Mr. Robison said. "All the airlines are having to do this."

USAir's companywide losses for the fourth quarter of 1990 were more than double the $102 million loss reported in the year-ago period. Fourth-quarter revenues rose to $1.7 billion, from $1.5 billion for the year earlier.

For the full year, USAir reported a loss of $454 million on revenue of $6.6 billion. That compares with a loss of $63 million on revenue of $6.3 billion for 1989.

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