US Airways to ditch hub-and-spoke system

In defensive move, carrier to focus on direct flights to, from major airports

July 28, 2004|By NEW YORK TIMES NEWS SERVICE

US Airways plans a major overhaul of the way it flies, concentrating on direct flights to and from major airports on the East Coast and dismantling its hub in Pittsburgh, executives said yesterday. The carrier will also wade into the highly competitive New York-to-Florida market, they said.

Those moves, which are meant to defend US Airways' share of traffic in its most valuable markets, will take effect in the autumn.

But the airline warned that the plan, and the company's solvency, depended on cutting $800 million a year from employee wages and benefits. It is pushing its unions to accept the cuts before Sept. 30. Otherwise, said Bruce R. Lakefield, US Airways' chief executive, the airline may be unable to fulfill obligations to its aircraft lenders, would run the risk of defaulting on its federally guaranteed loans and would be in danger of falling back into Chapter 11 bankruptcy.

The airline will shift away from the hub-and-spoke route system it has used for a decade, which blankets the eastern half of the country with flights meant to carry passengers to and from connections at its hub airports. Instead, Lakefield told analysts, the airline would emphasize direct flights to and from airports in Boston, New York, Washington and Philadelphia, its busiest destination, using aircraft freed up by the elimination of most connecting flights through Pittsburgh.

The move is in part a defensive measure against new low-fare competition. Southwest Airlines began flights to Philadelphia in May, and a start-up, Independence Air, began flying from Dulles International near Washington in June, competing with US Airways' big operation at Reagan National about 30 miles away.

In Pittsburgh, where US Airways has already eliminated a third of its flights, the schedule will be adjusted to primarily serve local demand.

US Airways, which is already offering $98 round-trip flights on some Florida routes, sees more potential in the market, and hopes to exploit it using its existing operations at New York's La Guardia.

Also yesterday, US Airways reported a $34 million profit for the second quarter. The airline, which had the highest operating costs, mile for mile, among major airlines in 2003, said it had brought them down closer to those of its peers. It earned $13 million in the second quarter last year.

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