US Airways to cut more capacity than planned, charge extra fees

US Airways, the low-cost airline owned by US Airways Group, has said it will reduce its work force by 1,700 (or, about 5%), cut more capacity than decided previously, and also introduce new fees. These measures are being taken to cope with exorbitant prices of fuel prices and a weakening economy, US Airways, headquartered in Tempe, Arizona, and the seventh largest airline in the United States, said in a statement.

The airline expects its expenses on fuel to be about $1.9 billion more in 2008 than it was a year ago.

US Airways will cut its domestic mainline capacity for the fourth quarter of 2008 by 6% to 8% – the earlier plan was a reduction of 2% to 4%.

The statement from US Airways said that, for 2009, the carrier plans to slash domestic mainline capacity by 7% to 9% compared to the 2008 levels.

In addition, the airline will also return 10 aircraft to leasing companies. The leased jets being returned are all narrow-bodied aircraft – 6 Boeing 737 aircraft and 4 Airbus SAS A320 aircraft – all of which will leave the US Airways fleet in the first half of 2009.

The carrier will also cancel deliveries for 21 Airbus A330 wide-bodied jets – aircraft that are typically used on long-haul routes.

As for new charges levied to passengers, US Airways will introduce a service fee of $15 for a first checked bag for many customers from July 9, 2008. That is not all: the carrier will charge $2 for soda and other non-alcoholic drinks.

In a press release, Doug Parker, chief executive officer of US Airways, remarked of the company’s new steps: “Our industry is profoundly challenged by the dramatic increase in fuel prices, and we must write a new playbook for running a profitable airline in this new and challenging environment.”

US Airways will close down its night operation at Las Vegas from September 3, 2008, except for limited night service to the East Coast. As a result, daily departures from Las Vegas – which stood at 141 in September 2007 – will drop to 81 daily departures after September 3. And, by the end of 2008, daily departures from Las Vegas will fall further to 74 as aircraft are being retired.

US Airways – which operates hubs in Charlotte, Philadelphia and Phoenix and also maintains focus city operations at Washington Reagan National, New York LaGuardia, Las Vegas, Pittsburgh and Boston – had merged with America West Airlines in 2005.

US Airways had failed to effect a merger with United Airlines in May 2008,  after having lost a bid for takeover of Delta Air Lines in 2007.