Ted Reed
The Street.com
01/06/10 - 01:32 PM EST
LAS VEGAS – Pilots from both sides of a divisive dispute at US Airways joined Wednesday to protest flight reductions in Las Vegas, possibly an early indicator of a thaw in their bitter relationship.
US Airways announced in October that it would reduce daily Las Vegas flights to 36 from 64. The cutbacks will impact 300 employees, including 140 pilots who flew for America West before its 2005 merger with US Airways. About 100 pilots, as well as additional employees from other work groups, were expected to demonstrate at McCarran International Airport.
Though divided by a controversial seniority ruling following the merger, pilots were unified in opposing the cutbacks. “This will go a long way to bring the pilots together,” said James Ray, spokesman for the U.S. Airline Pilots Association.
Pilots from the former US Airways dominate the union, formed in the aftermath of the seniority ruling, but union leaders flew to Las Vegas to show support for former America West pilots, who will either be transferred to Phoenix or laid off.
Las Vegas was America West’s second hub before a 2005 merger with US Airways. Las Vegas departures stood at 65 in October and at 141 in September 2007.
In October, CEO Doug Parker told reporters in Charlotte, N.C., that the rise in fuel prices over the past two years necessitated cutbacks in Las Vegas flying, which had depended largely on vacationers taking advantage of fares enabled by low fuel prices. Often, Las Vegas flights involved “utilization” flying, when sufficiently low operational costs justified flying more hours rather than keeping airplanes on the ground.
McCarran Airport said recently that passenger traffic rose slightly in November, the first upturn in 21 months. “US Airways is abandoning Las Vegas, one of the most popular vacation destinations in the world, on the eve of its turnaround,” said USAPA president Mike Cleary, in a prepared statement.
Pilots continue to battle one another in court. In December, an appeals court in San Francisco considered USAPA’s effort to overturn a ruling by a U.S. District Court in Phoenix, which found that the union breached its duty to represent former America West Pilots. A decision is expected early this year. “There’s just one issue that divides this pilot group,” Ray said. “We’re going to let the courts decide it, and then we will work together to get east and west pilots the contract they deserve.” Pilots have worked under separate contracts since the merger.
Meanwhile, in a traffic report Wednesday, US Airways became the second carrier to cite strong unit revenue performance in December, following Continental. The carrier said consolidated passenger revenue per available seat mile fell 2% from a year earlier, while total RASM fell 1%.
“We are pleased our revenue performance continued to show improvement with positive trends in both booked yields and corporate revenue,” said US Airways president Scott Kirby, in a prepared statement.
Despite the encouraging RASM performance, mainline revenue passenger miles fell 3.6%, while available seat miles fell 2.4%, meaning that the decline in passenger flying was steeper than the carrier’s capacity reduction. The passenger load factor fell one point to 79.3%.
US Airways stock initially fell as a result of the traffic report, then rose. At midday, the shares were trading at $5.13, down 18 cents. If airline shares are indeed headed up in 2010, as many analysts expect, US Airways will have the most ground to make up. Among the nine largest carriers, it had the worst stock performance in 2009, with shares down 37%.
Following the traffic report, Avondale Partners analyst Bob McAdoo changed his fourth-quarter earnings estimate to a loss of 56 cents a share from a loss of $1.20 a share. US Airways, “like the other legacies, is highly leveraged to economic recovery,” McAdoo wrote. “We believe US Airways has the best risk/reward profile among the legacies.” He set a $10 price target.
– Written by Ted Reed in Charlotte, N.C.