Falling behind on its post-bankruptcy recovery plans, US Airways executives will propose another round of cost cuts to the board of directors by year's end, the carrier disclosed Tuesday.
US Airways CEO David Siegel told employees in a company newsletter the airline needs to close "the shortfall between revenue and costs." Executives want to generate more revenue and reduce costs, including "restructuring or resizing money-losing segments of the company," he said, without giving specifics.
Siegel's comments were partly a reaction to US Airways' recent posting of a $90 million loss for the third quarter. He also warned of fare pressures from discount airlines -- especially from Southwest Airlines.
"They are going to have to look somewhere else than the pockets of labor. Our well is dry," said Jack Stephan, spokesman for the Air Line Pilots Association.
"Labor is very frustrated. Every time we've been asked to ante up (with concessions), we have," said Stephan. "But we don't see anything happening with the investment we made.
US Airways exited bankruptcy March 31 after shedding $1.9 billion in annual costs. About $1 billion of that came from labor concessions.
"Without cutting costs further, the airline can certainly save money by not paying high-priced lawyers to fight our contracts," said Joe Tiberi, spokesman for the International Association of Machinists. The union currently is in federal court to thwart management's outsourcing of Airbus heavy maintenance work. Tiberi had not seen Siegel's message and declined further comment.
The airline reduced costs to 9.7 cents per available seat mile last quarter from 12.3 cents in first quarter 2002. The industry measures costs by aggregate miles flown per airplane seat.
"We actually exceeded the cost goals we originally set back in the spring of 2002," Siegel said. "But the world has changed ever since then, and to successfully compete, we've got to bring down costs further."
Siegel said in order for US Airways' cost structure to fit the current revenue environmment, it needs to reach "certainly a number south of 9 cents.
"How far south depends upon what we think our long-term revenue production can be, given the structural changes that we're seeing," the CEO said.
Most of that industry change relates to consumer demand for lower fares and discount airlines' efforts to fill that need. Chief among them is Southwest Airline's bold decision to initiate Philadelphia service next May with 14 daily flights -- with gate space to grow to 40 a day.
Southwest is a low-fare carrier whose operating costs, at about 6.3 cents per seat mile, are about one-third lower than US Airways'. Philadelphia also represents about one-quarter of US Airways' operating revenue, analysts say.
Siegel called the incursion "a direct assault on our principal hub."
Company policy prohibits publicizing when or where US Airways board meetings are scheduled, said airline spokesman David Castelveter.
The board, however, has yet to meet to formulate the 2004 budget and would be expected to do so within the next eight weeks.
Thomas Olson can be reached at [email protected] or (412) 320-7854.
US Airways CEO David Siegel told employees in a company newsletter the airline needs to close "the shortfall between revenue and costs." Executives want to generate more revenue and reduce costs, including "restructuring or resizing money-losing segments of the company," he said, without giving specifics.
Siegel's comments were partly a reaction to US Airways' recent posting of a $90 million loss for the third quarter. He also warned of fare pressures from discount airlines -- especially from Southwest Airlines.
"They are going to have to look somewhere else than the pockets of labor. Our well is dry," said Jack Stephan, spokesman for the Air Line Pilots Association.
"Labor is very frustrated. Every time we've been asked to ante up (with concessions), we have," said Stephan. "But we don't see anything happening with the investment we made.
US Airways exited bankruptcy March 31 after shedding $1.9 billion in annual costs. About $1 billion of that came from labor concessions.
"Without cutting costs further, the airline can certainly save money by not paying high-priced lawyers to fight our contracts," said Joe Tiberi, spokesman for the International Association of Machinists. The union currently is in federal court to thwart management's outsourcing of Airbus heavy maintenance work. Tiberi had not seen Siegel's message and declined further comment.
The airline reduced costs to 9.7 cents per available seat mile last quarter from 12.3 cents in first quarter 2002. The industry measures costs by aggregate miles flown per airplane seat.
"We actually exceeded the cost goals we originally set back in the spring of 2002," Siegel said. "But the world has changed ever since then, and to successfully compete, we've got to bring down costs further."
Siegel said in order for US Airways' cost structure to fit the current revenue environmment, it needs to reach "certainly a number south of 9 cents.
"How far south depends upon what we think our long-term revenue production can be, given the structural changes that we're seeing," the CEO said.
Most of that industry change relates to consumer demand for lower fares and discount airlines' efforts to fill that need. Chief among them is Southwest Airline's bold decision to initiate Philadelphia service next May with 14 daily flights -- with gate space to grow to 40 a day.
Southwest is a low-fare carrier whose operating costs, at about 6.3 cents per seat mile, are about one-third lower than US Airways'. Philadelphia also represents about one-quarter of US Airways' operating revenue, analysts say.
Siegel called the incursion "a direct assault on our principal hub."
Company policy prohibits publicizing when or where US Airways board meetings are scheduled, said airline spokesman David Castelveter.
The board, however, has yet to meet to formulate the 2004 budget and would be expected to do so within the next eight weeks.
Thomas Olson can be reached at [email protected] or (412) 320-7854.
