By Robert Melnbardis
MONTREAL, May 13 (Reuters) - US Airways Group Inc. , which recently emerged from bankruptcy, is reviewing whether it may have to cut back fleet capacity to cope with lower demand for air travel, the company said on Tuesday.
David Siegel, president and chief executive of US Airways, said demand for passenger air travel has rebounded since the end of the war in Iraq, but not to prewar levels.
US Airways, which is based in Arlington, Virginia and is the seventh-largest U.S. air carrier, emerged from bankruptcy protection at the end of March. Siegel said the airline has stabilized its fleet in the short term, but that may change.
We are the only major network carrier that has not yet reduced its mainline fleet on a permanent basis given that lower demand, but we are still watching that situation and haven''t come to any definitive decisions there, Siegel told reporters.
Siegel was in Montreal for a signing ceremony on US Airways'' $2.2 billion order for 85 regional jets from Bombardier Inc. .
On Monday, US Airways unveiled a $4.3 billion order for regional jets that it split between Montreal-based Bombardier, the world''s third-largest civil aircraft maker, and Bombardier''s Brazilian rival Embraer SA .
Siegel said US Airways split the order to take delivery of the jets faster, as 50- and 70-seat regional jets are central to its plan to further cut costs and boost margins.
As part the each order, US Airways also agreed to take over jets from both manufacturers that had already been ordered by GE Capital Aviation Services--36 made by Bombardier and 30 by Embraer.
We were very interested in the GE order book. From the US Airways perspective that would enable us to more quickly deploy regional jets into the network, Siegel said.
He would not divulge details about financing of the big jet orders, prices paid for the aircraft, or terms of the GE jet order transfer.
Pierre Beaudoin, president of Bombardier Aerospace, said the company will participate in arranging financing for the sale, and may consider seeking a low interest loan for US Airways from the Canadian government-owned Export Development Corp.
Like any other financing possibility for the aircraft, it''s something we''ll look at, Beaudoin said.
Siegel said the the Bombardier and Embraer jets were integral to the strategy by US Airways and its regional affiliates to lower costs and meet customer demands.
On the Bombardier jets, Siegel said the 75 seats in the CRJ 700 Series 705 will allow the carriers to offer a nine-seat first-class section. He expects that configuration to be popular with other airlines.
You''re seeing a transition or a migration from the 50- to the 70-seater, Siegel said.
I think you will see, at least in North America, a number of follow-on orders that Bombardier will win for the 70-seater.
Bombardier''s Beaudoin would not discuss sales campaigns or speculation in the financial markets that the Star Alliance global aviation group headed by UAL Corp.''s United Airlines and Deutsche Lufthansa AG is in talks on ordering regional jets from the company.
Beaudoin dismissed speculation that the US Airways order might be the last big one for regional jets for some time.
There is a lot of plans to bring more regional jets onstream, so there is a lot of opportunity still left for growth in regional jets, Beaudoin said.
Beaudoin said Bombardier was in talks with Atlantic Coast Airlines , a feeder for Untied Airlines and Delta Air Lines , on ways to delay deliveries of their Canadair Regional Jet order, if needed.
Bombardier''s class B shares slipped 7 Canadian cents at C$3.79 on the Toronto Stock Exchange on Tuesday.
($1=$1.39 Canadian)
05/13/03 16:52 ET
MONTREAL, May 13 (Reuters) - US Airways Group Inc. , which recently emerged from bankruptcy, is reviewing whether it may have to cut back fleet capacity to cope with lower demand for air travel, the company said on Tuesday.
David Siegel, president and chief executive of US Airways, said demand for passenger air travel has rebounded since the end of the war in Iraq, but not to prewar levels.
US Airways, which is based in Arlington, Virginia and is the seventh-largest U.S. air carrier, emerged from bankruptcy protection at the end of March. Siegel said the airline has stabilized its fleet in the short term, but that may change.
We are the only major network carrier that has not yet reduced its mainline fleet on a permanent basis given that lower demand, but we are still watching that situation and haven''t come to any definitive decisions there, Siegel told reporters.
Siegel was in Montreal for a signing ceremony on US Airways'' $2.2 billion order for 85 regional jets from Bombardier Inc. .
On Monday, US Airways unveiled a $4.3 billion order for regional jets that it split between Montreal-based Bombardier, the world''s third-largest civil aircraft maker, and Bombardier''s Brazilian rival Embraer SA .
Siegel said US Airways split the order to take delivery of the jets faster, as 50- and 70-seat regional jets are central to its plan to further cut costs and boost margins.
As part the each order, US Airways also agreed to take over jets from both manufacturers that had already been ordered by GE Capital Aviation Services--36 made by Bombardier and 30 by Embraer.
We were very interested in the GE order book. From the US Airways perspective that would enable us to more quickly deploy regional jets into the network, Siegel said.
He would not divulge details about financing of the big jet orders, prices paid for the aircraft, or terms of the GE jet order transfer.
Pierre Beaudoin, president of Bombardier Aerospace, said the company will participate in arranging financing for the sale, and may consider seeking a low interest loan for US Airways from the Canadian government-owned Export Development Corp.
Like any other financing possibility for the aircraft, it''s something we''ll look at, Beaudoin said.
Siegel said the the Bombardier and Embraer jets were integral to the strategy by US Airways and its regional affiliates to lower costs and meet customer demands.
On the Bombardier jets, Siegel said the 75 seats in the CRJ 700 Series 705 will allow the carriers to offer a nine-seat first-class section. He expects that configuration to be popular with other airlines.
You''re seeing a transition or a migration from the 50- to the 70-seater, Siegel said.
I think you will see, at least in North America, a number of follow-on orders that Bombardier will win for the 70-seater.
Bombardier''s Beaudoin would not discuss sales campaigns or speculation in the financial markets that the Star Alliance global aviation group headed by UAL Corp.''s United Airlines and Deutsche Lufthansa AG is in talks on ordering regional jets from the company.
Beaudoin dismissed speculation that the US Airways order might be the last big one for regional jets for some time.
There is a lot of plans to bring more regional jets onstream, so there is a lot of opportunity still left for growth in regional jets, Beaudoin said.
Beaudoin said Bombardier was in talks with Atlantic Coast Airlines , a feeder for Untied Airlines and Delta Air Lines , on ways to delay deliveries of their Canadair Regional Jet order, if needed.
Bombardier''s class B shares slipped 7 Canadian cents at C$3.79 on the Toronto Stock Exchange on Tuesday.
($1=$1.39 Canadian)
05/13/03 16:52 ET
