"US Airways to Revamp Hub Network"

Thursday, May 6, 2004

US Airways to Revamp Hub Network 
BY MATTHEW BARAKAT
The Associated Press


ARLINGTON, Va. (AP) -- US Airways plans to dramatically alter its
hub-and-spoke network and will instead emulate the point-to-point network
that has been successful for low-fare carriers.

Company officials told labor groups Wednesday that the restructuring is
necessary to keep the struggling airline afloat. US Airways is the nation's
seventh-largest airline.

The company also plans to reduce and simplify its fare structures to compete
with low-fare carriers. Those changes are already under way at the airline's
Philadelphia hub, where the airline is bracing for competition starting this
month from Southwest Airlines.

Under the plan, Philadelphia would remain a hub for the company's
trans-Atlantic flights, and Charlotte would remain a hub for the company's
profitable routes to the Caribbean.

The airline's third hub, currently located in Pittsburgh, would no longer be
a hub but would instead be a "focus city" with fewer flights but would still
be the largest carrier at that airport, the airline said in a taped message
Wednesday for its employees.

The airline also plans to keep a strong presence in Boston, New York and
Washington, taking advantage of its strength in key East Coast markets.

US Airways president Bruce Lakefield, in a letter to Pennsylvania Gov. Ed
Rendell, said that "under the revised business plan, we see US Airways still
being the major carrier in Pittsburgh, although not at the current level of
activity."

He also said that changes in flight schedules would not occur until at least
September and that the airline would not reduce its work force at Pittsburgh
until then, either.

Pittsburgh had once been the airline's biggest hub. Before the Sept. 11
attacks, the company operated 542 flights a day out of Pittsburgh. That
number has dropped to 372.

The airline also plans to reduce its fares and simplify the fare structure
to compete with low-price carriers.

Last week the company unveiled its new "GoFares" structure in Philadelphia,
with fares ranging from $29 to $499 one way. On some routes walkup fares
dropped by 40 percent or more. The airline eliminated the requirement for a
Saturday night stay to obtain the lowest fares.

Airline spokesman David Castelveter said the changes in Philadelphia will be
the model for the rest of the network.

A spokesman for the pilots' union said the airline's plan is a solid one.

"We like what we see," said Jack Stephan, a spokesman for the US Airways
unit of the Air Line Pilots Association, which had been very critical of the
previous management team led by former President David Siegel, who resigned
last month. "This may be the first time that US Airways is going to take
part in something truly groundbreaking. It's going to be a change to the
entire way we operate."

Stephan said the new plan dramatically increases the chances that the union
will be willing to accept another round of wage concessions that the airline
says it needs to avoid a second trip into bankruptcy.

In late trading Thursday on the Nasdaq Stock Market, US Airways Class A
shares were down 23 cents, or 10 percent, at $2.08.


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