"American plans more Lambert flights"

Sunday, September 26, 2004

American plans more Lambert flights
By Tim McLaughlin
The St. Louis (MO) Post-Dispatch


American Airlines says it will boost the number of big jets flying from
Lambert Field by 15 percent as the carrier adds new destinations less than a
year after halving its flight schedule here.

The announcement, to be made officially on Monday, is somewhat of a surprise
because the airline has been hammered by surging fuel costs and cutthroat
competition from low-cost carriers such as Southwest Airlines, which has
gained market share at Lambert by packing more passengers on about the same
number of flights.

Much of American's new service begins in December, including flights to
three cities - Columbus, Ohio; San Antonio; and Tulsa, Okla. Those cities
are currently not served from Lambert by direct American flights, although
its affiliate carriers provide service.

The airline, which is Lambert's biggest operator, also will provide more
mainline, or large, jets to popular business destinations such as
Washington.

The result will be 61 daily large-jet departures from Lambert by February,
compared with 53 last November, after the airline slashed flights here. The
airline's AmericanConnection and American Eagle flights will increase to 161
daily, from 155.

"When we made adjustments to our St. Louis hub last year, we committed to
adding flights as local demand for service increased," said Loretta Kuss,
American's regional manager of passenger sales in St. Louis. "We're very
happy to say that, by early next year, American will be operating 15 percent
more flights than we did at St. Louis in November 2003, while our regional
partners will have about four percent more flights."

American's Lambert schedule had more than 400 daily flights before the
cutback in November. The carrier now emphasizes nonstops, which yield more
profit than the connector flights emphasized under the old Trans World
Airlines.

American says the additional flights are not a result of the massive
congestion at Chicago's O'Hare Airport.

American also is replacing some AmericanConnection regional jet service with
larger 129-seat MD-80 aircraft, Kuss said.

The new, big-jet flights to Columbus, San Antonio and Tulsa will augment
service offered by AmericanConnection. Service to Columbus and San Antonio
begins Dec. 16, while Tulsa flights start Jan. 31, the airline said.

Before American reduced its flight schedule last year, it had provided 44
percent of the airport's total operating revenue, according to the city's
fiscal 2003 financial review. During the first six months of this year,
American boarded 1 million passengers in St. Louis, down from 3.5 million in
the same period last year.

The cuts forced Lambert to pare its operating budget and suspend some
capital improvement projects to ensure it had enough cushion to pay the debt
on the $1 billion runway expansion.

American, based in Fort Worth, Texas, is the world's largest carrier. The
airline restructured its operations in St. Louis in a bid to return to
profitability. It posted a profit in the second quarter, but the industry
still faces significant challenges as brutal fare wars and surging oil
prices play havoc with carriers' income statements.

US Airways Group Inc., which has only a small presence at Lambert, recently
filed for bankruptcy protection for the second time in 25 months.

And last week, American said hurricanes and the price of oil, which has
topped $48 a barrel, waylaid its finances in August. Wall Street analysts
expect the company to lose about $270 million in the third quarter, which
ends Sept. 30.

American said its operating profit wasn't expected to be enough to meet a
bank covenant on an $834 million credit agreement. The airline said it
obtained an amendment to the bank credit arrangement that lowered the
required operating earnings ratio.

Meanwhile, smaller carriers have come into the St. Louis market with a plan
to fill some gaps left by American. For example, Denver-based Frontier
Airlines is battling USA 3000 Inc., which is mainly a charter operator, for
the final government designation to fly from Lambert to Cancun, Mexico.

American, which holds the other available destination, said it will add one
flight per week to Cancun. American already has two flights a week to Cancun
from Lambert. It also is adding seasonal daily flights to the Florida cities
of Fort Lauderdale, Fort Myers, Orlando and Tampa.

In addition, American affiliate Chautauqua Airlines is enhancing its St.
Louis schedule, launching two daily nonstop flights to Richmond, Va.,
effective Nov. 1.


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