Bucking the trend, US Airways Express will grow in the next two quarters but cutbacks will begin in September. Increasing again next year. During the second and third quarters, Express carriers will grow between seven and nine percent and between nine and 11 percent, respectively. The fourth quarter will see a drop of between negative one percent and one percent. During FY08, regional capacity will grow between four and six percent, while in FY09 growth will be limited to between zero and two percent.
Mainline domestic capacity reductions for US Airways will be between six and eight percent on a year-over-year basis forcing the reduction of 1,700 employees including roughly 300 pilots, 400 flight attendants, 800 airport employees and 200 staff and management. The carrier is also implementing several new revenue initiatives following other airlines who have adopted the first-bag check fee, increased in-flight charges and fees to use call centers and ticket offices. It will also return 10 mainline aircraft in 2008 and 2009, cancel the leases of two A330 aircraft that were scheduled for delivery in 2009, and plans to reduce additional aircraft in 2009 and 2010.
Aircraft coming out of the fleet include the return of six Boeing 737-300 aircraft by the end of 2008, four Airbus A320 aircraft in the first half of 2009, and the cancellation of leases of two A330-200 wide-body aircraft that had been scheduled for delivery in the second quarter of 2009. The airline is also planning to reduce additional aircraft in 2009 and 2010.
These new services and fees combined with US Airways' previously announced Choice Seats and second-checked-bag carry programs could generate between $300 million and $400 million annually for the airline.
"Our industry is profoundly challenged by the dramatic increase in fuel prices, and we must write a new playbook for running a profitable airline in this new and challenging environment,” said US Airways Chairman and CEO Doug Parker, who is planning to invest an amount equivalent to his 2008 salary in LCC as a measure of confidence. “We are taking every action to operate a strong and competitive airline, while ensuring that our customers have continued access to competitively-priced air travel. The actions we are announcing today, coupled with our strong relative cash position and no material debt payments until 2014, will help US Airways persevere through these unprecedented times for our industry. We are building a new business model that can return US Airways to sustained profitability in these challenging times."
The cost of jet fuel has increased more than 90 percent over the last 12 months (and more than 200 percent since 2000). US Airways estimates its total annual fuel expense (mainline and Express) will be $1.9 billion more in 2008 than it was in 2007 when the airline reported a net profit of $427 million. In 2008, fuel represents 39 percent of total (mainline and Express) expenses; in 2000, fuel represented 14 percent of the airline's total expenses. At current fuel prices, US Airways will spend an average of $299 in fuel costs alone to carry one mainline passenger on a roundtrip journey, which is up from an average of $151 in 2007, and $70 in 2000.

Capacity Reductions
In response to the sustained surge in record high fuel prices, the airline will reduce its fourth quarter domestic mainline capacity by six to eight percent on a year-over-year basis. The airline had previously planned a two to four percent decrease in domestic mainline capacity in its fourth quarter 2008. Domestic mainline capacity for 2009 is planned to be reduced seven to nine percent from 2008 levels.