US Airways Cuts Capacity, Job Count

CHARLOTTE, N.C. -- US Airways(LCC Quote), in an aggressive move to counter skyrocketing fuel costs, said it will cut fourth-quarter domestic mainline capacity by 6% to 8%, resulting in the loss of 1,700 jobs.

The carrier also said it will impose a series of new fees, including charging $2 for soda, water or coffee for domestic coach passengers. In addition, US Airways will join AMR(AMR Quote) and UAL(UAUA Quote) in charging $15 for the first checked bag, although most premium flyers will be exempt.

Also as part of its plan, US Airways will severely curtail its nighttime operations in Las Vegas, which for years have served leisure travelers to and from the gambling hotspot. Looking ahead, night options will be limited to a few East Coast flights. Daily Las Vegas departures will decrease from 141 in September 2007 to 81 in September 2008 and to 74 by the end of this year.

Throughout the airline industry, carriers are moving quickly to reduce capacity, cut employees and impose new fees. At US Airways, where fuel costs will be $1.9 billion higher this year than last, the new fees are expected to boost annual revenue by $300 million to $400 million.

"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 CEO Doug Parker, in a prepared statement. "We are building a new business model that can return US Airways to sustained profitability in these challenging times."