US Air Expects Fuel Bill to Rise by $2 Billion

Despite the rising prices, CEO Doug Parker remains optimistic the company can handle the costs.
Publish date:

The fuel bill at

US Airways


is likely to rise by $2 billion this year, but CEO Doug Parker says the industry is responding well to the fuel price crisis and the carrier is "well positioned" to face it.

"We're going to get through this," Parker said Wednesday at the company's annual meeting in Phoenix. "We're good at this." Parker became the first major airline executive to speak publicly since fuel reached $135 a gallon.

US Airways' cash as a percentage of revenue is 24%, ranking second among legacy carriers, Parker said.



is first at 30.2%, according to figures provided by US Airways. Third is



American Airlines at 22.4%.


(DAL) - Get Report

is next at 19.5%.



United Airlines is at 18.6%, and


(CAL) - Get Report

is at 18.3%.

Meanwhile, US Airways has relatively low scheduled debt payments below $200 million annually until 2014, when they balloon to about $1.7 billion, which would likely be refinanced before it comes due, Parker said.

The carrier now needs about $300 from each round-trip mainline passenger just to pay for fuel, about twice the level of a year ago. Fuel accounts for less than 50% of costs, so the total per-passenger cost is $600 to $700, more than any carrier is able to charge for an average ticket.

On the plus side, however, "the business traveler is still buying and traveling," meaningful capacity reduction is under way and airlines are adding fees for services, Parker said, noting that while capacity cuts are meaningful, their impact has not been seen yet.

On Wednesday, American raised its fuel surcharge by $10 on many flights, while

Virgin America

added fuel surcharges of $10 on short flights and $20 on long-haul flights. It was too soon to know Wednesday whether other carriers would match the charges.

Shares of US Airways were trading down 48 cents, or 12.7%, to $3.30. Shares of AMR were losing 53 cents, or 7.9%, to $6.20.