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US Airways Latest Carrier to Post Loss

It also plans to reduce capacity.
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US Airways


said it lost money in the latest quarter due to high fuel costs and, like other carriers, announced plans to further reduce capacity.

The loss, excluding special items, was $239 million, or $2.60 a share. Analysts surveyed by Thomson Financial had expected a loss of $2.64. Revenue rose 3.9% to $2.84 billion and met estimates.

Fuel expenses were $260 million higher than a year earlier, when the carrier earned $34 million, or 37 cents a share, before items.

"The large losses posted by U.S. airlines this quarter, the forecast for further losses and the recent liquidations and bankruptcies of a number of carriers, indicate quite clearly that the U.S. airline industry is in financial turmoil," said CEO Doug Parker, in a prepared statement.

US Airways has discussed a merger with



, which has also talked about combining with


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, say people familiar with the situation.

Those talks have gained urgency due to high oil prices and the planned merger of


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During the past week, all of the legacy carriers, including


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, have announced capacity cuts and revenue initiatives intended to offset high fuel prices.

US Airways said it will take six Boeing 737-300 jets out of service in 2008 and 2009, leading to mainline capacity reductions of 2% to 4% in the second half of this year. Additionally, the carrier plans measures such as fees for excess checked baggage, which are expected to generate $100 million annually, and said it would eliminate some bargain fares.

For the quarter, mainline passenger revenue per available seat mile rose 3.7% on a 1.2% decline in capacity. Consolidated PRASM climbed 4.1%, on a 0.3% capacity drop.

Mainline cost per available seat mile, before fuel and other items, was up 8.8%, reflecting a higher number of engine overhauls, capacity cuts and added spending on airport customer service.

Meanwhile, US Airways amended its credit-card processing agreement so that its collateral level was reduced. As a result, $67 million is expected to be released from the reserve account this month.

"We have a strong relative liquidity position versus our peers and as a result of financing transactions completed since the merger

with America West, we do not have any material debt payments through 2013," said CFO Derek Kerr, in a prepared statement.