CHARLOTTE, N.C. -- US Airways ( LCC) says revenue stabilized this month after falling in January and February.

"Booked revenue coming into March has been better than January and February," said President Scott Kirby, on an investor conference call with JPMorgan. "Demand remains murky (but) we've been cautiously optimistic the last couple of weeks."

Kirby said business demand is weaker while leisure demand "continued to hold up, but the leisure pricing deteriorated significantly." Because Easter is in April this year after occurring in March last year, holiday travel bookings are occurring later, he indicated.

In February, passenger revenue per available seat mile declined by 9% to 11%, but total RASM was about four points better than that because the latter number includes the impact of ancillary fees, which are expected to add $400 million to $500 million in 2009 revenue.

Kirby said US Airways has reduced international capacity by about 2% and is evaluating whether to reduce it further following the summer travel season. Although the carrier is sometimes viewed as lacking the capability to reduce capacity as much as others have due to restrictions in its pilot contract, Kirby noted that between 2004 and 2009, only US Airways and American ( AMR) showed double-digit capacity reductions.

He also revealed that US Airways has solidified its relationship with the Star Alliance. Previously, he said, "there was more opportunity for us to be removed from Star if United ( UAUA) merged with someone," but that risk has diminished. Now, US Airways will have "more opportunity over time not only to cooperate with United but with Continental ( CAL)," which is preparing to join the alliance, Kirby said.

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