March 26, 2003, 09:46 AM
America West looks to shave costs by $100m
America West Airlines is warning employees it must cut annual costs by $100 million and that layoffs may be necessary as part of those cuts.
The Phoenix-based low-fares carrier has so far not cut capacity or schedules since the outbreak of war in Iraq. Unlike most US majors, however, its network is predominantly domestic and the worst impact on bookings has been on international travel, especially in transatlantic markets.
America West, however, says it is concerned by the economic turmoil and is reviewing how best to cut costs and "protect our position".
America West chairman and CEO Douglas Parker has told employees there will be an "undetermined number" of layoffs as part of the cost cuts, but at this stage no "frontline" workers, such as pilots, flight attendants and customer service agents, are expected to lose their jobs.
"We have just started the review process of how to reduce management and administration and that is expected to take about two weeks," says an America West spokeswoman. "It probably will translate into fewer people. But the hope is that we can achieve our goals with these cost reductions without other layoffs among those employees who have direct customer service contact."
The spokeswoman adds: "It's about the continuation of the downturn and its effects on the industry. By this time, everybody had hoped to see some start of a turnaround materializing, but it's now clear that won't happen.
"We have one of the lowest cost bases in the industry and our new fares structure is helping us to improve revenues, but we need to remain diligent to protect our position."
The airline's pilots have recently rejected a new contract proposal that would have given them an 11% pay raise. Negotiations with management must now resume through a mediator.
Source: Air Transport Intelligence news