America West Announces Cost Reduction Plans

Apr 18, 2001, 01:00 ET from America West Airlines

    PHOENIX, April 18 /PRNewswire/ -- America West Airlines (NYSE:   AWA) today
 announced a cost reduction plan to respond to a softening economy.  The plan
 includes significant reductions in overhead and a slowing of the airline's
 growth through the return of five older, leased aircraft.  As a result of
 these steps, the annualized expense budget of America West should be reduced
 by approximately $75 million.  Capital spending will be reduced an additional
 $25 million.  The capital reductions will be realized in 2001, while
 approximately $25 million of the $75 million of cost reduction will occur in
 2001.  The reductions will not impact America West's operational improvement
 initiatives or passenger service levels.
     "We believe these are the proper steps in this economic environment," said
 W. A. Franke, chairman and chief executive officer.  "Business travel has
 slowed dramatically while fuel prices remain high, resulting in reported
 losses for the airline industry in the hundreds of millions of dollars.  We
 believe that uncertain times call for early and decisive action."
     "The company remains in good financial condition, with $213 million in
 cash and liquidity at the end of the first quarter, an increase of $18 million
 since December 31, 2000.  Additionally, we've reduced long term debt by
 $233 million, or 62 percent, since 1995," said Franke.  "Rather, this is about
 preventative action for a dynamic business operating in an uncertain economic
 environment within a cyclical industry."
 
     The cost reductions include the following specific measures:
 
     --  The return of five 737-300 aircraft to the lessor.  These aircraft
         will be returned as the leases expire between September 2001 and
         January 2002.  The result will be a slowing of the growth of the
         airline from previously anticipated rates of 7-8 percent in 2001 and
         5-6 percent in 2002 to 5-6 percent in 2001 and 1-2 percent in 2002.
 
     --  Significant reductions in overhead including a 10 percent reduction in
         management and clerical payroll, a 33 percent reduction in paid
         overtime, a reduction in advertising and the elimination of certain
         other discretionary expenses.  The management/clerical payroll
         reduction will be accomplished through the combination of attrition,
         deferred hiring and select reductions-in-force.
 
     --  The deferral of over $25 million of planned capital projects.
 
     Furthermore, Franke and W. Douglas Parker, president and chief operating
 officer, have requested the pay raises granted to them by the Board of
 Directors in March of this year be rescinded.  This request combined with a
 prior announcement that America West officers will receive no cash bonuses
 this year means that Franke and Parker's 2001 cash compensation will be
 reduced approximately 40 percent versus 2000.
     The cost reductions will have no impact on America West's Operational
 Improvement Plan or passenger service levels.  The plan, announced in July
 2000, has resulted in substantial improvements in America West's reliability.
     "We are pleased with the progress of our Operational Improvement Plan but
 know we still have work to do," said Parker.  "We are committed to continuing
 this progress and the cost reductions announced today will not impede those
 efforts.  Indeed, the retirement of some older aircraft will reduce the
 average age and improve the overall reliability of the fleet."
     As the result of the plan, since July 2000 America West's percentage of
 flights cancelled has dropped 55 percent, its baggage handling ratio has
 improved 43 percent and the number of consumer complaints to the Department of
 Transportation has dropped 70 percent.  America West's customers have welcomed
 the improvement and returned to the airline.  America West's percentage of
 seats filled, or load factor, increased 4.6 points in March to an industry
 leading 76 percent.  Most airlines have seen a decline in load factors over
 the same period.
     America West Airlines, the nation's ninth-largest carrier, serves
 92 destinations with more than 900 daily departures in the U.S., Canada and
 Mexico.  Along with its code share partners, America West serves more than
 180 destinations worldwide.  America West Airlines is a wholly owned
 subsidiary of America West Holdings Corporation, an aviation and travel
 services company with 2000 sales of $2.3 billion.
 
     This press release contains forward-looking statements within the meaning
 of the Private Securities Litigation Reform Act of 1995 that involve risks and
 uncertainties that could cause America West's actual results and financial
 position to differ materially from these statements.  The risks and
 uncertainties include, but are not limited to, the cyclical nature of the
 airline industry, competitive practices in the industry, the impact of changes
 in fuel prices, relations with unionized employees generally and the impact of
 the process of negotiation of labor contracts on the company's operations, the
 outcome of negotiations of collective bargaining agreements and the impact of
 these agreements on labor costs, the impact of industry regulation and other
 factors described from time to time in the company's publicly available SEC
 reports.  The company undertakes no obligation to publicly update any forward-
 looking statement to reflect events or circumstances that may arise after the
 date of this press release.
 
 

SOURCE America West Airlines
    PHOENIX, April 18 /PRNewswire/ -- America West Airlines (NYSE:   AWA) today
 announced a cost reduction plan to respond to a softening economy.  The plan
 includes significant reductions in overhead and a slowing of the airline's
 growth through the return of five older, leased aircraft.  As a result of
 these steps, the annualized expense budget of America West should be reduced
 by approximately $75 million.  Capital spending will be reduced an additional
 $25 million.  The capital reductions will be realized in 2001, while
 approximately $25 million of the $75 million of cost reduction will occur in
 2001.  The reductions will not impact America West's operational improvement
 initiatives or passenger service levels.
     "We believe these are the proper steps in this economic environment," said
 W. A. Franke, chairman and chief executive officer.  "Business travel has
 slowed dramatically while fuel prices remain high, resulting in reported
 losses for the airline industry in the hundreds of millions of dollars.  We
 believe that uncertain times call for early and decisive action."
     "The company remains in good financial condition, with $213 million in
 cash and liquidity at the end of the first quarter, an increase of $18 million
 since December 31, 2000.  Additionally, we've reduced long term debt by
 $233 million, or 62 percent, since 1995," said Franke.  "Rather, this is about
 preventative action for a dynamic business operating in an uncertain economic
 environment within a cyclical industry."
 
     The cost reductions include the following specific measures:
 
     --  The return of five 737-300 aircraft to the lessor.  These aircraft
         will be returned as the leases expire between September 2001 and
         January 2002.  The result will be a slowing of the growth of the
         airline from previously anticipated rates of 7-8 percent in 2001 and
         5-6 percent in 2002 to 5-6 percent in 2001 and 1-2 percent in 2002.
 
     --  Significant reductions in overhead including a 10 percent reduction in
         management and clerical payroll, a 33 percent reduction in paid
         overtime, a reduction in advertising and the elimination of certain
         other discretionary expenses.  The management/clerical payroll
         reduction will be accomplished through the combination of attrition,
         deferred hiring and select reductions-in-force.
 
     --  The deferral of over $25 million of planned capital projects.
 
     Furthermore, Franke and W. Douglas Parker, president and chief operating
 officer, have requested the pay raises granted to them by the Board of
 Directors in March of this year be rescinded.  This request combined with a
 prior announcement that America West officers will receive no cash bonuses
 this year means that Franke and Parker's 2001 cash compensation will be
 reduced approximately 40 percent versus 2000.
     The cost reductions will have no impact on America West's Operational
 Improvement Plan or passenger service levels.  The plan, announced in July
 2000, has resulted in substantial improvements in America West's reliability.
     "We are pleased with the progress of our Operational Improvement Plan but
 know we still have work to do," said Parker.  "We are committed to continuing
 this progress and the cost reductions announced today will not impede those
 efforts.  Indeed, the retirement of some older aircraft will reduce the
 average age and improve the overall reliability of the fleet."
     As the result of the plan, since July 2000 America West's percentage of
 flights cancelled has dropped 55 percent, its baggage handling ratio has
 improved 43 percent and the number of consumer complaints to the Department of
 Transportation has dropped 70 percent.  America West's customers have welcomed
 the improvement and returned to the airline.  America West's percentage of
 seats filled, or load factor, increased 4.6 points in March to an industry
 leading 76 percent.  Most airlines have seen a decline in load factors over
 the same period.
     America West Airlines, the nation's ninth-largest carrier, serves
 92 destinations with more than 900 daily departures in the U.S., Canada and
 Mexico.  Along with its code share partners, America West serves more than
 180 destinations worldwide.  America West Airlines is a wholly owned
 subsidiary of America West Holdings Corporation, an aviation and travel
 services company with 2000 sales of $2.3 billion.
 
     This press release contains forward-looking statements within the meaning
 of the Private Securities Litigation Reform Act of 1995 that involve risks and
 uncertainties that could cause America West's actual results and financial
 position to differ materially from these statements.  The risks and
 uncertainties include, but are not limited to, the cyclical nature of the
 airline industry, competitive practices in the industry, the impact of changes
 in fuel prices, relations with unionized employees generally and the impact of
 the process of negotiation of labor contracts on the company's operations, the
 outcome of negotiations of collective bargaining agreements and the impact of
 these agreements on labor costs, the impact of industry regulation and other
 factors described from time to time in the company's publicly available SEC
 reports.  The company undertakes no obligation to publicly update any forward-
 looking statement to reflect events or circumstances that may arise after the
 date of this press release.
 
 SOURCE  America West Airlines

RELATED LINKS

http://www.americawest.com