Airlines find ways to cut costs

As they try to cope with soaring and unpredictable fuel prices, airlines are
scrambling to cut money-losing routes, park fuel-guzzling airplanes, boost fees
and charges and reduce any unnecessary expenses. Here are some of the steps
carriers outlined when they talked to industry analysts this month:

American Airlines
Capacity: It will reduce mainline capacity 1.4 percent in 2008 vs. 2007, down
3.6 percent on domestic routes. In the fourth quarter, domestic capacity will be
down 4.6 percent from a year earlier. American previously planned to increase
its capacity 0.2 percent in 2008.
For American Eagle and other regional partners, capacity will be cut 2.1 percent
vs. a February estimate of an 0.6 percent decline.
Fleet: It will ground an unspecified number of MD-80s and three Airbus A300s in
2008. It will also speed up delivery of more efficient Boeing 737-800s, with
plans to take delivery of 34 in 2009 and 36 in 2010.
Costs: It implemented a hiring freeze on management and support staff April 1.

AirTran Airways
Capacity: Its capacity in fourth quarter 2008 and all of 2009 will be unchanged
year over year. AirTran previously reduced its annual growth rate from 20
percent down to 10 percent.
Fleet: It will add four airplanes in 2008 and finish the year with 141 rather
than the originally planned 147. It will end 2009 with 141 aircraft rather than
161 originally planned.
Capital expenditures: AirTran is cutting non-aircraft spending from $25 million
to $30 million to $12 million to $18 million.
Finances: It plans to raise $150 million from debt and equity offerings.

Alaska Air Group
Fleet: It will park the last of its 10 fuel-inefficient McDonnell Douglas MD-80
aircraft by Sept. 30, three months ahead of schedule. In 1995, Alaska flew 42 of
the MD-80s, which represented 60 percent of its fleet. But it made the decision
several years ago and go to an all Boeing 737 fleet.
It is also converting regional carrier Horizon Air to a fleet of 48 Bombardier
Q400s turboprop airplanes rather than a mix of three aircraft types and 65
airplanes, including 20 Bombardier regional jets over the next two years. The
smaller fleet will require fewer employees.
New and higher fees: On May 21, booking fees through reservations and airport
staff will go from $10 to $15; overweight bags will jump from $25 to $50; pet
transportation will cost $100, up from $75; handling unaccompanied children will
cost $75, up from $30 to $60 on nonstop flights and $60 on connecting flights.
The airline will start charging charge coach passengers $25 for checking a
second bag sometime this summer.
Route system: Alaska and Horizon likely will move up to 5 percent of their
existing capacity to better routes and markets this fall. This spring and
summer, it is deploying some aircraft flying some West Coast routes to
transcontinental and Hawaiian service.

Continental Airlines
Fleet: Continental is parking 14 older Boeing 737 aircraft as they come off
lease between September and April, in addition to 34 Boeing 737s previously set
to be removed from service through next year.
Capacity: Mainline capacity will be down 5 percent on an annualized basis
starting in the fall. Regional jet capacity will also be reduced by some amount
this fall.

Delta Air Lines
Fleet: Delta is removing 15 to 20 of its MD-80s, Boeing 757s and Boeing 767s and
70 of its 50-seat regional jets from its operations by year's end.
Capacity: It expects system capacity to be flat to down 2 percent in the second
half of 2008, with domestic capacity to shrink 9 percent to 11 percent.
Employment: It's cutting 700 administrative jobs and 1,300 front-line jobs
through normal attrition, voluntary severance and early retirement.
Capital spending: It expects to spend $1.3 billion, down $200 million.
Finances: It expects to produce $150 million through cuts in capital spending,
higher productivity and new revenue sources this year, or $350 million on an
annual basis.

JetBlue Airways
Capacity: The airline expects to grow 3 percent to 5 percent in 2008, down from
the up to 8 percent expansion originally planned this year. In the fourth
quarter, capacity will drop 2.8 percent below the same period in 2007, the first
year-over-year capacity decline in JetBlue's eight-year history.
Capital spending: It's been cut to $150 million, down from $150 million.
Fees and charges: JetBlue is implementing a $20 charge for a second checked bag
as of June 1.

Northwest Airlines
Capacity: It will cut domestic capacity by about 5 percent compared to its
original plans.
Fleet: It plans to park 15 to 20 additional aircraft, including DC-9s, Boeing
757s and Airbus A319s and A320s.
Fees and charges: It will charge coach customers $25 for a second checked bag
and $100 for additional bags and double fees for overweight bags. Overweight
bags will cost $50 each way, up from $25. It has begun charging passengers who
want to select particular seats on international flights or within Asia.
Cargo: It has suspended cargo service to Bangkok, Thailand and Singapore, and
will suspend service this summer to Guangzhou, China and Taipei, Taiwan. It is
retiring three freighters.
Capital expenditures: It's cutting nonaircraft spending to $150 million, down
$100 million.
Finances: It is trying to add $100 million annually through new charges, higher
productivity and lower costs.

Southwest Airlines
Capacity: It will cut 20 unproductive routes in August. It expects
fourth-quarter capacity to be up 1.4 percent over fourth quarter 2007, compared
to a previous projection of 4.2 percent and its growth in recent years of 8 to
10 percent. Capacity in 2009 is expected to climb 2 percent to 3 percent,
although it may wind up being flat compared to 2008.
Fleet: Southwest will take delivery of 14 aircraft in 2009, compared to the 28
previously ordered. For 2010, Southwest will have 22 airplanes on firm delivery
or with options to buy, down from 34. It intends to buy 29 aircraft in 2008 but
get rid of 22 other airplanes for a net growth of seven airplanes. It previously
cut back plans to grow by 34 aircraft in 2008. It may keep some of the 22
airplanes if other airlines' shrinkage provides growth opportunities.

United Airlines
Capacity: By the fourth quarter, capacity in domestic markets will be about 9
percent lower than a year earlier, which itself was down 5 percent from 2006.
Fleet: It will park 30 older, less efficient airplanes.
Fees and charges: It is implementing a $25 charge for a second checked bag.
Cost-cutting and layoffs: United will eliminate 500 salaried and management jobs
and 600 other jobs this year. It has targeted $200 million in non-fuel expenses
on top of a $200 million goal previous announced.
Capital spending: The $650 million in planned expenditures has been cut by $200
million.

US Airways
Capacity: It plans to reduce capacity by up to 4 percent in the second half of
2008.
Fleet: US Airways is returning six Boeing 737-300 aircraft when leases expire in
the latter part of 2008 and early 2009.
Fees and charges: It estimates it will raise $70 million this year from such
steps as charging $25 for a second checked bag, charging passengers for the
right to pick the best seats when they make seating assignments, etc.
Fares: It is modifying its fare structure to set floors on pricing, based on
distance. For example, it says it won't offer sale fares below $69 for flights
of less than 500 miles, with similar floors on longer-distance flights.
Capital spending: It cut $75 million from its capital expenditures for the
remainder of the year.

SOURCES: The airlines, Dallas Morning News research