US Airlines Fight FAA Crew Rest Requirements

Seven US airlines have sued the Federal Aviation Administration, claiming the agency broke its own rules and may have compromised flight safety when it set new standards for pilot rest times last year without input from the carriers.

The airlines, including American Airlines, Continental Airlines and United Airlines, filed the lawsuit on December 24 in the the US Court of Appeals for the District of Columbia Circuit.

The airlines said in the complaint that they should have had a chance to comment on the rules, which would place yet another financial burden on them.

"FAA has neither demonstrated how the rule will advance safety, considered the potential that the rule may actually diminish safety, nor justified the significant costs of the rule against any purported benefit," the carriers said.

Delta Air Lines, which recently merged with Northwest Airlines, was not a party to the lawsuit. Both Delta and Northwest have negotiated separate rules with the FAA governing crew rest requirements on long-haul flights.

The FAA did not comment on the lawsuit on Monday.

The government rules require additional rest time and longer time between flights for pilots on nonstop flights that last more than 16 hours. To comply, airlines would have to put more pilots on those flights and provide more in-flight rest facilities for them.

These changes would drive up costs for airlines, which hope to claw their way out of a financial downturn in 2009.

The vast majority of international flights are shorter than 16 hours, but weather delays can unexpectedly lengthen trips and pilots' workdays.

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United Airlines Widens On Volatile Fuel Prices

United Airlines parent UAL on Wednesday said its quarterly net loss widened on erosion in the value of its fuel hedges as oil prices dropped.

The company said its net loss amounted to USD$1.3 billion, compared with USD$53 million a year earlier.

The airline industry, battered severely last year by high fuel costs, cut capacity in the fourth quarter to offset that bill and to gain pricing power as economic woes eroded travel demand.

UAL said its revenue was USD$4.55 billion in the quarter, down 9.6 percent.

The company said it ended the quarter with an unrestricted cash balance of USD$2 billion.

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AMR, UAL Losses Widen, Tough Times Ahead air

Two of the largest US airlines, American Airlines and United Airlines, on Wednesday posted wider quarterly losses and warned that the economic slowdown in 2008 would likely continue this year, causing larger-than-expected job and route cuts.

UAL, parent of United Airlines, said it would cut 1,000 salaried and management positions from its payrolls this year, while AMR, parent of American Airlines, said it would trim capacity more than expected.

American and United are the first two major carriers to report their fourth-quarter earnings, and their statements muddied the outlook for the entire industry as it grapples with volatile fuel prices and the potential for sagging travel demand.

"It's going to be weak, no doubt about it," said Ray Neidl, analyst at Calyon Securities. "The question is can the airlines, with capacity cuts, keep up with the decrease in demand in a weak economy?"

AMR shares fell more than 21 percent to USD$8.24 on the New York Stock Exchange. UAL shares shed more than 7 percent to USD$10.70 on Nasdaq.

The airline industry, including AMR and UAL, slashed capacity last year to offset their high fuel bills and bolster fares as the economic recession eroded travel budgets.

A 75 percent decline in oil prices in the second half of 2008 greatly eased the fuel price burden for airlines. But it also lessened the value of airline fuel hedges, creating a new problem for the embattled industry.

AMR said its quarterly net loss widened as the price it paid for fuel rose 8 percent in the quarter from a year before.

The company said its fourth-quarter net loss was USD$340 million, compared with USD$69 million a year earlier.

Excluding one-time items, AMR said it lost USD$214 million.

Special items included a USD$23 million charge related to aircraft groundings and capacity cuts as well as a non-cash pension settlement charge of USD$103 million.

The airline industry, including AMR, made hefty capacity cuts in the fourth quarter of 2008 to offset volatile fuel prices and to bolster fares as demand sagged in a weak economy.

The company said it expects its mainline capacity to decrease more than 8.5 percent in the first quarter amid economic uncertainty. AMR said its 2009 mainline capacity will decline by more than one percentage point beyond a previous forecast provided in October.

"We intend to continue managing our business -- from capacity and fleet planning to balance sheet repair, fuel hedging and revenue initiatives -- conservatively and with discipline," AMR chief executive Gerard Arpey said in a statement.

AMR reported revenue of USD$5.47 billion, down 3.8 percent. The company said it ended the quarter with USD$3.6 billion in cash and short-tern investments.

AMR said the company now expects to receive 29 Boeing 737-800 aircraft in 2009 as a result of Boeing's delivery delays, compared with 36 expected previously.

UAL said its quarterly net loss widened on erosion in the value of its fuel hedges, as oil prices dropped.

The company said its net loss amounted to USD$1.3 billion, compared with USD$53 million a year earlier.

UAL reported a USD$370 million cash loss on fuel hedges that settled in the quarter, due to the recent fall in fuel prices. The company also suffered non-cash, net mark-to-market losses on its fuel hedges of USD$566 million.

The company, which cut about 7,000 jobs in 2008, said it would cut another 1,000 salaried and management positions in 2009.

UAL said its revenue was USD$4.55 billion in the quarter, down 9.6 percent. The company said it ended the quarter with an unrestricted cash balance of USD$2 billion.

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Airlines Ask US To Withdraw NY Airport Slot Sales

US airlines have asked the Obama administration to withdraw a government plan for boosting competition and reducing congestion by auctioning takeoff and landing rights at New York-area airports.

The chief lobbying group for the major carriers asked Transportation Secretary Ray LaHood to swiftly rescind last year's Bush administration initiative.

"As you noted at your confirmation hearing, auctioning slots does not make sense as a tool to address congestion," James May, chief executive of the Air Transport Association, said in a letter to LaHood dated January 22.

May urged LaHood to act before further litigation on the matter. Airlines sued to block the auctions on grounds the Federal Aviation Administration (FAA) lacked the authority to carry them out.

A US appeals court stayed the auction plan last month pending further court review.

The Bush administration had sought to sell up to 10 percent of rights for takeoffs and landings at LaGuardia and John F Kennedy airports in New York, and Newark in New Jersey, as a way to streamline operations and facilitate new service.

LaGuardia, Newark and JFK, all popular with business travellers, are among the worst airports in the United States for delays and congestion. Airlines tend to pack their schedules and run many flights with feeder aircraft, especially at LaGuardia.

The tie-ups add millions of dollars annually in industry operating costs, and tend to ripple across the country and affect flights in other cities.

US Airways, Delta Air Lines, Continental Airlines, American Airlines and United Airlines all have hubs or other operations at one or more of the three airports.

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United Airlines

United Airlines (NASDAQ: UAUA) operates nearly 3,000* flights a day on United and United Express to more than 200 U.S. domestic and international destinations from its hubs in Los Angeles, San Francisco, Denver, Chicago and Washington, D.C. With key global air rights in the Asia-Pacific region, Europe and Latin America, United is one of the largest international carriers based in the United States. 

United also is a founding member of Star Alliance, which provides connections for our customers to 975 destinations in 162 countries worldwide. United's 52,000 employees reside in every U.S. state and in many countries around the world. News releases and other information about United can be found at the company's Web site at united.com.

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