US Airways, other lines soar a second year

Times are good for people who run airlines.

The industry is headed toward its second straight profitable year, for the first time since 1999-2000. International air traffic has been especially robust, and competition growing. US Airways, Philadelphia's biggest carrier, is hiring pilots for the first time in nine years.

So why do so many people - airline employees, customers, and even some industry executives and experts - seem unhappy?

The euphoria that should come from making money is tempered these days by:

Employees demanding that high-paid senior managers return some of the compensation workers gave up the last five years to help bankrupt airlines survive.

Customers complaining loudly about delayed flights and poor service on some carriers, especially about US Airways' Philadelphia International Airport hub.

Industry consultants and the managers themselves, who caution that the airline business is highly cyclical, fuel prices are at record levels, and, if carriers don't control their costs now, everyone will regret it in the next economic downturn.

There's no question that the airlines, primarily using labor cost cuts, have done well since early 2006 after $35 billion in losses in the five preceding years.

John Heimlich, vice president and chief economist at the Air Transport Association, the major carriers' trade group, estimates that U.S. industry profit will be at the top end of his forecast of $4 billion to $5 billion. While that will be the best performance in seven years, "anything after $35 billion in losses is going to look like you won the gold medal," he said.

For US Airways executives, the need to hire 350 new pilots, primarily to fly regional jets at the Philadelphia hub, is one clear sign of good financial health. President Scott Kirby noted when the hiring was announced in early September that, just two years after coming out of Chapter 11 bankruptcy protection and merging with America West Airlines, the carrier had cut the number of pilots furloughed during the bad times from 1,700 to zero.

But labor leaders and others point out that US Airways needs to hire new pilots in part because there was nobody left on its furlough list who wanted to come back.

About 600 US Airways pilots have turned down the chance to return because of pay and benefits cuts, they have moved on to other jobs, or they don't like the sloppy way the airline is being run, said Arnie Gentile, a pilot and the spokesman for the US Airways' Air Line Pilots Association chapter.

"To have 600 who don't want to come back is monumental," Gentile said. "Airline pilots just don't give up their jobs. It's the way they're being treated, the poor employee-management relations. And we've got an embarrassing product out there."

No one, including US Airways' senior executives, disputes that the Philadelphia hub continues to be the most troublesome part of its operation.

This summer, the airline's flights to and from Europe were routinely an hour or more late and its on-time performance was well below the industry's already poor average of 68 percent.

US Airways officials blamed some of the on-time performance on a lack of available international gates, which they said made it difficult to coordinate inbound and outbound flights, especially when thunderstorms disrupted schedules. The airline had access to 17 gates for 20 daily round-trips.

Airport director Charles J. Isdell contended that US Airways could have helped its operations if it had used the airport's passenger-transport vehicles, high-level buses for loading or unloading planes on the tarmac when a gate isn't available. But airline officials refused, saying that would have resulted in even more delays in getting passengers on and off flights.

Apart from the delays, passengers had other beefs. In e-mails and phone calls to The Inquirer in recent weeks, dozens of US Airways passengers who flew this summer said they would avoid the airline whenever possible, and not just because of late flights. The customers said airplanes often were dirty, in-flight entertainment systems didn't work properly, and some airport and on-board employees were sullen, or at best indifferent.

Union leaders who represent the employees say there's a simple reason for some workers' attitudes: They're demoralized by pay and benefit cuts while US Airways' senior executives have cashed in stock options and received handsome bonuses.

The airline acknowledges morale problems, but it traces some of the passengers' complaints to the messy way managers have merged the operations of the old US Airways and America West this year, spokesman Philip Gee said.

"We understand there are issues with morale, some of it tied to labor contracts," Gee said. "But we're at the tail end of a pretty difficult year in integrating the two airlines. The brunt of those difficulties was felt by our front-line employees."

At the same time, industry analysts and consultants, who focus more on how much money airlines make and less on how they do it, are pleased.

They note that all the major airlines have not added more capacity, measured by the number of available seats for sale, than they could fill up with passengers. That, along with a healthy demand from customers, has enabled carriers to raise fares 10 times so far this year, helping their bottom lines at the same time crude-oil prices have hit record highs.

"As the poet said, 'Gather ye rosebuds while ye may,' " said George Hamilin, managing director of Airline Capital Associates, a New York consulting firm. "This is not going to last forever."

The industry experts warn that airlines traditionally overexpand when times are good, only to lose big bucks with too much capacity when the economy slows down.

US Airways chief executive officer Doug Parker, after reporting a $506 million profit for the first nine months of the year, said the industry finally might have figured out how to curb its enthusiasm when times are good.

He said: "I think what's really happening here is, we've dramatically reduced the cyclicality of our industry."