US Airways will delay delivery of 54 new Airbus jets until at least 2013 and take other steps to boost its cash reserves until travel demand rebounds.
The airline said Tuesday that putting off the deliveries will cut aircraft spending by $2.5 billion over the next three years.
The company said a new $95 million loan plus other financial moves will boost its available cash by about $150 million this year and $450 million by the end of 2010, CEO Doug Parker said in a message to employees. In recent months, some analysts had speculated that US Airways could face a financial crisis as it burned through cash this winter, a slower period for travel. Last month, the company announced it will cut 1,000 jobs, drop several international routes, and concentrate nearly all U.S. flying at three hub airports and Washington.
It still plans to add 28 new planes in the next three years, which it called a more manageable pace during an airline industry slump. It has financing in place for those 28 planes, including $180 million in loans for four planes coming next year. The airline also said it would push back the launch of its Airbus 350 XWB service from 2015 to 2017.
“Simply put, people are not willing to pay as much to fly as they were during more robust economic times,” the company wrote to employees. It also said loans for the new planes were expensive and harder to get.
US Airways, based in Tempe, Ariz., was scheduled to add 72 Airbus A320-series jets and 10 A330 aircraft over the next three years to replace older jets. Now it plans to take four next year and 12 in each of the following two years.
The A320-series jets are domestic workhorses with 124 to 183 seats. The A330 model coming next year has 258 seats, and US Airways uses it for international routes.
Another 22 A330s and A350s scheduled for delivery beginning in 2015 were also delayed until 2017 through 2019.
Airbus spokeswoman Mary Anne Greczyn said the US Airways deferral was already built into the company’s 2010 production and delivery planning.
US Airways spokesman Morgan Durrant declined to say whether the company would be hit with penalties for delaying the deliveries.
US Airways will keep its overall flying level about the same, as it keeps operating its current planes one or two years longer than planned rather than replacing them with new ones.
Airline traffic has been weak this year, and several major U.S. carriers have raised cash to get through the slow fall and winter seasons. The cash situation has been especially acute at US Airways.
During the third quarter its cash fell below $1.5 billion, the minimum level in its agreement with Barclays, which issues the US Airways-branded credit card. Barclays lowered the limit to $1.35 billion through October. And on Tuesday, US Airways said Barclays had lowered the limit permanently, though it didn’t say how much.
The company also said that Barclays will delay repayment of a $200 million advance for 14 months. Barclays advanced the money when it bought frequent-flier miles from the carrier.
US Airways lost $125 million in the first nine months of this year on lower revenue, after losing $2.1 billion last year.
“The past two years have been exceptionally difficult for our industry and US Airways,” Parker told employees. He said the company was fortunate to have partners willing to help, but “we cannot continue to lose money indefinitely and fund our losses through financing and partner support.”
CreditSights analyst Roger King marveled at the ability of US Airways management to raise money.
“Everything is going against them,” he said, “and they’re still flying.”