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Fuel costs land US Airways a first-quarter loss

Although US Airways Group Inc. swung to a first-quarter loss because of spiraling jet fuel prices, the region's dominant airline said yesterday that it made great performance strides in two areas of customer complaints: on-time flights and lost baggage in Philadelphia.

Although US Airways Group Inc. swung to a first-quarter loss because of spiraling jet fuel prices, the region's dominant airline said yesterday that it made great performance strides in two areas of customer complaints: on-time flights and lost baggage in Philadelphia.

"We've made huge operational progress in Philadelphia," US Airways president Scott Kirby told analysts in a conference call. Kirby credited a new headquarters management team in Philadelphia, employees, and "great cooperation" with Mayor Nutter's office and the city-run aviation department.

Kirby said on-time arrivals at Philadelphia International Airport improved by 16 percentage points in the quarter ended March 31 compared with a year ago. "Our on-time departures improved 23 points year over year, and our mishandled-baggage ratio declined by 30 percent," he said.

Kirby said operationally the airline had its "best quarter since the merger" with America West in 2005, with "top on-time performance" among major airlines "across the industry."

"For the quarter, US Airways had on-time performance of over 73 percent, about 16 points higher than the same time in 2007," said chief executive officer Doug Parker. That's 7 or 8 points higher than the industry average, he said.

The Tempe, Ariz.-based carrier, whose principal international hub is Philadelphia, said international service will account for about 20 percent of operations this year, 23 percent next year, 26 percent in 2010, and 29 percent in 2011.

"Much of that growth is occurring in Philadelphia," Kirby said, noting the airline is "making progress" in getting additional gates at the Philadelphia airport.

US Airways said it lost $236 million for the quarter, or $2.56 a share, compared with a profit of $55 million, or 70 cents a share, a year earlier. Revenue rose to $2.84 billion from $2.73 billion a year ago.

Excluding $3 million in special items, the net loss was $239 million, or $2.60 a share. Analysts on average polled by Thomson Reuters expected a loss of $2.64 a share on revenue of $2.84 billion. Earnings estimates typically exclude onetime items.

"Oil is causing significant financial turmoil and the need for action in our industry," said Parker.

If fuel prices had stayed about the same as last year's first quarter, fuel costs would have been $260 million lower.

US Airways said it is taking steps to boost revenue and cut costs by trimming capacity (the number of seats for sale), raising some fares, and reducing capital expenditures by $75 million this year.

The airline has started charging passengers who check a second bag, and for aisle and window seats near the front of the coach cabin.

It also has increased some fares to counter rising fuel costs. For example, on flights of less than 500 miles, the airline is no longer offering non-sale one-way fares that are less than $69.

Shares closed up 81 cents, or 12.9 percent, to $7.06 on the New York Stock Exchange.