Airline to Focus More on Las Vegas

24 January 2005

By Chris Jones

In a year in which so many things went awry, Las Vegas remained one of 2004's few bright spots for America West Airlines.

On Friday, the Tempe, Ariz.-based carrier said it will increase its emphasis on this city in 2005 and beyond through expanded service on popular routes and new flights to several markets, including potential Hawaii routes as early as next year.

In a conference call that covered the airline's fourth-quarter performance, America West executives again decried the problems of high fuel costs and excess capacity in today's competitive global aviation industry.

America West's fourth-quarter loss was $49.7 million, or $1.38 per share, a significant downturn from 2003's fourth-quarter profit of $6.8 million, or 13 cents per share. The reversal was largely due to escalating fuel costs, which surged from $93.9 million in fourth-quarter 2003 to $150.7 million in the same period last year.

"Had fuel prices remained unchanged and all else been equal, we'd have been profitable in the fourth quarter," Chairman and Chief Executive Officer Doug Parker said.

For the year, America West lost $89.9 million, or $2.50 per share vs income of $57.4 million, or $1.27 per share, in 2003.

Despite those setbacks, America West still plans to grow its network in 2005 through the addition of 11 Airbus aircraft. Coupled with the recent decision to scale back underperforming transcontinental flights, Executive Vice President Scott Kirby said Las Vegas will see additional growth, particularly in the latter half of this year.

"Leisure demand is still very strong," Kirby said, adding Phoenix, Mexico and Canada could also see more flights in 2005. Still, America West plans to grow its network by just 2 percent to 4 percent this year, down from previous projected growth rates of 3 percent to 5 percent.

America West is Las Vegas' second-busiest carrier, trailing only Dallas-based low-fare rival Southwest Airlines. Through November, America West last year carried nearly 6.25 million local passengers, up 12.1 percent vs. the first 11 months of 2003.

Last year, America West added service between Las Vegas and 10 domestic markets, plus three in Canada and two in Mexico. This year's announced additions from McCarran International Airport include Albuquerque, N.M.; Boise, Idaho; Oklahoma City; as well as California's Bakersfield and Long Beach. Spokesman Carlo Bertolini said two more Las Vegas routes will be announced Monday.

Given its success in leisure markets including Las Vegas and the Mexican beach resorts of Los Cabos and Puerto Vallarta, America West could begin service to Hawaii by next year's first quarter, Executive Vice President and Chief Operating Officer Jeff McClelland said.

The carrier is now obtaining Federal Aviation Administration certification that would allow its Boeing 757-200 aircraft to fly to the islands or other overseas destinations, McClelland added, though he stopped short of naming specific service routes. Bertolini later said Las Vegas would be considered should America West pursue direct Hawaii flights.

Industry watchers reacted positively to the Jan. 16 announcement that customers of Southwest Airlines can, starting next month, travel to Hawaii through a code-share agreement with ATA Airlines. But Parker bristled Friday at the suggestion that his company's chief rival had won the race across the Pacific.

Parker cited America West's long-standing alliance with Hawaiian Airlines that allows code-share customers to participate in frequent-flier programs on either carrier, a perk unmatched by Southwest and ATA.

America West shares closed Friday's trading session at $4.30, down 38 cents or 8.12 percent.