America West Holdings shareholders got their chance Tuesday to spout off about merger talks with US Airways, with jobs the main issue. The annual meeting in Phoenix yesterday packed the room with stockholders, including many employees. Many said they believe a merger would cut America West employment -- a possibility, given that the low-fare carrier's work force tends to be much less senior than US Airways'. "I'm entitled to know what's going on with this merger," shouted one stockholder, who said he owned more than 60,000 America West shares. "What's going to happen to the employees?" Chief Executive Officer Douglas Parker told those gathered at the meeting -- broadcast on the Internet -- that he could not comment about merger discussions "until either a deal is reached or talks stop." But shareholders who are employees still asked about possible cuts to America West's 14,000-member work force. A woman who identified herself as a gate agent of five years said: "Seniority is a real issue. Factor that in, so that if we do merge, these (US Airways) employees don't move in here and take our jobs away." The meeting ended with the irate shareholder shouting at Parker: "You can't look these (workers) in the face and say their jobs will be there. There's duplication between USAir and America West, and people are going to lose their jobs." Parker responded: "I'm not going to let you stand up here and tell my employees they're going to lose their jobs when that's not true." Parker said he has tried "very hard to be open and candid" about merger comments but is constrained by securities regulations. He did say he is "hopeful" a decision will be made "in the near future." One factor that could tilt America West more toward a merger is the progress that US Airways made in 2004 over its peers in cutting costs, according to government data released yesterday. "They bucked the (cost) trend against almost all their competitors," said David Beckerman, director of consulting services for BACK Aviation Solutions in Washington, D.C. Much of US Airways' $1.1 billion in labor-cost cuts during bankruptcy came at year-end, he said. Figures from the U.S. Bureau of Transportation Statistics show that US Airways reduced its costs per available seat mile to 15 cents in the fourth quarter from 15.9 cents a year earlier. American and Southwest airlines were the only other carriers in 2004 to reduce their per-mile costs. Overall, average per-mile costs for the seven-largest legacy carriers' average per-mile costs increased to 13.7 cents from 12.3 cents, mostly due to fuel costs that have doubled. US Airways offset some of that spike with lower labor costs, but they were still far from the 8.8-cent average of the seven low-cost carriers, the government said. On the revenue side, every one of the 14 carriers analyzed by the agency (except for upstart Spirit Airlines) had a year-over-year drop in so-called yields -- or revenue per passenger mile. It fell at US Airways from 14.8 cents to 12.8 cents, which was still high enough to out-rank all but Northwest. Beckerman credits US Airways' traditional presence at small markets in the East, where fares remain high because of little competition. But the airline struggles with fare pressure from discounters in several large markets. Many business routes from Philadelphia, for instance, are taking a fare beating from Southwest, he said. "Still, US Airways did get its costs down, and that's one of the things America West has noted," said Beckerman of US Airways' intended merger partner. America West's costs also rose -- to 8.6 cents in the fourth quarter from 7.8 cents the year earlier. The airline lost $89 million last year, after posting a profit in 2003. And this year, the carrier faces fuel costs roughly $180 million higher than year-ago levels. Like most other carriers, America West's yields also declined last year, largely because of persistent over-capacity in the industry. "There are too many seats chasing too few customers," said Parker. The airline industry is poised to lose another $5 billion this year, on top of over $30 million lost since 2001, he said.

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