Cheap fares and high fuel prices continue to vex US Airways. The nation's seventh largest airline, which has been operating under bankruptcy protection since September, said its fourth-quarter loss more than doubled from a year ago, to $236 million, pushing its 2004 loss to $611 million. The net loss amounted to $4.30 a share, compared with a net loss of $98 million, or $1.82 a share in the same quarter a year earlier. Fuel costs for US Airways and its regional subsidiaries jumped 32 percent, to $322 million, the airline said. Meantime, average fare per mile dropped 12 percent, to 13.42 cents -- reflecting increased competition from low-cost carriers. A recent government survey showed that passenger fares at Philadelphia International Airport, where US Airways is jousting with Southwest, dropped the most at any major airport last year. Southwest will try to make further inroads into US Airways' territory when it launches service at Pittsburgh International Airport in May. US Airways' results were in line with most analysts' expectations, and were consistent with an industry in turmoil. The nation's six biggest carriers lost about $3 billion in the fourth quarter, pushing their annual losses to $9 billion and to $31 billion since 2001. Except for Southwest, most so-called low-cost carriers lost money in the quarter as fuel prices continued to hover just below record highs. Nevertheless, Chief Executive Officer Bruce Lakefield continued his optimistic drumbeat about US Airways' future. "Although the industry still faces challenges,'' he said, "we are actively managing those issues and working to build an airline that can be successful in an operating environment of lower revenue and sustained high fuel costs.'' Lakefield and other US Airways executives have said that $1.1 billion a year in labor savings, a new loan agreement with the Air Transportation Stabilization Board and lower aircraft lease terms give the Arlington, Va.-based carrier a chance to successfully emerge from bankruptcy reorganization in June. However, Ray Neidl, senior analyst at Calyon Securities in New York, said the latest financial results show that US Airways still has work to do. "They have to get their cost structure down,'' Neidl said. "Their CASM is still too high.'' CASM, an acronym for cost per available seat mile, is an industry measure of operating efficiency. US Airways said its cost per available seat mile, excluding volatile fuel prices, declined to 8.79 cents in the fourth quarter, a 14-percent improvement over the same period a year ago. The improvement reflects a 21-percent pay cut a bankruptcy judge imposed on the airline's union workers in October. US Airways said that its labor costs fell by 22 percent, to $518 million, in the fourth quarter. Labor costs will decline further this year, as the effects of new labor agreements kick in. In spite of labor gains, US Airways' cost per available seat mile of 8.79 cents is still over 30 percent higher than Southwest Airlines' cost of about 6.7 cents. Mike Boyd, an Evergreen, Colo., aviation analyst, was sanguine about US Airways' results. Considering high fuel costs and hundreds of thousands of dollars in costs to clean up the Christmas baggage breakdown in Philadelphia, "It's not as disheartening as it looks,'' he said. Still, he agreed that US Airways needs further belt-tightening on its operational costs if it hopes to become a profitable carrier again.

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