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The Federal Aviation Administration on Wednesday proposed fines against two of the nation’s largest airlines, saying the airlines flew planes on hundreds of occasions in violation of FAA or airline safety standards. The FAA is seeking a $5.4 million fine from US Airways and a $3.8 million fine from United Airlines for unrelated violations.

The US Airways case involved the greatest number of planes – eight. The FAA alleges US Airways operated the eight aircraft on a total of 1,647 flights last fall and winter while the planes were in a potentially unsafe condition.

The FAA said it issued an AD requiring airlines to inspect Airbus A320 aircraft for possible cracking of a landing gear part. But US Airways operated two Airbus A320s on a total of 43 flights without complying with the ordered inspection. The airline also operated an Embraer 190 aircraft on 19 flights without performing an inspection to prevent a cargo door from opening during flight, according to the FAA. The remaining five cases involve the airline’s failure to follow its own maintenance procedures, the FAA said.

The United Airlines case involves one aircraft, a Boeing 737. According to the FAA and the airline, a pilot noticed a low fuel pressure indication while on a flight from Denver, Colorado, on April 28, 2008. The pilot shut down an engine and returned to the Denver airport. United mechanics who inspected the engine found that two shop towels had been used to cover openings in the oil sump area, instead of protective caps.

United Airlines parent UAL Corp. swung to a second-quarter profit on hedging gains, overshadowing a continuing fall in demand and revenue. UAL posted income of $28 million, or 19 cents a share, compared with a year-earlier loss of $2.74 billion, or $21.57 a share. Excluding hedging gains, the company posted a loss of $2.23 a share. Revenue decreased 25% to $4.02 billion. Load factor, or the percentage of available seats filled, fell to 82.5% from 83.2% as capacity cuts couldn’t outweigh the drop in demand. Revenue per available seat mile, considered the best basic measure of revenue for airlines, fell 20%.

The airline also announced that it will cut international capacity by another 7% for the last four months of the year.

Though United Airlines announced last week it will buy up to 150 new jets as it replaces its wide-body fleet, the carrier says it has no plans to purchase Boeing 747s or Airbus A380s, the largest commercial aircraft in the sky. Instead, United tells the Chicago Sun-Times that it is studying smaller, twin-engine models such as the Boeing 777, which offer greater fuel efficiency.

UAL Corp, the parent company of United Airlines, posted a fourth-quarter loss of $1.3 billion and said it would cut 1,000 jobs by the end of 2009. This is in addition to a series of layoffs announced in December. By the completion of all planned layoffs, the airline will have trimmed 30 percent of its work force. In the quarter, the company lost $1.3 billion, or $9.91 a share, as the company was hit hard from losses on fuel hedges, driven by dropping oil prices in the later part of 2008. In the fourth quarter a year ago, the company lost $55 billion, or 47 cents a share.

United Airlines (Chicago) has scrubbed a plan to replace complimentary hot meals with buy-on-board cold sandwiches and snacks on flights from North America to Europe. In a letter e-mailed to customers, United thanked fliers for their “direct, candid feedback,” adding: “we heard you and have decided not to move forward with the test of offering customers buy-on-board options in United Economy on certain trans-Atlantic flights.” United is going ahead with plans to replace hot meals in domestic business class with cold buy-on-board options.

The losses keep piling up for airlines, as three of the nation’s biggest carriers said Tuesday high fuel costs overwhelmed higher revenue in the quarter that ended June 30:

- United Airlines (Chicago) posted the biggest loss – $2.73 billion or $21.74 per share. United also expanded the number of jobs it plans to eliminate by the end of the year from 3,800 to 7,000.

- US Airways (Phoenix) rolled up a $567 million loss – $6.16 per share. Revenue rose 3 percent, but CEO Doug Parker also pointed to soaring fuel costs for most of his company’s financial woes.

- jetBlue Airways (New York) posted the smallest loss – $7 million or 3 cents a share, as revenue climbed 18 percent. JetBlue will shut down its operations in Ontario, Calif., because of rising costs.

American Airlines (Fort Worth) could be eliminating more than 6,800 jobs later this year as the carrier struggles to survive record fuel costs. AMR Corporation, the parent of American Airlines and regional carrier American Eagle, said that it will cut domestic service 11-12% by the fourth quarter, which becomes a systemwide reduction of 8% when including international flights. In a memo to all employees, AMR said the employment reduction will be commensurate with the capacity cuts. AMR has about 85,500 employees, which means an 8% decrease would be about 6,850 workers.

American’s announcement is the latest furlough announcement in the airline industry, which also is trying to raise fares and fees to cope with record fuel prices. Other announced staff cuts include 4,000 at Delta Air Lines (Atlanta), 3,000 at Continental Airlines (Houston), 2,550 at United Airlines (Chicago) and 1,700 at U.S. Airways (Phoenix).

United Airlines (Chicago) says that it is planning to lay off 950 pilots as it prepares to cut domestic capacity to offset soaring fuel prices. The layoffs would be about 15% of United’s 6,518 pilots. The carrier has said it plans to cut its staff by 1,400 to 1,600 as it aims to reduce domestic capacity by 14% in the fourth quarter.

According to Megan McCarthy, spokesperson for the airline, the initial notices for the layoffs will be sent out in mid-July, and will start taking effect in September, following into next year. She also said that the cuts announced were in addition to the job cuts for 1,600 salaried positions announced at an investor conference a week ago. Details on the cuts are yet to emerge.

A company statement said, “As we reduce the size of our fleet and take actions company wide to enable United to compete in an environment of record fuel prices, we must take the difficult but necessary step to reduce the number of people we have to run our business.”

Photo: United’s cuts will most likely come from the Boeing 737 fleet that is being downsized. (Photo Copyright Eric D Smith - Northern Exposures)

To major U.S. airlines, US Airways (Phoenix) and United Airlines (Chicago), are doing everything they can to survive in tough times. Both this week have announced changes that will affect the travelling public.

United, the first legacy carrier to implement a $25 fee to check a second bag, announced yesterday that they will be following American Airlines by charging a $15 fee to check a first bag. The new fee will start in August of this year. New bag-check fees, which have rankled the traveling public, are part of a broad effort by airlines to charge passengers for services that used to be included in the fare. “With record-breaking fuel prices, we must pursue new revenue opportunities, while continuing to offer competitive fares, by tailoring our products and services around what our customers value most and are willing to pay for,” John Tague, UAL’s chief operating officer, said in a statement. Earlier last week, United announced capacity and employee cuts to take effect later this year.

US Airways is following a similar line of thought as they impose a similar $15 fee for your first checked bag. Additionally, starting in August, the carrier will start charging coach passengers $2 for non-alcoholic drinks on flights, and has added an additional $2 to the cost of alcoholic drinks. US Airways has started taking a very serious look at the “pay-for-what-you-use” business model. “We must write a new playbook for running a profitable airline in this new and challenging environment,” US Airways Chairman and Chief Executive Officer William D. Parker said in a statement.

Separately on Thursday, US Airways said it will be eliminating 1,700 jobs and will return ten (10) leased jets to counter surging fuel bills. US Airways will be reducing its fourth-quarter domestic mainline capacity by 6-8%, having previously planned a 2-4% cut.

United Airlines is expected to announce plans to reduce its mainline fleet by another 70 aircraft by the end of 2009 and announce further job cuts on Wednesday. The carrier will drop 64 Boeing 737s by the end of next year, and also remove 6 Boeing 747s. United will also announce additional cuts of salaried and management workers, with cuts of unionized positions to follow later, beyond what was announced earlier in April. Also expected to be cut is the carrier’s domestic “low cost” service Ted. Ted’s 56 all-couch Airbus A320 aircraft will be re-introduced into the mainline fleet, some having first-class cabins restored.

The CEOs of United Airlines (Chicago) and US Airways (Phoenix) have told their employees that a combination of the two carriers won’t happen “at this time.” In a letter to his employees, Doug Parker, CEO of US Airways, said, “It is simply unlikely that anything will happen in 2008 as our industry continues to struggle with how to function in a world with $130 a barrel oil prices.” After meeting yesterday, the two carriers ended two months of merger talks.

A United Airlines (Chicago) flight from Hong Kong to Los Angeles made an unscheduled stop in Honolulu on Tuesday morning after a female passenger died aboard the aircraft en route. Cabin crew aboard flight 862 reported an unresponsive passenger and received permission to land at Honolulu International Airport. The woman was pronounced dead upon arrival. The Honolulu medical examiner’s office identified the woman as Hung Thi Thu Quach, 57, of Vietnam, but there was no immediate statement on the cause of death.

Mesa Air Group (Phoenix) said earlier today that it might be forced to file for bankruptcy protection if it loses a legal fight with Delta Air Lines (Atlanta). Should this occur, it would be the eighth airline to seek Chapter 11 protection or close down operations in the past five months, following Frontier Airlines (Denver), Skybus Airlines (Columbus), ATA Airlines (Indianapolis), and others, as they struggle with record fuel prices.

Mesa, which operates regional flights for Delta Air Lines, United Airlines (Chicago) and US Airways (Phoenix), has been in dispute with Delta since March, when the carrier told Mesa that it planned to terminate their partnership, accusing Mesa of failing to complete a specified number of flights. Mesa denied the allegation, and in April filed suit against them, saying the airline had breached their agreement. Earlier this month, Mesa filed a motion in the U.S. District Court for the Northern District of Georgia to prevent Delta from terminating the agreement. A court hearing is set for May 27, and Mesa said it expects a ruling when that is completed.

United Airlines (Chicago) just announced a new policy with regards to how their frequent fliers gain mileage. Prior to this, travellers who were on flights of less than 500 miles would be awarded 500 miles to their account. The carrier released this statement this afternoon:

To ensure that Mileage Plus miles earned toward elite status and award travel on United are aligned with actual miles flown, we are revising our base accrual policy. Beginning July 1, 2008, for flights of less than 500 miles, passengers will earn redeemable miles equal to the actual miles flown. Elite Qualifying Miles (EQM) will also be awarded based on actual miles. Elite Qualifying Segments (EQS) are not affected.

This new mileage accrual structure will apply to travel on or after July 1, 2008, regardless of when the travel was ticketed. Flights of less than 500 miles flown on or before June 30, 2008, will accrue Mileage Plus miles under the previous policy of a minimum mileage accrual per individual segment flown.

As other airlines have followed suit in the past with cost saving policies, it would not be surprising to see other airlines adopt this policy in the coming weeks.

Virgin America (San Francisco) today announced that it will seek government approval to serve Chicago O’Hare International Airport. Chicago would be the eighth city in the airline’s ever-growing network of service to primary airports in major urban cities. If successful, the carrier plans to offer four daily round-trip flights to both San Francisco and Los Angeles.

“Chicago is one of the nation’s top travel markets, a world-class city, and a perfect fit for our innovative, low-fare service,” said Virgin America President and Chief Executive Officer David Cush. “We want to bring Chicago travelers a better choice, with attractive fares and brand new planes that offer a unique, upscale flying experience – from leather seats to individual video touch-screens at every seatback. When more airlines compete, consumers win with lower fares and better service. We think that savvy Chicago travelers will find our high-value, low-fare service a breath of fresh air. The mayor, airport, and city have shown tremendous vision by investing in O’Hare’s future, with long-term investments, such as the new runway coming online this fall that will expand and modernize one of the world’s busiest travel hubs. We want to be part of O’Hare’s future.”

Virgin’s request may have started something of a controversy at the already congested airport. Once new landing rights are made available at O’Hare, the Federal Aviation Administration (FAA) has said it plans to give priority to new entrants. However, United Airlines (Chicago) and American Airlines (Fort Worth), which cut flights several years ago at the federal government’s request, have long contended that they should be given precedence for landing rights. Mary Frances Fagan, a spokeswoman for American Airlines, said, “We welcome all competition. We look forward to flying our customers to the hundreds of destinations that they don’t fly to.”

Photo: Virgin America currently serves seven destinations with new Airbus aircraft. (Photo Copyright Maciek Flis - 360° Spotter)

The Occupational Safety & Health Administration (OSHA) has proposed $215,500 USD in fines against United Airlines (Chicago) at O’Hare International Airport after alleging multiple serious and repeat violations of U.S. federal workplace safety standards. The agency selected the airline for inspection after reviewing occupational injury and illness data, which included ramp services, customer service areas, air freight, aircraft and ground equipment maintenance, building/facility maintenance, business operations, strategic procurement, medical facilities, and flight attendant operations. As a result of its inspection, OSHA issued forty-three (43) serious violations and four (4) repeat violations.

“Falls, electrical hazards and machine guarding issues, as well as energy lockout/tagout procedures, which are intended to prevent accidental start-up of machinery during maintenance, are problems that should not exist at any worksite,” said Diane Turek, director of OSHA’s Chicago North Area Office in Des Plaines, Ill. “They are problems that can be avoided if an employer is dedicated to protecting employees. Employers must remain dedicated to keeping the workplace safe and healthful, or face close scrutiny by this agency.”

An outside source close to both United Airlines (Chicago) and US Airways (Phoenix) says that the carriers are in very advanced talks and expect to announce within a couple of weeks that they will be merging. The two carriers have been in preliminary talks for weeks about possibly teaming up, although United had focused more recently on joining with Continental Airlines (Houston). United and US Airways reportedly stepped up their own talks after Continental caught United off guard by deciding not to pursue a deal to merge. No real details have emerged regarding the merger including the name or headquarters location of the combined carrier. It is believed, however, that as a significanly larger carrier, United would take the lead in those decisions.

United Airlines (Chicago) today announced that the airline posted a $542 million operating loss for the first quarter of 2008, or $4.45 per share. The loss was $305 million higher than the same period a year earlier, when the carrier lost $237 million. The loss, according to United, was driven primarily by a $618 million increase in consolidated fuel expense.

Photo: Two United Airlines jets land side-by-side at the airline’s San Francisco hub. (Photo Copyright khor)

United Airlines (Chicago) will be once again raising their fares in response to high fuel costs. The airline is increasing its domestic fuel surcharge by between $10 and $20 USD roundtrip. The fare hike, which went into effect late Tuesday, is on top of a separate jump in United fares last week which was also intended to offset fuel expenses. United expects to spend an additional $2 billion in fuel charges in 2008.

United Airlines (Chicago) has temporarily withdrawn its entire fleet of fifty-two (52) Boeing 777 aircraft until functional testing of the fire suppression system can be completed. The move is the latest in a series of temporary groundings by U.S. airlines in recent weeks following a Federal Aviation Administration (FAA) review of compliance with airworthiness directives. United released the following statement:

“As part of a regular review of maintenance records the company discovered that the functional test that checks the firing system on one of the five bottles in the cargo fire suppression system on the Boeing 777 was not performed and this was voluntarily disclosed to the FAA. United is in the process of checking this part of the system. This system is regularly tested as part of the pre-flight safety checks. These checks are related to compliance. United will not operate these aircraft until the tests are complete.”

Flights from London, Paris, and Frankfurt to the United States have already been cancelled, but the airline is expecting the impact of this move to continue to disrupt other flights as well.

Photo: United Airlines operates a fleet of 52 Boeing 777 aircraft. One is seen here departing Amsterdam. (Photo Copyright Aw Stam)