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US Airways and Virgin

US Airways CEO David Siegel held a conference call yesterday with all employees telling them that, in short, unless manna falls from heaven, they are screwed. Siegel noted that the airline needs to drop its cost per seat mile from 10 cents to a JetBlue-like 6 cents per mile, and that half of this reduction will come from unions, most of which don’t want to negotiate. A 40% reduction in seat costs is as likely as me spinning straw into gold. Siegel then went on to blame Southwest’s entry into Philadelphia for the airline’s woes. This is like Martha Stewart blaming her troubles on “the media.” Southwest is not the problem, costs are the problem.

US Airways may find that manna from heaven, though, in the form of Richard Branson. The Virgin mogul suggests obliquely that he may launch his Virgin USA by acquiring some part of US Airways. Interesting.

Speaking of Virgin, the airline announced a rather aggressive expansion schedule for 2005 including new flights from London to the Bahamas, Australia and Cuba. Yes, Cuba. Everyone is allowed to travel to Cuba except Americans. That embargo sure seems to be working!

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