INTERVIEW-UPDATE 1-US Airways has no plans to cut U.S. capacity
* Business travel weak but modest rebound seen
* Prepared for higher oil prices
* Seeks further airline sector consolidation
(Adds comments, background)
LOD, Israel, July 8 (Reuters) - US Airways Group Inc (LCC.N) has no plans for further downsizing, despite capacity cuts by rivals and falling travel demand in the United States, the airline's chief executive said on Wednesday.
"We are pretty happy with our fleet right now and have no plans to reduce capacity any further," Doug Parker said in an interview with Reuters after a news conference to mark the airline's new Philadelphia-Tel Aviv route.
"If anything, we will have a modest expansion internationally," he said at Israel's Ben-Gurion International Airport near Tel Aviv.
Hurt by the economic downturn that has hit travel demand, many carriers have responded with sweeping capacity cuts. US Airways has said it would cut its 2009 mainline capacity by 4 percent to 6 percent, but the carrier has little room for more downsizing because it is near the minimum capacity required by its pilots' contract.
Last month, however, US Airways President Scott Kirby signalled a willingness to trim capacity on transatlantic routes and some domestic routes.
Delta Air Lines (DAL.N) and AMR Corp's (AMR.N) American Airlines said last month they would continue to slash capacity this year. Other carriers were expected to follow.
Parker said leisure travel in the United States was strong, helped by lower fares. Lucrative business travel remains weak.
TOO EARLY
"We are starting to see some modest signs of recovery (in business travel) but it is too early to call it a real recovery until we see it sustained and more pronounced," Parker said. "It certainly feels as if we bottomed some time ago and now we are just waiting for it to recover, which it will.
"They (companies) won't defer travel for extended periods of time," Parker said. "It will eventually come back but not because of anything we do."
Parker said US Airways was prepared for the worst by continuing to streamline operations. He said the airline had built up a cash balance that was as strong or stronger than its peers.
US Airways has no plans to resume hedging its fuel costs despite rising global oil prices, Parker said, citing the industry getting burned when oil prices plunged in late 2008.
"If indeed oil prices continue to rise that's probably because the economy is coming back, which is good," he said.
Parker, long an advocate of industry consolidation and who engineered the merger of US Airways and America West to form the current US Airways, said fragmentation remains a key problem.
He said over time the sector will consolidate into three large networks from the current five in the United States, though financing is hard to come by for the time being to make that happen.
When it does, Parker would like US Airways to be a participant. "If the industry consolidates and US Airways is not part of it, it is better than an industry that doesn't consolidate, but I happen to believe US Airways is better off participating."
(Additional reporting by Kyle Peterson; Editing by David Holmes)
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