=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/06/09/f= inancial1412EDT0631.DTL --------------------------------------------------------------------- Wednesday, June 9, 2004 (AP) AP Centerpiece: Airlines, squeezed by high fuel prices, focus again on cons= ervation BRAD FOSS, AP Business Writer (06-09) 11:14 PDT (AP) -- Pilots for Ted, United Airlines' low-fare carrier, flew 14 mph slower at cruise altitude over the Memorial Day weekend. At American Airlines, planes flying trans-Atlantic flights now carry less emergency fuel, to lighten their loads. And at JetBlue Airways, pilots are using one engine instead of two to ta= xi along congested runways. With high oil prices stifling the airline industry's recovery, U.S. carriers are finding ways to cut back on the amount of fuel they use, placing an emphasis on fuel efficiency not seen since the 1980s energy crisis. Some carriers said they recently lowered their fuel-burn rate in the air and on the ground by as much as 3 percent on certain routes. That is not nearly enough to counter the industry's anticipated loss of $3 billion in 2004, but the amount saved is not chump change either for a business that spends roughly one out of every seven of its pennies at the pump. "That money goes right to the bottom line. That's why we're being so aggressvie," said Steve Forte, senior vice president of flight operations at UAL Corp.'s United Airlines. The bankrupt carrier aims to trim its anticipated $3 billion jet fuel bill this year by 0.5 percent by focusing sharply on efficiency. United's low-fare unit, Ted, reduced the maximum flying speed of its planes from 530 mph to 516 mph over the Memorial Day weekend, saving about 3,000 gallons of fuel while sacrificing "very little" on its on-time performance, Forte said. United is considering making the change fleetwide. The relative fuel efficiency of any airline depends mostly on the age of its planes, the length of its routes and the number of seats sold per flight. While critical, these factors cannot be easily, or inexpensively, changed. But there are plenty of rather simple ways for airlines to burn less fue= l. One well-known strategy is to carry less weight. To that end, American Airlines, the nation's largest carrier, in late May began flying trans-Atlantic flights with half as much reserve, or emergency, fuel in its tanks. This lightens the load AMR Corp.'s jetliners need to shuttle back and forth -- each gallon of jet fuel weighs 6.7 pounds -- and the move is expected to save the Fort Worth, Texas-based company about $10.5 million in 2004. With authorization from the Federal Aviation Administration, American now flies to Europe with a fuel reserve of 5 percent instead of 10 percent. Several other carriers, including United and Continental Airlines Inc., are seeking similar FAA authority. "It still leaves us plenty of room for safety," airline spokesman Tim Wagner said. American is also reducing the amount of reserve fuel on domestic flights. The FAA requires pilots to plan for 45 extra minutes of flying in case of delays or the need to divert to another airport. But American's pilots last year carried enough reserve fuel, on average, for 99 minutes of extra flying. The company's pilots, who make the final decision about how much fuel they need for each flight, have recently gotten that figure down to 90 minutes, producing about $19 million in savings for the year, Wagner said. Other carriers have slimmed down by pulling heavy ovens and serving trays off of flights where no hot food is served, and by reducing the amount of water and ice they carry. "I think that $40 oil is a wake-up call," said Gary Kelly, the chief financial officer at Southwest Airlines Inc., which is in better financial shape than most airlines because it has hedged 80 percent of its fuel costs in the mid-$20-a-barrel range. Even so, "the opportunity to reduce our fuel costs is still there," said Kelly, who estimated Southwest would improve its fuel efficiency by 1 percent a year through 2006, excluding the impact of new planes being delivered during that period. In addition to flying at slower speeds and encouraging pilots to reduce their fuel-reserve margins, Southwest has recently lowered the fuel consumption of its Boeing 737 jets by an additional 3 percent to 4 percent by placing extensions, designed to reduce drag, on the wingtips. Other steps airlines are taking before and after flights to reduce fuel spending include: * Using one engine while taxiing on runways. * Plugging into electric generators at terminals to keep planes powered between flights. * Filling up their planes tanks in cities where prices are lowest (so lo= ng as the extra weight does not undermine the benefit gained by purchasing cheaper fuel). This isn't the first time airlines have tweaked operations in response to higher fuel costs. Serious attention was paid to fuel efficiency after the oil crises of the mid-1970s and early '80s. Today the industry is far more fuel efficient due to better engine designs, lighter raw materials and more sophisticated computer programs for planning flight routes. Boeing's next jet, the 7E7 Dreamliner, is as much as 20 percent more fuel-efficient than its 767 models, which date from the 1970s. Overall, the industry is 40 percent more efficient than it was 20 years ago, according to a recent analysis by airline consultants at Unisys. "During the first and second fuel crises ... airlines went on frenzied searches for ways to save fuel," Michael Roach, managing director of Unisys R2A's Transportation Management Consultants, said in a recent report. "In recent years we believe many have become a little lax." With the spot price of jet fuel above $1 a gallon in New York, a 25 percent increase from a year ago, American expects its fuel costs to run $600 million to $700 million higher than last year and United puts the figure at $750 million. Repeated efforts to pass along higher fuel costs to travelers have failed due to stiff airfare competition. ---------------------------------------------------------------------- Copyright 2004 AP