America West Widens Discounts; Analysts Skeptical

America West Airlines Inc., the struggling Phoenix-based carrier, said Monday that it will accept discount fare coupons offered by other airlines and will cut an additional $10 from the ticket price.

Analysts said the move shows the carrier’s anxiety about its ability to draw enough passengers.

America West, which has operated under Chapter 11 bankruptcy protection since June, said it expects the new program to boost its passenger traffic.

But analysts said the discount policy reveals that America West is unsure about booking seats as the industrywide slump drags into the fall.

“If America West was looking at solid bookings, it wouldn’t feel compelled to match and exceed competitors’ coupons,” said Samuel Buttrick of Kidder Peabody.

Glenn Engell at Goldman Sachs, added, “This shows they can’t keep seats filled without the additional discounts (because) passenger demand is just not there.”

America West reported its August load factor, the percentage of seats filled, at 69%, up from 67.9% in August, 1990, which is among the highest in the industry.

But analysts said it is more important for America West, and the industry as a whole, to improve profit per passenger than simply to increase passenger traffic.

“It’s not a difficult task to fill up an airplane when you’re giving the seats away,” Buttrick said.

Some analysts said the ticket discounting war is not the right prescription for the ailing airlines.

“A much stronger economy and stronger industry pricing is what will help America West and the industry as a whole, not higher load factors,” said Dean Witter’s Mark Daugherty.

The airline said it would accept its competitors’ discounts with the same restrictions imposed by the original carrier. These coupons typically offer $25 to $100 off on a flight. America West said the reduction cannot be used with other promotional or special-offer fares.

The unorthodox discount program comes less than a week after a U.S. Bankruptcy Court approved a $155-million financing package for America West and a joint marketing alliance with NWA Inc.’s Northwest Airlines.

The company said Wednesday that Air Canada’s affiliate, GPA Group, will provide $35 million and that an additional $20 million will come from Northwest.

The remaining $100 million will be generated by deferred payments through Dec. 1 from its aircraft providers.

“The financing buys them some time, but not loads of time,” Engel said.