As part of a new plan to cut costs and counter its low-fare rivals, US Airways is planning a "de-emphasis" in markets, such as Pittsburgh and Charlotte, that depend on connecting passengers.

That disclosure, made for the first time yesterday, came as the nation's seventh-largest airline reported a net loss of $177 million for the first quarter of 2004, improving on its numbers from a year ago but still far from the company's goal of sustained profitability.

A week after replacing David Siegel with Wall Street veteran Bruce Lakefield as chief executive officer, the Arlington, Va.-based carrier has embarked on a recovery plan involving unspecified, across-the-board cost cuts and an increase in East Coast operations, especially in high-traffic areas such as New York, Boston, Washington, D.C. and Philadelphia, where low-fare rival Southwest Airlines begins service next month.

The new strategy, approved by US Airways' board last week, is a reaction to the price pressures and revenue challenges presented by more efficient carriers that offer "point-to-point" service -- nonstop flights that take passengers from one major market to another. US Airways still relies largely on a more costly "hub-and-spoke" system that brings passengers to a major airport, where they connect with flights to their final destinations. To compete, it wants to become more like its smaller rivals by lowering costs, lowering fares and increasing its "point-to-point" flying in highly contested markets, perhaps with new planes.

Such moves probably mean a decrease in flying from Pittsburgh or Charlotte, two US Airways hubs that do not generate a lot of traffic from the people who start their trips locally. US Airways' local traffic in Charlotte is only 17.5 percent of its total traffic at the airport, and in Pittsburgh, it's 39.6 percent.

Ben Baldanza, US Airways' senior vice president for marketing and planning, explained the new strategy yesterday in a conference call with analysts. "We will still be a connecting airline, as we are today, but our percentage of traffic that comes from connections versus local passengers will change," he said. As the company does more flying in Philadelphia, Boston, New York and D.C., there will be a corresponding "de-emphasis in some of the areas that are today over-reliant on connecting traffic."

While Baldanza did not mention Pittsburgh by name, it was clear what he meant, said New York airline analyst Ray Neidl, who participated in the conference call. "I just don't see Pittsburgh being as big in the future as it is today," he said.

Baldanza "reinforced that" yesterday, Neidl said, adding, "that was the first time it has ever been mentioned."

US Airways, which employs about 8,000 people locally, has tied its future in Pittsburgh to a reduction in its debt obligations at the airport. Allegheny County Chief Executive Dan Onorato recently said he is willing to offer $30 million a year in airport debt relief; Onorato hopes to meet with airline executives soon and gauge their long-term interest in Pittsburgh, where US Airways has promised to maintain service through September.

Asked yesterday about Baldanza's comments, Airport Authority Director Kent George said, "They haven't given us any strategy and they haven't talked to us about anything they are going to do."

Lakefield, the airline's new CEO, declined yesterday to offer any specifics about where the company plans to cut costs, but he indicated that it could be across the board, perhaps from unions, aircraft lessors, bondholders and the federal government, which last year guaranteed almost $1 billion in loans used to lift US Airways out of bankruptcy.

The company's $177 million net loss in the first quarter was cause for optimism among executives and even some analysts, who had been predicting that the company would lose even more money than it did.

But everyone agreed that the results still underlined the need for more belt-tightening.

"While we are seeing year-over-year improvement, we clearly have more to do to ensure long-term success, and we must implement a new cost structure and a revenue plan that allows us to return to profitability," Lakefield said.

Before resigning under pressure due to his deteriorating relationship with union leaders, Siegel said for the company to survive it had to cut costs by 25 percent, or $1.5 billion, and that about half of the cuts would have to come from labor groups, which have already given up about $1 billion in annual concessions the past two years.

Lakefield, who agrees with Siegel's call for cuts but has not offered details, plans to meet with unions soon and explain to them the company's recovery plan. Thus far, only the pilots have agreed to talk about their contract.

"I don't want to lock myself into any specifics at this time," Lakefield said.

While the Arlington, Va.-based company did not show a profit in the first quarter, it continued to make improvements a year after emerging from bankruptcy. Its net loss of $177 million was down 37 percent from the first quarter of 2003, when US Airways recorded an operating loss of $282 million, excluding items associated with the company's completion of bankruptcy.

Operating revenue was up 10.9 percent, to $1.7 billion, passenger counts were up and the percentage of each mainline plane filled with passengers, or load factor, was the highest for a first quarter in the company's history, at 70.2 percent. Its overall costs were also up 5.9 percent due to rising jet fuel prices and the expenses involved in the launch of Pittsburgh-based MidAtlantic, but the cost of flying one seat one mile dropped 3.4 percent to 10.02 cents, excluding fuel. US Airways also ended the quarter with $978 million in unrestricted cash, reflecting the company's $250 million prepayment of a federally-backed loan in March.

"The company continues to make progress in reducing losses and improving cash flow," said airline Chief Financial Officer Neal Cohen. "However, our long-term success will be driven by our ability to achieve competitive costs and implement our transformation plan. It is simply stating the obvious that no business can sustain itself, compete and survive over the long term if it is not profitable, and our preference is to complete our restructuring on a consensual basis."

One other new disclosure yesterday involved Cohen, who was close to Siegel and has a provision in his contract allowing him to leave during the month of April now that Siegel has departed. Siegel is due to collect a $4.5 million severance payment, plus whatever else he is able to negotiate with the board. Cohen is also eligible to collect severance if he were to leave by this Friday. Lakefield, asked about that yesterday, said only that "we are in discussions about [Cohen's] role in US Airways."