US Airways to stop charging for onboard soda, coffee, bottled water

U.S. Airways, which had been the only major, domestic airline to charge for non-alcoholic beverages, said it was dropping the fees because it placed the company at a competitive disadvantage versus other major airlines.

However, the airline will still charge $7 per in-flight beer, glass of wine, or cocktail, the airline said. That's $8 if your martini is shaken, not stirred, like Mr. Bond's. James Bond. (Just kidding!)

Shares of US Airways (NYSE: LCC) rose 30 cents to $3.42 in Monday afternoon trading. The First Call FY 2009/ 2010 EPS estimates for LCC are $2.83 to $3.91.

Further, the company said it still expects to generate $400-500 million in revenue in 2009 from a la carte items, including baggage fees, which remain.

Stock Analysis: Like the other major carriers, U.S. Airways is not a buy here, on the argument that a likely 7-10% reduction in travel revenue from the recession will outweigh cost reductions stemming from increased efficiency and substantially lower jet fuel costs. The bitter/sweet bright side: the airline sector is no longer the worst sector in the U.S. [See: banking, auto sectors.] The unequivocal bright side: the airline sector's capacity cuts have put the major carriers in a better position to withstand the recession, and who knows? With cash flow improving, U.S. Airways may become a Buy in Q2. Stay tuned.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX. Lazzaro owns frequent flyer miles in American Airlines (NYSE: AMR.).