US Airways (NYSE: LCC) is trimming 600 ground jobs and closing other services in an effort to cut costs. The airline had hoped not to cut this many positions, anticipating that resignations and departures would do the hard work for it. But employee attrition fell sharply from last year – probably because this isn't exactly the best market for job hunting. Unfortunately, the same reasons that cause employees to stay force US Airways to cut them loose.

At nine airports, US Airways is moving to outside contractors for ramp work. The Las Vegas US Airways Club will close and its staff cut. Also, the walk-up ticket counter at the airline's Tempe, AZ headquarters is on the chopping block.

US Airways flight number 1549 from Laguardia to Charlotte went down around 3:30 p.m., crashing in the Hudson River near 57th Street in New York City. The plane is floating and rescuers are on the scene; it looks as if most of the 148 passengers and crew are being rescued via life rafts. On the news, US Airways (NYSE: LCC) stock was (surprisingly) up 16 cents to $7.55.

Updates: According to an FAA spokesperson, the plane may have been hit by birds. And reports are that everyone survived the crash (which was in shallow water); passengers didn't even get wet.

USA Today's Ben Mutzabaugh had an interesting Q&A session with Richard Branson, founder of the Virgin Group and Virgin Atlantic Airways, on last week's inaugural flight from New York JFK Airport to San Francisco. Reading Branson's description of the new Virgin flights made me want to book a flight to San Fran immediately.

What interested me from the start of the interview was one of things that Branson said would set Virgin America apart from the other U.S. carriers, something he planned to introduce called "premium economy class." He described this as seating that would be "for people who want more legroom but can't afford first class." Mind you that the most expensive first-class tickets Virgin America has right now are approximately $650, but who wants to pay that for a flight when you can have "premium economy class?"

A quick check on Virgin Atlantic's website, because Virgin America has yet to initiate this service, and they show me that premium economy seating has 38 inches of leg room, compared to the standard 33 inches in economy seating, and a seat width of 21 inches. This is has to be a dream! Once this "premium economy class" comes to Virgin America, I'm certainly going to think of using them for my next flight. More space for less money, it's an amazing concept. I just hope they can last that long in the States with Northwest Airlines (NYSE: NWA), AirTran (NYSE: AAI), Southwest Airlines (NYSE: LUV), US Airways (NYSE: LCC), JetBlue Airways (NASDAQ: JBLU), United Airlines (NASDAQ: UAUA) and all the other U.S. carriers competing for the same ticket.

As of today, there's a new airline in the skies: Virgin America. That's right folks: British Billionaire Richard Branson has expanded his Virgin Atlantic fleet across the pond. The new San Francisco-based start-up will use a fleet of Airbus A320's to fly two routes: San Francisco to J.F.K in New York and San Francisco to Los Angeles International.

While Virgin America will only open with those two routes, they plan on ramping its schedule fast. In the next three months, Virgin will add Las Vegas and Washington Dulles to the schedule and move up to a total 10 U.S. destinations a year from now. The fleet plans to service 30 destinations within the next five years.

MOST NOTEWORTHY: US Airways (LCC), Cigna Corp (CI), Gentex Corp (GNTX) and China Life Insurance (LFC) were today's more noteworthy upgrades:

• UBS upgraded US Airways (NYSE: LCC) to Neutral from Reduce based on valuation.

• Cigna Corp (NYSE: CI) was upgraded to Neutral from Sell at Banc of America to reflect the company's market share gains and share buybacks.

• Banc of America also raised Gentex Corp (NASDAQ: GNTX) to Buy from Neutral to reflect increased penetration of the company's new rear-camera display product.

• Deutsche Bank upgraded shares of China Life Insurance (NYSE: LFC) to Hold from Sell on valuation and the continued strong equity markets...

OTHER UPGRADES:

• Morgan Stanley raised DirecTV Group (NYSE: DTV) to Overweight from Equal Weight.

• Citigroup upgraded Sempra Energy (NYSE: SRE) to Buy from Hold.

• Acorda Therapeutics (NASDAQ: ACOR) was upgraded to Buy from Neutral at Banc of America.

• Merrill Lynch raised Citadel Broadcasting Corp's (NYSE: CDL) rating to Buy from Neutral.

• CyberSource Corp (NASDAQ: CYBS) was upgraded to Buy from Accumulate at ThinkEquity.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Circuit City Stores (CC), select airline stocks and General Electric (GE) were today's noteworthy downgrades:

• Citigroup downgraded shares of Circuit City Stores NYSE: CC) to Hold from Buy and lowered their target to $17 from $26 following management's second guidance cut in one month; the firm thinks there is more bad news to come. The electronics-retailer was also downgraded to Market Perform from Outperform at Raymond James and to Neutral from Buy at Robinson Humphries. Circuit City was cut to Sell from Hold at Soleil.

• UBS downgraded six airline stocks on fuel price concerns and their belief that demand may fall as economic growth slows in the domestic market. Downgrades are as follows: AMR Corp. (NYSE: AMR), UAL Corp. (NASDAQ: UAUA) and U.S. Airways Group (NASDAQ: LCC) were downgraded to Reduce from Buy; Southwest Airlines Co (NYSE: LUV) and Continental Airlines (NYSE: CAL) were downgraded to Neutral from Buy; JetBlue Airways Corp (NASDAQ: JBLU) was downgraded to Reduce from Neutral.

• General Electric (NYSE: GE) was removed from Goldman Sachs' Americas Conviction Buy list on valuation.

OTHER DOWNGRADES:

• Prudential expects Sprint Nextel Corp's (NYSE: S) company-specific problems to continue and weigh on shares and downgraded the phone-giant to Underweight from Neutral.

• Banc of America downgraded shares of LSI Corp (NYSE: LSI) to Neutral from Buy.

• Buckingham cut Best Buy Co (NYSE: BBY) to Neutral from Strong Buy.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Nortel Networks Corp (NT), Bristol-Myers Squibb Co (BMY) and the select airliners were today's most noteworthy downgrades:

• Goldman cut Nortel Networks (NYSE: NT) to Sell from Neutral as the firm believes shares fully discount a successful execution on the cost restructuring.

• HSBC downgraded Bristol-Myers Squibb (NYSE: BMY) to Underweight from Neutral.

• JP Morgan sees few catalysts to drive airline shares higher and has downgraded the following stocks:

• AMR Corp (NYSE: AMR) and US Airways Group, Inc (NYSE: LCC) to Neutral from Overweight; Alaska Air Group, Inc (NYSE: ALK) and UAL Corp (NASDAQ: UAUA) to Underweight from Overweight; Continental Airlines, Inc (NYSE: CAL) and JetBlue Airways Corp (NADAQ: JBLU) to Underweight from Neutral.
  

OTHER DOWNGRADES:

• Keefe Bruyette downgraded Countrywide Financial Corp (NYSE: CFC) to Underperform from Market Perform, citing the impact of tighter credit standards for the move.

• OfficeMax Inc (NYSE: OMX) was cut to Underperform from Peer Perform at Bear Stearns.

• Matrix USA downgraded PepsiCo, Inc (NYSE: PEP) to Hold from Buy on valuation.

• Merrill Lynch downgraded Dean Foods Co (NYSE: DF) to Sell from Neutral.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MAJOR PAPERS:

• A full page advertisement by CVS Corporation (NYSE: CVS) in this morning's Wall Street Journal (subscription required) warned Caremark Rx Inc (NYSE: CMX) shareholders that their "[investments] would be at risk" under Express Scripts' (NASDAQ: ESRX) proposal and recommended the CVS/Caremark merger. Also in the Journal:
• Investors at Clear Channel Communications Inc (NYSE: CCU) believe they are being short changed and have started a showdown with private equity buyers.
• The NYSE Group Inc (NYSE: NYX) and the Tokyo Stock Exchange are expected to announce an alliance.
• US Airways Group (NYSE: LCC) may increase its offer for Delta Air Lines (OTC: DALRQ).
• The Financial Times (subscription required) featured articles on News Corporation (NYSE: NWS) and Corus Group ADS (NYSE: CGA).
• News Corp's MySpace is close to launching local versions in Canada and Mexico.
• Tata Steel is expected to top CSN's offer for Corus Group at a takeover auction on Tuesday.

OTHER PAPERS:

• USA Today wrote that two years ago, Verizon Communications' (NYSE: VZ) Verizon Wireless turned down the opportunity to be the exclusive distributor of the iPhone in the U.S. because of Apple Inc's (NASDAQ: AAPL) financial terms and other demands.
• Investor's Business Daily's "New America" column mentioned Universal Stainless & Alloy Products (NASDAQ: USAP) positively, writing that Universal is looking to expand abraod with little foreign competition. The specialty steel products company focuses on the aerospace and power industries and named Boeing Company (NYSE: BA) as a key customer.

AMR Corp (NYSE:AMR), parent of American Airlines, Wednesday reported its first annual profit since 2000, posting Q4 earnings of 7 cents per share. That may not sound like much, but the airlines have weathered a recession/overcapacity-driven slump. Consider: In Q4 2005 AMR lost -$3.46 per share, or $600 million. For 2006, AMR earned 98 cents per share, up from a loss of -$5.18 per share in 2005.

With excess capacity reduced, the U.S. economy growing, and travelers acclimating themselves to the travel safety/security requirements of the new era, legacy carriers like AMR have slowly crawled their way back to profitability. Further, if fuel costs - - which have started to moderate - - remain at tolerable levels, airline earnings should increase again in 2007.

Investment Analysis: AMR, currently trading at around $39, remains a high-risk stock not suitable for conservative- or moderate-risk investors. However, if your portfolio can tolerate a high-risk, cyclical stock, consider adding a half-position of AMR. Buy 50 shares if you typically buy 100 shares; 250 if you buy 500.

U.S. stocks rallied as investors ignored higher interest rates as oil closed below $54 a barrel. Crude oil closed down 3.59% to $53.64. The Dow was up 0.20%, the NASDAQ 100 was up 0.60%, the S&P 500 was up 0.18%, and the 10 year bond rose to 4.682%. The Volatility Index S&P 500 Options-VIX was down .31 to 11.60.

• US Airways Group Inc.' (NYSE: LCC) option implied volatility is at 49 into US Air raising its bid for Delta Air Lines (OTC: DALRQ). US Airways increased its proposed offer of merging with Delta, which is currently operating under bankruptcy protection. US Airways is offering $5 billion in cash and 89.5 million in shares of stock. US AIrways is recently up 1.26 to $59.16. US Airways overall option implied volatility of 49 is near its 26-week average, according to Track Data, suggesting non-directional risks.
• Las Vegas Sands Corp.' (NYSE: LVS) option volume, implied volatility and share price are all up on the right to develop Hengqin Island. Las Vegas Sands, the operator of the Sands Macau and Las Vegas Sands, is recently up $10.22 to $102.68. Jefferies said "after speaking with management today we learned that Las Vegas Sands was officially granted the right to develop on Hengqin Island, as we expected." Jefferies added "we currently value the project at $34 from the real estate development to be built over the course of 11 years." Las Vegas Sands call option volume of 20,530 contracts compares to put volume of 14,794 contracts. Las Vegas Sands February option implied volatility of 44 is near its 26-week average of 41, according to Track Data, suggesting larger price fluctuations.
  

Option volume leaders today were: Applied Materials Inc. (NASDAQ: AMAT), Research In Motion Ltd. (NASDAQ: RIMM), Apple Inc (NASDAQ:AAPL), and Advanced Micro Devices Inc. (NYSE: AMD).

Options analysis provided by Paul Foster, options strategist for Theflyonthewall.com.