chperplt
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ARLINGTON, Va. (May 17) - US Airways will ask the federal government to back roughly $1 billion in loans and ask employees to accept wage and benefit cuts of $950 million a year as it fights to prevent bankruptcy.
Airline executives outlined the plan Thursday to union leaders, warning that the carrier would likely seek Chapter 11 bankruptcy protection if it could not get the labor concessions and the loan guarantees. The loan guarantees are available through the $15 billion industry bailout approved by Congress after Sept. 11.
Details of the labor cuts weren't discussed, but they alone would represent roughly 25 percent of the company's personnel costs in 2001. Jerry Glass, the airline's senior vice president for human resources, said US Airways would go from the highest paid employees in the industry to about sixth or seventh.
Glass said the specific terms of the loan proposal are not final, but he acknowledged that the airline will likely have to offer the federal government the opportunity to buy a stake in the company.
Overall, the company's plan calls for $1.2 billion in cost reductions annually, meaning employees are being asked to bear about 80 percent of the reductions.
``There are a number of costs you can't do anything about. Fuel, landing fees - you can't control,'' said Glass. ``There are only limited areas where you can get cost reductions.''
Glass said the airline has no plans to lay off more workers or further reduce its capacity. Last year, the airline reduced capacity by 23 percent and laid off 11,000 of its 46,000 employees following Sept. 11.
``We intend to try to keep everybody employed,'' Glass said. ``Over time we want to grow the business.''
The $1 billion in loan guarantees is roughly what analysts had anticipated. The only other airline to seek the government loan support, was America West, which received $429 million.
As part of its deal, America West gave the government the option to buy one-third of that airline at a price of $3 a share.
Despite the steep concessions US Airways asked of employees, Karen Lascoli, representing US Airways' unit of the Association of Flight Attendants,said the presentation was ``very positive.''
``We're committed to helping this airline survive. We're not exactly sure what will be asked of us, so we have to be careful to committing to anything. ... But they gave a very convincing presentation.''
Lascoli said she liked that the plan focused not just on cutting costs, but also on increasing revenues through a big increase in regional jets and alliances with domestic and international carriers that would take advantage of US Airways' strength on the East Coast.
The plan, Glass said, is to strengthen the airline's three biggest hubs in Charlotte, Philadelphia and Pittsburgh and revitalize its business in Washington's Reagan Airport, New York's LaGuardia Airport and Boston. The last three cities form the bulk of US Airways' shuttle business, which caters to lucrative business travelers. That market has suffered in recent months as travelers have opted for car or high-speed trains instead.
The company wants to add another 150 regional jets. The smaller planes, which seat about 50 passengers, could be used to feed the airline's hubs and replace turboprop planes, which are unpopular with passengers, or larger more expensive jets.
The regional-jet issue is one that divides flight attendants and pilots. Flight attendants support their use, but pilots are concerned that they would be paid less to operate those planes. the pilots union agreed last month to expand the number of regional jets from 70 to 140, after lengthy, contentious negotiations.
Roy Freundlich, a spokesman for the Air Line Pilots Association, said he was disappointed that the plan does not outline exactly what concessions will be asked of each employee group. that information will come next week.
``We're keeping an open mind, but we need to see more details,'' he said. ``Our position in general is that if this plan is an attempt at making the mainline airline larger in the long run, then we'll support it.''
US Airways lost $2.1 billion, or $31 a share, on revenue of $8.3 billion last year.
Airline executives outlined the plan Thursday to union leaders, warning that the carrier would likely seek Chapter 11 bankruptcy protection if it could not get the labor concessions and the loan guarantees. The loan guarantees are available through the $15 billion industry bailout approved by Congress after Sept. 11.
Details of the labor cuts weren't discussed, but they alone would represent roughly 25 percent of the company's personnel costs in 2001. Jerry Glass, the airline's senior vice president for human resources, said US Airways would go from the highest paid employees in the industry to about sixth or seventh.
Glass said the specific terms of the loan proposal are not final, but he acknowledged that the airline will likely have to offer the federal government the opportunity to buy a stake in the company.
Overall, the company's plan calls for $1.2 billion in cost reductions annually, meaning employees are being asked to bear about 80 percent of the reductions.
``There are a number of costs you can't do anything about. Fuel, landing fees - you can't control,'' said Glass. ``There are only limited areas where you can get cost reductions.''
Glass said the airline has no plans to lay off more workers or further reduce its capacity. Last year, the airline reduced capacity by 23 percent and laid off 11,000 of its 46,000 employees following Sept. 11.
``We intend to try to keep everybody employed,'' Glass said. ``Over time we want to grow the business.''
The $1 billion in loan guarantees is roughly what analysts had anticipated. The only other airline to seek the government loan support, was America West, which received $429 million.
As part of its deal, America West gave the government the option to buy one-third of that airline at a price of $3 a share.
Despite the steep concessions US Airways asked of employees, Karen Lascoli, representing US Airways' unit of the Association of Flight Attendants,said the presentation was ``very positive.''
``We're committed to helping this airline survive. We're not exactly sure what will be asked of us, so we have to be careful to committing to anything. ... But they gave a very convincing presentation.''
Lascoli said she liked that the plan focused not just on cutting costs, but also on increasing revenues through a big increase in regional jets and alliances with domestic and international carriers that would take advantage of US Airways' strength on the East Coast.
The plan, Glass said, is to strengthen the airline's three biggest hubs in Charlotte, Philadelphia and Pittsburgh and revitalize its business in Washington's Reagan Airport, New York's LaGuardia Airport and Boston. The last three cities form the bulk of US Airways' shuttle business, which caters to lucrative business travelers. That market has suffered in recent months as travelers have opted for car or high-speed trains instead.
The company wants to add another 150 regional jets. The smaller planes, which seat about 50 passengers, could be used to feed the airline's hubs and replace turboprop planes, which are unpopular with passengers, or larger more expensive jets.
The regional-jet issue is one that divides flight attendants and pilots. Flight attendants support their use, but pilots are concerned that they would be paid less to operate those planes. the pilots union agreed last month to expand the number of regional jets from 70 to 140, after lengthy, contentious negotiations.
Roy Freundlich, a spokesman for the Air Line Pilots Association, said he was disappointed that the plan does not outline exactly what concessions will be asked of each employee group. that information will come next week.
``We're keeping an open mind, but we need to see more details,'' he said. ``Our position in general is that if this plan is an attempt at making the mainline airline larger in the long run, then we'll support it.''
US Airways lost $2.1 billion, or $31 a share, on revenue of $8.3 billion last year.
