A320 EOW
Aug 16, 02, 8:52 am
http://www.pittsburghlive.com/x/s_86297.html
US Airways vows to keep hub
By Thomas Olson
TRIBUNE-REVIEW
Thursday, August 15, 2002
Pittsburgh International Airport will remain a strong hub for now-bankrupt US Airways, largely due to a new regional commuter carrier it is creating that will be based here and start flying by mid-2003, Chief Executive David Siegel said Wednesday.
Siegel met with local officials and business leaders at the airport yesterday morning to outline what US Airways' recent Chapter 11 petition means to its hub operations and future flights. He made similar visits to Philadelphia and Charlotte, N.C., on Tuesday.
In a nutshell: US Airways will become smaller but stronger.
"I'm here in Pittsburgh to reaffirm our commitment to this hub and to this community," said Siegel, who became CEO last March.
"It will be business as usual for the airline," he said. "The bankruptcy process will be relatively short-lived, and our customers will not notice any change."
The CEO expects US Airways to emerge from bankruptcy protection in about six months.
MidAtlantic Airways, the commuter airline created by US Airways in May, will fly as many as 465 regional jets. The 50- to 70-seat aircraft will replace mainline jets that seat at least 120 passengers.
US Airways now operates more than 300 large mainline jets. But too many of them fly too often with too many empty seats ? a capacity issue that smaller jets should alleviate.
"We see US Airways as a regional carrier with a focus on the eastern U.S.," said Siegel.
In addition, while US Airways will still fly to all 200 of its current destinations, it is likely to trim the number of flights. US Airways will place "a significant order in the very near future" for regional jets, said Siegel.
The CEO expects MidAtlantic over time to hire between 400 and 500 people from among those on furlough from the parent company, US Airways. It laid off roughly 1,200 workers in the region after Sept. 11.
"The progress (US Airways) has made in just a short time is remarkable," said Allegheny County Executive Jim Roddey of US Airways' fast-track bankruptcy proceeding.
Roddey said "all the experts" think US Airways should return to profitability by 2004. The carrier, America's seventh-largest, lost $517 million in the first half of this year.
"When they come out of bankruptcy, they'll have $1.2 billion available to them," Roddey said. Such operating funds should assure "a positive outcome for the airline and for the region."
The company had about $500 million in cash when it declared voluntary bankruptcy Sunday afternoon. It is getting $500 million in loans from several major banks, plus a $200 million investment from a buyout group based in Fort Worth, Texas.
The CEO also explained why bankrupt US Airways sought and got court approval to pay some $6 million in bonuses to roughly 500 managers at a time when rank-and-file jobs are in jeopardy.
Siegel said US Airways had created a supplemental pension benefit to hang onto managers whose turnover was "triple" normal rates in April 2001. That's when doubts grew deep that US Airways merger into United Airlines would pass antitrust scrutiny. (It didn't roughly two months later.)
The court granted US Airways permission to pay that $6 million "over time," he said.
Siegel plans to return to Pittsburgh next week to discuss with local employees management's plans to operate the airline through bankruptcy.
Declaring bankruptcy, however, will render US Airways stock worthless. The shares have not traded since the New York Stock Exchange opened Monday. Yesterday, the exchange started procedures to delist US Airways shares. The company could challenge the NYSE decision, but its bankruptcy petition already states it expects to cancel the shares and issue a new class of stock.
Siegel would not detail how many flights would be cut or precisely how many MidAtlantic regional jets would displace larger, mainline jets of US Airways.
Union members say the small jets will reduce both jobs and pay rates for many workers.
US Airways flies large jets from 57 mainline gates at Pittsburgh International currently and likely will cut that to less than 20 once MidAtlantic starts up, said Jim Witmer, a vice president of Local 13302 of the Communications Workers of America.
Under terms of the CWA's contract with US Airways, jets with 70 or less seats are deemed commuter ? not mainline ? flights. That means counter, gate and ticket agent work is contracted out, and "a lot fewer" CWA workers would keep their jobs, said Witmer.
The union is the last major US Airways work group that has not yet reached an agreement on concessions. The two sides currently are negotiating in Washington.
If US Airways can't reach a tentative agreement with the CWA by Friday, it will ask the judge to hear a motion to break the contract, the company said.
Each union, from pilots to reservations agents, is being asked to roll back wages to April 1999 levels, said Siegel.
Yesterday, mechanics and other maintenance workers represented by the International Association of Machinists gave tentative approval to a contract that concedes roughly $160 million a year in wages and benefits, said IAM spokesman Joe Tiberi.
The union will tour US Airways bases next week to discuss the pact with members, who are to vote on ratification Aug. 28. Baggage handlers, who also are represented by the union, are expected to reach a tentative agreement today.
Pilots are taking pay cuts, too, as it pays less to fly smaller planes. The Air Line Pilots Association already has conceded the most pay and benefits of any US Airways union.
"We are confident this airline will be successfully reorganized," ALPA attorney Richard Seltzer testified at US Airways' bankruptcy court hearing in Alexandria, Va., on Monday.
Siegel would not elaborate on how many or when any new layoffs will take place. US Airways employs less than 10,500 in this region now. That compares to about 11,700 before the Sept. 11 terrorist attacks crippled air travel and industry profits and payrolls.
Re-employment at MidAtlantic would include customer service workers, but at lower pay.
"It would still be union work, which down the road we'd negotiate for a better rate," said Witmer.
Roddey said 3-year-old plans for an aircraft maintenance hangar at Pittsburgh International were "being put aside for now because of more important issues" at US Airways.
"They are buying a lot of new aircraft for MidAtlantic and they're going to have to maintain them," he said.
Pittsburgh Mayor Tom Murphy could not attend yesterday's session, due to a scheduling conflict but was briefed by the company by phone, said mayoral spokesman Craig Kwiecinski.
US Airways vows to keep hub
By Thomas Olson
TRIBUNE-REVIEW
Thursday, August 15, 2002
Pittsburgh International Airport will remain a strong hub for now-bankrupt US Airways, largely due to a new regional commuter carrier it is creating that will be based here and start flying by mid-2003, Chief Executive David Siegel said Wednesday.
Siegel met with local officials and business leaders at the airport yesterday morning to outline what US Airways' recent Chapter 11 petition means to its hub operations and future flights. He made similar visits to Philadelphia and Charlotte, N.C., on Tuesday.
In a nutshell: US Airways will become smaller but stronger.
"I'm here in Pittsburgh to reaffirm our commitment to this hub and to this community," said Siegel, who became CEO last March.
"It will be business as usual for the airline," he said. "The bankruptcy process will be relatively short-lived, and our customers will not notice any change."
The CEO expects US Airways to emerge from bankruptcy protection in about six months.
MidAtlantic Airways, the commuter airline created by US Airways in May, will fly as many as 465 regional jets. The 50- to 70-seat aircraft will replace mainline jets that seat at least 120 passengers.
US Airways now operates more than 300 large mainline jets. But too many of them fly too often with too many empty seats ? a capacity issue that smaller jets should alleviate.
"We see US Airways as a regional carrier with a focus on the eastern U.S.," said Siegel.
In addition, while US Airways will still fly to all 200 of its current destinations, it is likely to trim the number of flights. US Airways will place "a significant order in the very near future" for regional jets, said Siegel.
The CEO expects MidAtlantic over time to hire between 400 and 500 people from among those on furlough from the parent company, US Airways. It laid off roughly 1,200 workers in the region after Sept. 11.
"The progress (US Airways) has made in just a short time is remarkable," said Allegheny County Executive Jim Roddey of US Airways' fast-track bankruptcy proceeding.
Roddey said "all the experts" think US Airways should return to profitability by 2004. The carrier, America's seventh-largest, lost $517 million in the first half of this year.
"When they come out of bankruptcy, they'll have $1.2 billion available to them," Roddey said. Such operating funds should assure "a positive outcome for the airline and for the region."
The company had about $500 million in cash when it declared voluntary bankruptcy Sunday afternoon. It is getting $500 million in loans from several major banks, plus a $200 million investment from a buyout group based in Fort Worth, Texas.
The CEO also explained why bankrupt US Airways sought and got court approval to pay some $6 million in bonuses to roughly 500 managers at a time when rank-and-file jobs are in jeopardy.
Siegel said US Airways had created a supplemental pension benefit to hang onto managers whose turnover was "triple" normal rates in April 2001. That's when doubts grew deep that US Airways merger into United Airlines would pass antitrust scrutiny. (It didn't roughly two months later.)
The court granted US Airways permission to pay that $6 million "over time," he said.
Siegel plans to return to Pittsburgh next week to discuss with local employees management's plans to operate the airline through bankruptcy.
Declaring bankruptcy, however, will render US Airways stock worthless. The shares have not traded since the New York Stock Exchange opened Monday. Yesterday, the exchange started procedures to delist US Airways shares. The company could challenge the NYSE decision, but its bankruptcy petition already states it expects to cancel the shares and issue a new class of stock.
Siegel would not detail how many flights would be cut or precisely how many MidAtlantic regional jets would displace larger, mainline jets of US Airways.
Union members say the small jets will reduce both jobs and pay rates for many workers.
US Airways flies large jets from 57 mainline gates at Pittsburgh International currently and likely will cut that to less than 20 once MidAtlantic starts up, said Jim Witmer, a vice president of Local 13302 of the Communications Workers of America.
Under terms of the CWA's contract with US Airways, jets with 70 or less seats are deemed commuter ? not mainline ? flights. That means counter, gate and ticket agent work is contracted out, and "a lot fewer" CWA workers would keep their jobs, said Witmer.
The union is the last major US Airways work group that has not yet reached an agreement on concessions. The two sides currently are negotiating in Washington.
If US Airways can't reach a tentative agreement with the CWA by Friday, it will ask the judge to hear a motion to break the contract, the company said.
Each union, from pilots to reservations agents, is being asked to roll back wages to April 1999 levels, said Siegel.
Yesterday, mechanics and other maintenance workers represented by the International Association of Machinists gave tentative approval to a contract that concedes roughly $160 million a year in wages and benefits, said IAM spokesman Joe Tiberi.
The union will tour US Airways bases next week to discuss the pact with members, who are to vote on ratification Aug. 28. Baggage handlers, who also are represented by the union, are expected to reach a tentative agreement today.
Pilots are taking pay cuts, too, as it pays less to fly smaller planes. The Air Line Pilots Association already has conceded the most pay and benefits of any US Airways union.
"We are confident this airline will be successfully reorganized," ALPA attorney Richard Seltzer testified at US Airways' bankruptcy court hearing in Alexandria, Va., on Monday.
Siegel would not elaborate on how many or when any new layoffs will take place. US Airways employs less than 10,500 in this region now. That compares to about 11,700 before the Sept. 11 terrorist attacks crippled air travel and industry profits and payrolls.
Re-employment at MidAtlantic would include customer service workers, but at lower pay.
"It would still be union work, which down the road we'd negotiate for a better rate," said Witmer.
Roddey said 3-year-old plans for an aircraft maintenance hangar at Pittsburgh International were "being put aside for now because of more important issues" at US Airways.
"They are buying a lot of new aircraft for MidAtlantic and they're going to have to maintain them," he said.
Pittsburgh Mayor Tom Murphy could not attend yesterday's session, due to a scheduling conflict but was briefed by the company by phone, said mayoral spokesman Craig Kwiecinski.