poor thing, hopefully he has avoided the airline business and has found greener pastures like many US employees are doing:
US Airways argues for retention program
STAN CHOE AND TONY MECIA
Staff Writers
ALEXANDRIA, Va. - US Airways' survival plan of merging with America West may be in jeopardy if its managers continue to leave for higher pay or better job security, executives testified in bankruptcy court Tuesday.
To stem the exodus of 20 to 40 managers per month, US Airways says it needs to offer severance packages to those workers as they work to complete the integration, which will cost many of them their jobs.
Labor unions have roared about the proposal, which could cost tens of millions of dollars, saying it isn't fair after they sacrificed pay and pension plans during the bankruptcy process. The U.S. Trustee overseeing the bankruptcy case also objected.
Judge Stephen Mitchell said he senses the frustration.
"This motion is not playing well in Peoria," he said in court, after noting US Airways workers may already feel demoralized because of the pay cuts.
But the departures of managers and other salaried staff is hurting the airline's day-to-day operations, with about 300 jobs still waiting to be filled, executives said. The airline hopes to enact the severance program for nearly 1,900 workers.
"This is our last chance to survive," said Hans Mirka, a US Airways director and chair of the board's human resources committee. "For that to happen, we need the support of management employees." Mirka would not receive any severance pay under the proposal.
The airline is losing managers to low-cost carriers, travel-related companies such as Orbitz.com and others, testified Jerry Glass, the airline's chief human resources officer. And it's unable to hire new workers to fill the void, he said.
Since relapsing into bankruptcy protection in September, the company has hired only about 15 managers and salaried staff. And the airline had to offer signing bonuses to get them, Glass testified.
The airline needs those workers to combine the payrolls and complex computer systems of US Airways and America West, Glass said.
The fate of the deal is crucial for Charlotte, US Airways' largest hub, which is home to 5,600 of the airline's 24,000 workers. If the merger falls through, it puts US Airways at renewed risk of liquidation. If it succeeds, Charlotte could remain a major hub for years to come.
US Airways' labor groups attacked the proposal from several angles:
• They pointed to management's promise to share in the sacrifice of cutting pay and benefits to keep the airline afloat.
• The Communications Workers of America, which represents about 5,000 airline customer-service and reservation agents, said it was able to get 2,209 signatures in four days for a petition saying the retention program is unfair.
• The pilots argued the plan would unfairly place executive severance pay at the head of the line if the airline were to liquidate. Now, executive severance would be lower on the priority list.
The U.S. Trustee overseeing the case also disagreed with the proposal. Not only will it further hurt employee morale, the retention plan covers too many workers, said Jack Franklin, attorney for the U.S. Trustee.
"You could argue every employee is essential," he said, "otherwise they wouldn't be employed."
As originally proposed last month, the retention program would likely cost between $16 million and $21 million, the company said, although it could cost the full $55 million if all workers lost their jobs -- which the company says is unlikely.
It consists of new employment contracts for the top two dozen executives, a revised severance policy for 1,873 salaried workers and money the company could dole out on a case-by-case basis to retain workers.
Since unveiling the retention proposal, the company agreed to trim its cost by $4 million by cutting back on the potential severance amounts paid to the top two dozen officers.
Under the proposed changes, for the first time since taking over a year ago, CEO Bruce Lakefield would have his employment contract altered. If he lost his job through merger or liquidation, he would receive double his base pay and bonus, instead of triple. He earns $425,000 a year.
Attorneys are to give closing statements today and Mitchell could rule from the bench.
Merger Road Map
In his sole ruling Tuesday, Judge Stephen Mitchell approved procedures outlining a road map for the merger of US Airways and America West through the bankruptcy process, limiting to 30 days any potential competing bids.
US Airways said it sought the window to "shake the tree and see if there's any higher, better offer." At the same time, the airline said it wanted to receive any potential bids quickly so that it can emerge from bankruptcy protection as soon as possible.
If no other suitors emerge, the two carriers would exclusively negotiate a merger.