Wall Street Journal article about US Airways
Dec 27, 2004, 6:42 pm
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Wall Street Journal article about US Airways
US Air Faces Financial Setbacks
After Holiday-Weekend Woes
By SUSAN CAREY
Staff Reporter of THE WALL STREET JOURNAL
December 28, 2004
US Airways Group Inc. faces a setback in its efforts to reorganize and emerge from bankruptcy protection as it recovers from a weekend plagued by absentee employees, canceled flights and lost luggage.
The nation's seventh-largest airline, under bankruptcy protection for the second time in two years, can ill afford the problems it served up to thousands of passengers over the holiday weekend, a performance exacerbated by a big winter storm. US Airways' chances of avoiding a liquidation of assets in the coming weeks are precarious, given that its faces crucial deadlines for further cutting its labor costs and persuading its various lenders to give it additional forbearance.
If workers unhappy by the prospect of further pay cuts continue to disrupt operations, US Airways could lose passenger confidence. "Passengers who have been caught up in this aren't very happy," said an airline spokesman. "I can't blame them." But he cautioned that "this is an absolute exception to our normal customer-service commitment. Our employees are just as embarrassed as anyone by the customer inconvenience." (See article on page D5.)
Web-based travel specialist Terry Trippler advised his customers to avoid US Airways after the weekend baggage mess, which he said was one of the worst he has witnessed in 36 years in the travel business. "Stick a fork in them, folks," he said of the carrier. "They're done."
Eve and Kerry Lubin, of Bensalem, Pa., had planned to fly to Cancun, Mexico, on Saturday with their son. But the trip was ruined by huge crowds at US Airways check-in desks in Philadelphia, which caused the Lubins to miss their connecting flight to Charlotte, N.C. The airline said it couldn't rebook them for three days, putting them in Mexico too late to honor their hotel reservation. Facing a $1,300 charge for the hotel, Mr. Lubin said, "We'll find another carrier before we try US Air again."
Still, US Airways, based in Arlington, Va., has made considerable headway since its September bankruptcy filing. It has gained givebacks from its pilots, dispatchers and customer-service agents. "It's hard to imagine this, in and of itself, would cause US Airways to liquidate. But if it turns into a chronic problem, that's another matter," said Robert Ashcroft, an airline analyst for UBS Investment Research.
An organized group of US Airways frequent fliers, called Ffocus, in a statement yesterday suggested several steps the company should take to prevent the loss of future customers, including immediate termination of individuals who didn't fulfill their work responsibilities in the past week. The airline will look at whether there were abuses and if disciplinary action against individual workers is appropriate, a spokesman said.
U.S. Transportation Secretary Norman Mineta yesterday asked the Transportation Department's inspector general to investigate the holiday troubles at US Airways, as well as at Delta Air Lines unit Comair Inc., which said about 60% of its scheduled flights were operating yesterday following a crippling computer-system crash over the weekend.
US Airways blamed more than 450 canceled flights from Thursday through yesterday and thousands of pieces of stranded luggage on a heavy winter storm and higher-than-usual numbers of sick calls during the crucial travel period. The company normally operates more than 1,200 flights a day, not counting 2,000 commuter flights operated on its behalf by regional partners. The spokesman said there was no evidence the staffing shortages were organized by its unions.
US Airways said yesterday that flight-attendant sick calls continued to run around 300 a day instead of the usual 100. The spokesman also said shortages continue to exist among ramp workers at its big Philadelphia hub. But the carrier covered its flight schedule yesterday with reserve flight attendants and shored up its Philadelphia staffing with managerial personnel and customer-service agents, he said.
The Association of Flight Attendants said sick calls weren't much higher this Christmas than they were a year ago. "This was a holiday phenomenon aggravated by the weather," said Pat Friend, international president of the union. "It's not going to continue." Ms. Friend said union locals in Pittsburgh and Charlotte asked attendants who were off duty and had hours left in the month to fly to make themselves available to work extra trips.
Ms. Friend expects that a tentative agreement on a new contract that will save US Airways more than $150 million a year from pay and benefit cuts and a pension-plan termination will be ratified on Jan. 5. "We don't want to tank the operation," she said. "We've made it this far." The AFA represents 5,200 attendants at US Airways.
The International Association of Machinists union, which represents 4,000 ramp workers and 4,200 mechanics and aircraft cleaners at the airline, also denied that there was a concerted job action at US Airways in the past week. Robert Roach Jr., general vice president for transportation at the union, ascribed the staff shortage to "normal winter travel problems."
Mr. Roach said the union is committed to putting a concessionary offer to its membership for a vote early next month. "We don't think it's in the best interests of the Machinists union or its members to try to liquidate US Airways," he said.
Getting the labor savings would allow US Airways to access a complex leasing and financing deal with General Electric Co., its largest creditor. The additional savings also could persuade lenders to continue to allow US Airways to use some of the proceeds from an earlier financing to stay aloft in Chapter 11.
GE didn't return phone calls yesterday. David Bronner, chief executive of the big Alabama pension fund that owns 36% of the airline's equity, declined to comment. US Airways' financial-restructuring advisor also didn't respond to messages.
Unclaimed baggage continued to sit at Philadelphia International Airport and Washington's Reagan National Airport. US Airways spokeswoman Amy Kudwa said the carrier had fewer than 1,000 pieces of luggage left to deliver yesterday, down from a peak of 10,000 lost bags.
After Holiday-Weekend Woes
By SUSAN CAREY
Staff Reporter of THE WALL STREET JOURNAL
December 28, 2004
US Airways Group Inc. faces a setback in its efforts to reorganize and emerge from bankruptcy protection as it recovers from a weekend plagued by absentee employees, canceled flights and lost luggage.
The nation's seventh-largest airline, under bankruptcy protection for the second time in two years, can ill afford the problems it served up to thousands of passengers over the holiday weekend, a performance exacerbated by a big winter storm. US Airways' chances of avoiding a liquidation of assets in the coming weeks are precarious, given that its faces crucial deadlines for further cutting its labor costs and persuading its various lenders to give it additional forbearance.
If workers unhappy by the prospect of further pay cuts continue to disrupt operations, US Airways could lose passenger confidence. "Passengers who have been caught up in this aren't very happy," said an airline spokesman. "I can't blame them." But he cautioned that "this is an absolute exception to our normal customer-service commitment. Our employees are just as embarrassed as anyone by the customer inconvenience." (See article on page D5.)
Web-based travel specialist Terry Trippler advised his customers to avoid US Airways after the weekend baggage mess, which he said was one of the worst he has witnessed in 36 years in the travel business. "Stick a fork in them, folks," he said of the carrier. "They're done."
Eve and Kerry Lubin, of Bensalem, Pa., had planned to fly to Cancun, Mexico, on Saturday with their son. But the trip was ruined by huge crowds at US Airways check-in desks in Philadelphia, which caused the Lubins to miss their connecting flight to Charlotte, N.C. The airline said it couldn't rebook them for three days, putting them in Mexico too late to honor their hotel reservation. Facing a $1,300 charge for the hotel, Mr. Lubin said, "We'll find another carrier before we try US Air again."
Still, US Airways, based in Arlington, Va., has made considerable headway since its September bankruptcy filing. It has gained givebacks from its pilots, dispatchers and customer-service agents. "It's hard to imagine this, in and of itself, would cause US Airways to liquidate. But if it turns into a chronic problem, that's another matter," said Robert Ashcroft, an airline analyst for UBS Investment Research.
An organized group of US Airways frequent fliers, called Ffocus, in a statement yesterday suggested several steps the company should take to prevent the loss of future customers, including immediate termination of individuals who didn't fulfill their work responsibilities in the past week. The airline will look at whether there were abuses and if disciplinary action against individual workers is appropriate, a spokesman said.
U.S. Transportation Secretary Norman Mineta yesterday asked the Transportation Department's inspector general to investigate the holiday troubles at US Airways, as well as at Delta Air Lines unit Comair Inc., which said about 60% of its scheduled flights were operating yesterday following a crippling computer-system crash over the weekend.
US Airways blamed more than 450 canceled flights from Thursday through yesterday and thousands of pieces of stranded luggage on a heavy winter storm and higher-than-usual numbers of sick calls during the crucial travel period. The company normally operates more than 1,200 flights a day, not counting 2,000 commuter flights operated on its behalf by regional partners. The spokesman said there was no evidence the staffing shortages were organized by its unions.
US Airways said yesterday that flight-attendant sick calls continued to run around 300 a day instead of the usual 100. The spokesman also said shortages continue to exist among ramp workers at its big Philadelphia hub. But the carrier covered its flight schedule yesterday with reserve flight attendants and shored up its Philadelphia staffing with managerial personnel and customer-service agents, he said.
The Association of Flight Attendants said sick calls weren't much higher this Christmas than they were a year ago. "This was a holiday phenomenon aggravated by the weather," said Pat Friend, international president of the union. "It's not going to continue." Ms. Friend said union locals in Pittsburgh and Charlotte asked attendants who were off duty and had hours left in the month to fly to make themselves available to work extra trips.
Ms. Friend expects that a tentative agreement on a new contract that will save US Airways more than $150 million a year from pay and benefit cuts and a pension-plan termination will be ratified on Jan. 5. "We don't want to tank the operation," she said. "We've made it this far." The AFA represents 5,200 attendants at US Airways.
The International Association of Machinists union, which represents 4,000 ramp workers and 4,200 mechanics and aircraft cleaners at the airline, also denied that there was a concerted job action at US Airways in the past week. Robert Roach Jr., general vice president for transportation at the union, ascribed the staff shortage to "normal winter travel problems."
Mr. Roach said the union is committed to putting a concessionary offer to its membership for a vote early next month. "We don't think it's in the best interests of the Machinists union or its members to try to liquidate US Airways," he said.
Getting the labor savings would allow US Airways to access a complex leasing and financing deal with General Electric Co., its largest creditor. The additional savings also could persuade lenders to continue to allow US Airways to use some of the proceeds from an earlier financing to stay aloft in Chapter 11.
GE didn't return phone calls yesterday. David Bronner, chief executive of the big Alabama pension fund that owns 36% of the airline's equity, declined to comment. US Airways' financial-restructuring advisor also didn't respond to messages.
Unclaimed baggage continued to sit at Philadelphia International Airport and Washington's Reagan National Airport. US Airways spokeswoman Amy Kudwa said the carrier had fewer than 1,000 pieces of luggage left to deliver yesterday, down from a peak of 10,000 lost bags.
Dec 27, 2004, 7:00 pm
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Just a friendly reminder, FlyerTalk TOS ask that articles only be quoted in passing, and then a link to the full article added to the end. This is to respect copyright.
Unfortunately, the WSJ is a pay site, but that makes such "restrictions" even more important...
Unfortunately, the WSJ is a pay site, but that makes such "restrictions" even more important...