Executives at US Airways met with union representatives yesterday to lay out a proposed business plan that would cut costs deeply to move the airline toward profitability and help it obtain a $1 billion federal loan guarantee. But many union leaders said they left the meeting more confused than combative, still unsure of exactly what concessions the executives wanted.þþUnder the plan, the company, the sixth-largest airline and an East Coast mainstay, would cut $1.3 billion in costs, with $950 million of that coming from nonmanagement labor costs and $50 million from management, union representatives said. Almost 90 percent of its work force is represented by a union, and labor leaders went into the meeting skeptical. But they left without knowing exactly how much each labor group would have to contribute to the cuts.þþÿThe overarching theme is to have a competitive cost structure,ÿ David N. Siegel, chief executive of US Airways, said yesterday evening in a telephone interview. ÿWe're taking a very cooperative, inclusive, consensual approach to solve the problem. It's a challenge, obviously.ÿþþThe plan also proposes heavily increasing the airline's use of regional jets, strengthening its three East Coast hubs and forming a partnership with a larger carrier to expand its route system at home and abroad.þþThe four-hour meeting, held in a lawyer's office in downtown Washington, was the first step in trying to win employee approval for a huge revamping. About 100 people packed the room, with labor leaders coming from around the country. US Airways is working with a tight deadline because it must have a lean business plan by next month to apply successfully for a loan guarantee.þþAfter the Sept. 11 attacks, Congress set up a $10 billion loan guarantee program for the airlines, in addition to giving them $5 billion in immediate aid. The Air Transportation Stabilization Board, which administers the program, expects applicants to have business plans that demonstrate stringent cost-cutting measures and a feasible route toward profitability. The board gave America West $380 million in backing last December, and that airline has been the only successful applicant of half a dozen so far.þþAt yesterday's meeting, executives repeatedly stressed the need to obtain a $1 billion loan guarantee to keep US Airways afloat. Mr. Siegel said he intended to file an application by June 15, well before the June 28 deadline. But he said he would not present the application until he won agreements from the labor unions.þþÿI'm not as skeptical as I was before about the overall plan, but I'm still not sure what participation is expected from the flight attendants,ÿ said Karen Lascoli, president of the US Airways branch of the Association of Flight Attendants. ÿNone of the labor groups know about their participation.ÿþþExecutives are planning to hold separate meetings with each union next week to discuss specific cost-cutting measures.þþÿIf the meeting today was noteworthy for anything, it was for a lack of details,ÿ Joe Tiberi, a spokesman for the machinists' union, said. ÿOur members who are being asked to participate in a restructuring program can't be asked to take part in a plan where details are withheld.ÿþþÿThe longer they wait to give us proper information, the harder it will be for the carrier to meet that deadline,ÿ Mr. Tiberi added.þþThe reductions in labor costs would come from cuts to wages, work hours, pension plans and health care, among other things. The plan did not call for immediate furloughs or layoffs. Mr. Siegel said he wanted to put together a plan that ÿtakes every opportunity to preserve jobs.ÿþþUS Airways suffered more than most of its competitors after the terrorist attacks because it relies heavily on East Coast travel. It reported a $269 million loss for the first quarter, its seventh consecutive losing one. As of March 31, it had $561 million in cash and was using that up at rate of $3.5 million a day.þþThe airline also has some of the highest labor costs in the industry. Its operating cost — 12.46 cents to fly one seat one mile — is more than that of any competitor. Labor and management have clashed over bringing down those costs, although Mr. Siegel did not step into his job until March and does not have much of a history with the airline's unions.þþBesides the proposed $1 billion in labor and management cost cuts, the plan also calls for $300 million in reductions from partners like aircraft leasers, technology service providers and other suppliers, Mr. Siegel said.þþHe added that the airline was looking to join with another carrier, and it would try to increase its regional jets to 300 in three to five years. Regional jets are much cheaper to operate than wide-bodied aircraft, and pilots are generally paid less to fly them. The pilots' union had a contractual clause with US Airways to limit the airline's fleet of regional jets to 70, but recently agreed to increase that to 140.þþÿIf more regional jets mean more passengers to our hubs feeding mainline flights, then the regional jets would be used in a manner that is acceptable,ÿ Roy Freundlich, a spokesman for the pilots' union, said. ÿIf it's simply about outsourcing our jobs to make the main line smaller, it will remain a contentious issue.ÿþ
Source: NY Times
