US Airways could seek cost cuts from unions -- CEO

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NEW YORK, March 26 (Reuters) - US Airways Group (U) could ask its unions to
help scale back costs as the No. 7 U.S. airline struggles to rejuvenate
profits and trim its expenses in the wake of the Sept. 11 attacks on the
United States.

US Airways' new president and chief executive David Siegel said the airline
needed to change its current wage formula for unionized workers, which tops
the average salaries at four larger rival carriers.

"Continuing to tie our compensation plan to those of the four largest
carriers does not make any other sense in today's airline industry
environment," Siegel told employees in a recorded message.

"We must reach a level of labor costs in a way that is fair to the company
and all employee groups, that makes sense for us ... and is not tied to the
fortunes of companies that are more than twice our size," he said.


Arlington, Virginia-based US Airways has some of the highest labor costs in
the industry and about 32,000 of its 35,905 employees are union members.

Battered by the lingering economic downturn and the post- Sept. 11 travel
slump, U.S. airlines are struggling to stave off huge financial losses.

UAL Corp.'s (UAL) United Airlines, the second-largest U.S. carrier, plans to
approach its six labor groups seeking billions of dollars in concessions to
help aid its return to financial stability.

Chicago-based United, whose labor costs represent about 38 percent of its
total expenses, posted $2.1 billion in losses for 2001.

US Airways has struggled to right itself after its failed $4.3 billion
merger with United and its east coast markets have been eroded by low-cost
rivals and major carriers using cost- efficient regional jets.

Aviation experts see expanding US Airways own fleet of regional jets as one
of the essential elements of its recovery plan. But talks between US Airways
pilots and management on expanding small jet use stalled earlier this month
over job protection concerns.

US Airways shares gained 22 cents, or 3.44 percent, to $6.62 during in
Tuesday afternoon trading on the New York Stock Exchange.


©2002 Reuters Limited.

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