CEO: US Airways 'fully prepared to exit Pittsburgh'......If it can't cut costs here, airline says it will move operations Wednesday, June 11, 2003 By Frank Reeves, Post-Gazette Staff Writer On the eve of critical talks with state and local officials, US Airways Chief Executive Officer David Siegel yesterday said the carrier was "fully prepared to exit Pittsburgh" if it's unable to slash costs at Pittsburgh International Airport. "We have contingency plans. If we can't get the right cost structure, we'll exit Pittsburgh," Siegel said at the conclusion of a speech in New York to a gathering of analysts at the Merrill Lynch Global Transportation Conference. Despite his blunt talk, Siegel said he was "optimistic we'll find a way to resolve" the Pittsburgh issue. A key step toward resolving the issue could come this afternoon when Siegel meets in Washington, D.C., with the state's top political leaders, including Gov. Ed Rendell, U.S. Sens. Arlen Specter and Rick Santorum, as well as Allegheny County Chief Executive Jim Roddey, Pittsburgh Mayor Tom Murphy, top Philadelphia officials and most of the state's congressional delegation. The outcome of the discussions could determine the fate of more than 15,000 US Airways employees in Pennsylvania, including 9,000 in Pittsburgh. It will be the first high-level meeting since the airline abruptly canceled its leases at Pittsburgh International Airport in March, effective Jan. 5. The move, coming moments before the airline emerged from bankruptcy protection, angered local leaders who felt they had the airline's assurances that it wouldn't cancel the airport leases. The airline wants to slash its lease costs in Pittsburgh, which now total $62 million a year, almost all of which goes to pay down the airport's $673 million debt. US Airways has said it would like to reduce those debt costs by $500 million, thus bringing its overall costs here -- more than $7 per passenger -- in line with those at its Charlotte, N.C., hub, where it's about $1.30 per passenger. The region's dominant carrier also is seeking $155 million in capital improvements in Pittsburgh, including a regional jet terminal and maintenance center, and $95 million in improvements at Philadelphia. In addition, it is asking for $140 million in rent relief in Philadelphia over five years. Specter, who arranged today's meeting, said it will be a chance "to find out what US Airways has in mind for the future and what additional assistance US Airways is going to ask from public officials." "In the past, we've gone to bat for them,'' Specter said, citing specifically the state's congressional delegation's push to get the airline a $900 million federal loan guarantee, "but there's been no reciprocity. If they want help [now], we expect reciprocity from them." Santorum, saying he didn't expect that US Airways' request for capital improvements and cost-savings at the Philadelphia and Pittsburgh airports would be resolved at today's meeting, said the state's delegation is "not going there hat-in-hand saying, 'Gee, we'll give you anything you want.' At the same time, we're not going to say, 'Stay here, no matter if it makes you close your company.' " It is not clear whether state and local officials will deliver cost-saving proposals to Siegel at today's meeting. Siegel said yesterday he expected to receive the state's response in a couple of weeks. Rendell has said that he intends to present Siegel with a unified "Pennsylvania plan" that incorporates proposals from Philadelphia and Pittsburgh. Allegheny County and Airport Authority officials have only offered a broad overview of their proposals, which they delivered to Rendell earlier this month. Roddey has said that any concessions or improvements given to US Airways would be contingent on its keeping nearly all of the current jobs in Pittsburgh and increasing the number of daily flights from the current 400 to nearly 500. But Allegheny County officials, working to be prepared in case US Airways does ultimately scale back, have emphasized that any improvements such as construction of a regional jet terminal or maintenance facility would be tailored to benefit any airline, not just US Airways. The proposal Rendell presents isn't likely to include incentives to entice US Airways to move its headquarters from Arlington, Va., to Pennsylvania. In a speech last month to Washington, D.C.-area business leaders, Siegel reminded them that other states -- notably Alabama and Pennsylvania -- were anxious to have US Airways relocate. His words set off speculation that the airline wanted to move from suburban Washington, despite repeated company denials. In his appearance yesterday, Siegel indicated that the airline's hubs in Charlotte and Philadelphia loom large in the airline's plans to return to profitability -- Charlotte in part because of its strategic location as a gateway to the Caribbean, Philadelphia because of its pivotal location on the highly populated East Coast. Pittsburgh was portrayed as a costly burden, with its $673 million debt. "You can't win a race with a 300 pound jockey," Siegel said, quoting his mentor, Gordon Bethune, chief executive officer of Continental Airlines, where Siegel once worked. But in its desire to retain Philadelphia as a hub, some state officials see a potential bargaining tool: US Airways won't get the capital improvements and cost-savings at Philadelphia unless there is some accommodation for Pittsburgh. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Mas Site: www.tntisland.com/tntrecords/mas2003/ Site of the Week: http://www.natalielaughlin.com/ TnT Webdirectory: http://search.co.tt *********************************************************