Pennsylvania leaders offer $263 million carrot to keep US Airways hub

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Pennsylvania leaders offer $263 million carrot to keep US Airways hub

WASHINGTON (AP) =97 Pennsylvania's top officials on Wednesday offered $263.9=
=20
million in airport investments over five years to persuade US Airways to=20
keep its hub in Pittsburgh, a plan quickly deemed a "good-faith effort" by=
=20
the airline's chief. But US Airways chief executive officer David Siegel=20
said the offer was only the opening step in negotiations beginning=20
Thursday, and bluntly said he could not promise to accept it. "Absolutely=20
not," Siegel said when asked if he could immediately commit to remaining at=
=20
Pittsburgh International Airport. "What we're committing to is a process to=
=20
work very hard, and I would define success as finding a resolution where we=
=20
can stay in Pittsburgh, where it works for U.S. Airways and works for=20
Pennsylvania. "The goal is to stay," he added The offer was made during a=20
90-minute meeting in Washington between Siegel and top Pennsylvania=20
officials, including Democratic Gov. Ed Rendell, Republican Sens. Arlen=20
Specter and Rick Santorum, and 14 of the state's 19 House members.

US Airways, which emerged from bankruptcy in late March, has said it needs=
=20
roughly $864 million worth of investments over the next five years to=20
maintain current service levels in Pennsylvania. Rendell, who drew up the=20
proposal, said that amount far exceeds what the public can invest. His plan=
=20
=97 a mix of federal, state and local funding =97 would upgrade hub=
 terminals,=20
hangars and other facilities, and lower operating costs at both the=20
Pittsburgh and Philadelphia airports. The airline's third hub is located in=
=20
Charlotte, N.C. But the deal came with strings attached: If the airline=20
ultimately shuts down its Pittsburgh hub, as it has threatened to do as=20
part of its companywide restructuring plan, it will not receive any of the=
=20
aid for Philadelphia facilities. "We are going to act as a team," Rendell=20
said. "If US Airways does not continue to hub at both airports,=20
Philadelphia and Pittsburgh, then none of these benefits will be available=
=20
to US Air." Moreover, Rendell said, the investments at both airports will=20
help all air carriers, not just US Airways exclusively. But he said the=20
state is willing to sweeten the deal with more money "if there's more=20
significant commitment by US Air."

Specifically, Rendell said, at least $10 million could be added to the plan=
=20
if US Airways keeps its mainline personnel training center in Pittsburgh,=20
which Rep. Mike Doyle, D-Pa., emphasized as vital to providing good-paying=
=20
jobs in the area. Negotiations begin Thursday and will be wrapped up by=20
July 18. Pittsburgh is the Arlington, Va.-based airline's costliest hub;=20
the average cost per passenger is $7 =97 more than double the $3 per=20
passenger cost at Charlotte. US Airways, the nation's sixth-largest=20
airline, was the first to file for bankruptcy in the wake of the travel=20
industry slump following the Sept. 11 terrorist attacks. An estimated=20
17,000 of US Airways' 32,000 employees work in Pennsylvania. The company=20
lost $2.1 billion in 2001 and has said it needs to cut costs by $1.6=20
billion to remain viable. "We're certainly apart on the dollar amount and=20
the form that we would be receiving assistance," Siegel said. "But when=20
someone puts a quarter-billion dollars on the table, and says, 'Look, we=20
want to work with you to find a solution,' you have to characterize that as=
=20
very significant."

The largest chunk of the money =97 $130.4 million =97 would come from the=20
Allegheny County Airport Authority, and would be paid with an increase in=20
fees and debt restructuring, said Allegheny County Executive Jim Roddey,=20
who attended the meeting. Beaver and Washington counties would kick in a=20
combined $22.5 million, with the city of Philadelphia adding another $57.5=
=20
million. The state has pledged at least $23.5 million, and lawmakers are=20
promising to secure $30 million from the federal government. Specter, who=20
said he "wore out the telephone lines" since the terror attacks to help US=
=20
Airways keep its head above the water, predicted the airline would maintain=
=20
a "viable Pittsburgh operation" and described himself as "optimistic" after=
=20
the meeting in his Washington office. Other lawmakers also said they were=20
happy with Siegel's initial response to the offer, which was made after=20
more than two months of tense rhetoric from both sides.
"I'm pleased he's making the effort, basically, not to blow Pittsburgh=20
off," said Rep. Melissa Hart, R-Pa., whose district includes many airport=20
employees.


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