The article below from NYTimes.com has been sent to you by psa188@xxxxxxxxx /--------- E-mail Sponsored by Fox Searchlight ------------\ I HEART HUCKABEES - OPENING IN SELECT CITIES OCTOBER 1 From David O. Russell, writer and director of THREE KINGS and FLIRTING WITH DISASTER comes an existential comedy starring Dustin Hoffman, Isabelle Hupert, Jude Law, Jason Schwartzman, Lily Tomlin, Mark Wahlberg and Naomi Watts. Watch the trailer now at: http://www.foxsearchlight.com/huckabees/index_nyt.html \----------------------------------------------------------/ Sorting Out the Winners if US Airways Doesn't Survive September 14, 2004 By MICHELINE MAYNARD US Airways' second trip to bankruptcy court holds both promise and peril for the nation's other major airlines. US Airways' decision to seek Chapter 11 protection on Sunday could jolt unions at Delta, Continental and Northwest to make wage and benefits concessions, executives at the carriers said yesterday. But at the same time, they acknowledged that there was little chance US Airways' probable contraction, and possible demise, would solve the overcapacity that is plaguing the industry. In fact, a liquidation of US Airways could have the opposite effect: Low-fare airlines like JetBlue and Southwest could step up their already aggressive plans to expand their fleets and routes to capture its customers before its bigger rivals do. That might be easily accomplished. According to documents filed with the United States Bankruptcy Court in Alexandria, Va., yesterday, US Airways' assets include 290 gates in 14 cities, a cargo operation in Philadelphia and hundreds of slots that enable the airline to schedule flights from La Guardia Airport and Reagan National in Washington. JetBlue, which begins service from La Guardia on Friday, might be a ready customer. "If, all of a sudden, there is some real estate available, we would have to take a good hard look at it," JetBlue's president, David Barger, said. So instead of helping the traditional carriers, US Airways' troubles could make their own even worse, analysts said. At least on the labor front, there is some optimism. Delta, Continental and Northwest are trying to reach agreements on pay and benefit cuts with the Air Line Pilots Association, which traditionally takes the lead in labor talks. Some analysts think a decision by some union leaders to block pilots from voting on US Airways' contract proposal was the crucial factor in the airline's decision to file for bankruptcy protection. The message companies may attempt to send to unions, they said, is: Do not let that happen to you. "All the airlines will now be playing off each other, and what each one gets will be the minimum for the next one," said Gary L. Chaison, professor of industrial relations at Clark University in Worcester, Mass. Pilots "have got to be looking at this and thinking, we'd be better off with an out-of-court solution, given that our brethren at US Airways are facing liquidation," added William T. Warlick, senior airline analyst with Fitch Ratings. John Mazor, a spokesman for the national pilots' union, disagreed, saying, "We hope that management would get the message that airline workers are tired of handing over concessions that disappear right down the drain because management hasn't fixed the broken business model." Mr. Mazor's union is based in Washington. Such a sense could be the reason for the standoff at Delta, where its chief executive, Gerald A. Grinstein, has warned for months that the airline is likely to seek its own bankruptcy filing, absent $1 billion in concessions from its pilots, if it is unable to clean up its debt-laden balance sheet. Delta's pilots have offered cuts valued at $655 million to $705 million, but they are upset with the company's plan to terminate their retirement program and replace it with a less-generous plan, echoing a threat also made by United Airlines, which is also in bankruptcy court. Yesterday, Mr. Grinstein said that the US Airways bankruptcy takes away two psychological impediments he thought could be keeping airline pilots from cutting deals. First, the Chapter 11 filing came amid the strongest air traffic in years, he said, so it cannot be blamed on the business cycles that routinely shake the industry. Second, no investors have stepped forward to rescue US Airways, which will be operating on its cash and ticket revenues until it has the chance to craft a restructuring plan. The airline's filing "peels away those two elements," Mr. Grinstein said in an interview yesterday. Mr. Mazor, in turn, saw a message sent to management by the filing: "They need to look at US Airways and decide if they are going to let their own operations slide into that position." At Northwest, which has been talking to its pilots about concessions for more than a year, the chief executive, Richard Anderson, said the US Airways situation would heighten the sense of urgency to get a deal quickly. "This is a commodity market, and you have to have low costs to mark at market prices," Mr. Anderson said in an interview. Mr. Anderson said Northwest could not ignore what was happening at other carriers. "We live in a parity world," he said. Mr. Mazor said he had heard such threats many times during his 25-year career as a union official. "That's a time-honored game," he said. But Professor Chaison said US Airways had upset the dynamic of negotiations by following through on its Chapter 11 filing. "They can walk out of a room any time," he said of management, "and that will be it." Also upsetting the industry balance has been the growth of low-fare carriers, led by Southwest, the industry's sixth-largest airline, which has more employees than US Airways - about 33,000 to 28,000 - and JetBlue, which is on track to become a similar size within the next decade, up from about 7,000 employees now. Both airlines have ordered dozens of new aircraft - Boeing 737's for Southwest, and a mix of Airbus jets and Embraer regional jets for JetBlue. Mr. Barger, whose airline does not have unions, expressed sympathy for US Airways, which he said faced "incredibly difficult circumstances." But the battle between the airline and its unions over $800 million in wage and benefit concessions was no surprise, he said, given the labor problems that crippled other airlines in the past. Ticking off a list of carriers that did not survive bankruptcy, Mr. Barger said, "What don't you understand about Pan Am, TWA and Eastern?" http://www.nytimes.com/2004/09/14/business/14impact.html?ex=1096170314&ei=1&en=0ab5ba81ecc55134 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! Click here: http://homedelivery.nytimes.com/HDS/SubscriptionT1.do?mode=SubscriptionT1&ExternalMediaCode=W24AF HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2004 The New York Times Company