NYTimes.com Article: In Court, US Airways Presses for Pay Reduction

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In Court, US Airways Presses for Pay Reduction

October 8, 2004
 By MICHELINE MAYNARD





US Airways pressed its bid for emergency pay cuts
yesterday, saying its bookings had dropped and its costs
had increased since it entered Chapter 11 bankruptcy
protection last month.

But Judge Stephen S. Mitchell of Federal Bankruptcy Court
in Alexandria, Va., did not rule on the airline's bid for
23 percent pay cuts and other reductions in workers'
benefits, which the airline's unions oppose. Judge Mitchell
said he would hear more arguments on the request on
Tuesday.

US Airways filed for its second bankruptcy in two years on
Sept. 12, after workers did not grant $800 million in wage
and benefit cuts. The concessions would have been the third
set; two were granted in the airline's first bankruptcy,
from which it emerged in April 2003.

Lawyers for the airline said yesterday that US Airways
would be in danger of liquidation without the emergency
cuts, which the airline has asked the court to impose on
unions that have not reached agreements on permanent cuts.

"I wish that I had more cards to play," said Brian Leitch,
the airline's lead bankruptcy lawyer. "We're at the point
where there are not many options.''

The airline has reached a tentative agreement with only one
major union, the Air Line Pilots Association. That deal,
worth $300 million a year, calls for pay cuts of 18 percent
and requires pilots to fly more hours each month. Voting on
that deal will conclude Oct. 21.

The airline is still talking with its flight attendants,
mechanics and reservation agents. US Airways wants
concessions worth $950 million a year from its unions, or
$150 million more than it sought before its recent
bankruptcy filing.

David M. Davis, chief financial officer at US Airways, said
bookings in October had dropped, apparently because
customers were concerned about the airline's future. Bruce
R. Lakefield, chief executive at US Airways, told
reporters: "We need every passenger on the plane that we
can get. There's no doubt that we need the money."

The four hurricanes that struck parts of Florida in the
last two months hurt US Airways, like other airlines. The
company said it lost $20 million to $25 million in revenue.


In addition, jet fuel prices have risen nearly 50 percent
from 2003, creating a severe strain for US Airways and its
competitors. If prices stay at current record levels, the
airline said, fuel could cost it $200 million to $300
million more than it anticipated when it sought bankruptcy
protection.

Given all those factors, Mr. Davis said that the airline's
cash, which stood at $750 million when it sought court
protection last month, could fall as low as $313 million by
mid-March. The airline said that was an unacceptable level.


Union representatives denounced the company's efforts to
cut pay and benefits, saying it had not done enough to
reduce its costs.

Kristin A. Lee contributed reporting from Alexandria, Va.,
for this article.



http://www.nytimes.com/2004/10/08/business/08air.html?ex=1098242618&ei=1&en=898f2d1e59abd15b


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