The article below from NYTimes.com has been sent to you by psa188@xxxxxxxxx /--------- E-mail Sponsored by Fox Searchlight ------------\ SIDEWAYS IS THE BEST PICTURE OF THE YEAR! Critics in New York, Los Angeles, San Francisco and Boston agree... SIDEWAYS is the BEST PICTURE of the year. The award-winning film from Alexander Payne has also earned 7 GOLDEN GLOBE NOMINATIONS including Best Picture, Best Director, Best Actor and Best Screenplay. SIDEWAYS stars Paul Giamatti, Thomas Haden Church, Sandra Oh and Virginia Madsen. SIDEWAYS is now playing in select theaters. Watch the trailer at: http://www.foxsearchlight.com/sideways/index_nyt.html \----------------------------------------------------------/ Airlines' Woes May Be Worse in Coming Year December 27, 2004 By MICHELINE MAYNARD Passengers who got caught up in the airlines' troubles over Christmas received a glimpse of what may await them in the coming year. The winter storms and computer malfunctions, which snarled airport traffic from Philadelphia to Atlanta, may have been unavoidable, experts say. But the signs of labor unrest that cropped up over the weekend could be a harbinger of things to come in an industry already buffeted by bankruptcies and structural change. With the six big airlines expected to lose another $5.5 billion this year, every one of them - American, United, Delta, Continental, Northwest and US Airways - has announced plans for deeper cuts in 2005. All told, they will reach $7.5 billion in spending and at least 20,000 jobs. "We really have the tough part ahead of us," said Gerald A. Grinstein, the chief executive at Delta Air Lines, which avoided a bankruptcy filing this fall by persuading pilots to cut their pay by a third. For passengers, the irreversible retrenchment by the airline industry, which has shrunk by a quarter since the start of the decade, has meant the loss of food service, a reduction in routes, flight delays, lost baggage and other headaches. But if employees' reactions to these kinds of changes are anything like what US Airways experienced over the weekend, consumers are in for more serious disruptions. Yesterday, US Airways, which is operating in bankruptcy, canceled 29 flights, on top of 300 cancellations on Friday and Saturday, when unusually high numbers of baggage handlers in Philadelphia and flight attendants elsewhere called in sick. Union officials said the sick calls were not organized. Comair, a regional carrier for Delta Air Lines, also canceled flights for a second day. The airline canceled all 1,100 of its flights on Saturday after a computer malfunctioned, stranding passengers in cities like Cincinnati and Atlanta. The airline planned to operate just 172 flights yesterday and to return to normal by noon on Wednesday, according to the Air Line Pilots Association. The situation at US Airways came on top of problems it had experienced for months in the Philadelphia baggage system. It led the airline to make unscheduled flights filled with suitcases from Philadelphia to Charlotte, N.C., for processing before being returned to passengers. Amy Kudwa, an airline spokeswoman, said yesterday that as part of their compensation, some passengers who were stranded were put up in hotels, while those who did not have their bags would receive at least $50 for the first day and $25 for each day after that. US Airways is by far the sickest of the major airlines. It filed for its second bankruptcy in two years on Sept. 12. It is demanding deep pay cuts from employees, who have already given two rounds of wage and benefit concessions. In a memorandum on Dec. 15, US Airways told flight attendants based at airports in Boston, Charlotte, New York and Washington that they would have to fly an additional five hours a month starting in February to make up for staffing shortages. The memo came on the same day that flight attendants reached tentative agreement on a new contract that would cut their pay 9 percent and reduce benefits, including sick and vacation time. Before that agreement, flight attendants threatened to strike the airline if a bankruptcy court set aside their contract and replaced it with more spartan terms. Flight attendants at United Airlines, which also wants to set aside union contracts, have made the same threat. Officials at the Transportation Department spoke with US Airways management over the weekend and were monitoring the situation yesterday, said Robert Johnson, a department spokesman. "We're in a fact-finding mode," he said, adding that transportation officials would be "deliberate and careful." The chief executive at US Airways, Bruce R. Lakefield, angrily blamed the "operational meltdown" on the "irresponsible actions of a few." In a message to employees yesterday, Mr. Lakefield said: "Let us not forget who pays our salaries - our customers - and this weekend did nothing to earn their confidence and their future business." Don Logan Jr., a US Airways maintenance worker in Philadelphia who took scheduled vacation during the holiday rush, said yesterday that management should have anticipated problems. "Back at Thanksgiving, we were short," he said. "Did they think it was going to go away come Christmas?" "I don't blame any employee who wants to spend the holiday with their family after what they have been put through this year," Mr. Logan said. Some US Airways workers are angry that Mr. Lakefield has not taken a pay cut, even though a bankruptcy court judge ordered emergency 21 percent pay cuts for union members. "The extra presents under the tree that my kids didn't get this year, I'll tell him thank you for that," Mr. Logan said. For some consumers, whose family reunions and hopes for a holiday break were foiled by the problems, this weekend may be the last straw. "I don't think there's a tremendous amount of sympathy," said Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass. "Consumers are always ready at a moment's notice to jump from one airline to another airline." Charlton Tarrant, 38, who flew home to Detroit last week on US Airways, agreed. "It's like any industry: survival of the fittest. The strong survive and the weak will get devoured," Mr. Tarrant said. He will have to choose another airline next year if US Airways cannot survive. But, said Mr. Tarrant, "If they're not fit, then they will fold like others before them." The airlines' unending spiral brings to mind what happened to American auto companies, steel makers and coal miners, whose decline had an indelible effect on parts of the country that still echoes in shuttered plants and vacant mills. In the case of airlines, though, the situation is different. Unless they lived in the Rust Belt, or a few other places where Detroit put its plants, most people in the country never met an autoworker or witnessed the industry's decline first hand. But virtually everyone who flies and every city with an airport feels the airlines' predicament. "It's like the chain on a bicycle. If one link is broken, we aren't going anywhere," said Robert Roach, vice president for transportation at the International Association of Machinists and Aerospace Workers. "The airline industry really is an infrastructure industry," added Alfred E. Kahn, the former head of the Civil Aeronautics Board, who oversaw the industry's deregulation under President Carter. In places like Evansville, Ind., the industry's problems have meant the loss of entire airlines. On Dec. 17, US Airways dropped its daily flights to Charlotte, the airport's only service to the East Coast. Now, passengers headed east must fly on other airlines to Detroit, Memphis or Atlanta, and connect from there. "It's sad," said Robert Working, 57, manager of the Evansville Regional Airport, speaking by telephone last week as a storm dumped 19 inches of snow on the airport's three runways, complicating an already busy holiday week. And in the last year, a range of cities, from Boston to St. Louis to Minneapolis and Dallas, have seen airlines cut service, while in the last four years, others have pulled out completely. Since 2000, the big airlines have eliminated more than 100 cities from their schedules as they sort out where they can afford to fly on the fares consumers will pay, according to an estimate by Back Aviation Solutions, an industry consulting firm. At least people in Evansville have other options. One-third of the nation's 609 airports offering daily flights are served by just one airline, said Michael Allen, the chief operating officer at Back Aviation. If one company pulls out and another does not pick up its flights, a chain reaction begins: jobs will be lost, communities will have trouble attracting new companies, employers will not be able to easily send employees where they need to go and real estate prices will fall because the cities and towns have become remote. "If you don't have a connection to the outside world, you become less valuable," Mr. Allen said. "It's fine to say, 'Let market forces prevail,' but you can't do that without examining what the consequences are," said Patricia Friend, president of the Association of Flight Attendants, which has 50,000 members. Because of wage and benefit cuts, some new flight attendants earn just $12,000, less than they might make at Wal-Mart or as a bank teller. "The flight attendants will always sympathize with the passenger. But they won't always sympathize with the company," said John McCorkle, a US Airways flight attendant who writes an industry newsletter. Airlines are hoping for a reprieve in the form of lower prices for jet fuel, which rose 74 percent this year, to more than $1.50 a gallon. That could give them an opportunity to be profitable again after losing $30 billion in the last five years. Even so, profits will not restore the jobs the companies are eliminating; bring back the traditional pension plans that are being dropped; or do away with the cost-cutting that has been announced. And as JetBlue, Southwest and other low-fare airlines keep a lid on prices, the big airlines cannot raise fares substantially to give themselves a cushion as they once might have done. Mr. Grinstein of Delta said, "If we are waiting for some miracle to occur, we are wasting our time and we'd be better off saving our breath." In Evansville, Mr. Working said he thought the big airlines were "finally learning how to compete" - a step he thought was long overdue. Yet, he admits he wishes things were different. "To be honest, I wonder if deregulation was good. You used to dress up and everyone acted real nice to you and it was fun to fly," Mr. Working said. "Now it isn't nice, you only get pretzels and all the other service is gone." Eric L. Dash contributed reporting from New York for this article, and Jeremy W. Peters from Detroit. http://www.nytimes.com/2004/12/27/business/27air.html?ex=1105162926&ei=1&en=5912c7701367d644 --------------------------------- 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