SOURCE: Philadelphia Inquirer http://www.philly.com/mld/philly/news/11612309.htm US Airways seeks $55 million to keep employees during talks By Tom Belden INQUIRER STAFF WRITER US Airways has asked a U.S. Bankruptcy Court judge to let it spend as much as $55 million to try to keep its officers and managers from quitting while it discusses a merger with America West Airlines. The airlines' parents, US Airways Group Inc. and America West Holdings Corp., have said they are in talks to combine the companies into what would be the nation's sixth-largest carrier but have provided no details of what a merged operation would look like. An analyst said today that he expects to hear more details soon about what the companies are doing. "We should hear something this week or early next week," said analyst Ray Neidl of Calyon Securities in New York. "I think there are serious talks going on." US Airways said in its court filing late Monday and in a message to employees today that it has been losing key management employees at a rapid rate because of its financial problems and its April 22 acknowledgement that it was talking to America West. "Since US Airways filed for bankruptcy protection in September 2004, the level of voluntary turnover among management employees has reached an all-time high," the message to employees said. "In January 2005, the loss rate was 24.4 percent, compared with 10 percent the previous January." Analysts say that if America West and US Airways agree to merge, the largest job losses would be among officers and managers at the airlines' headquarters, but there also could be positions eliminated throughout the companies. There would probably be fewer layoffs among pilots, flight attendants, merchanics, baggage handlers and ticket agents, the analysts said. America West, based in Phoenix, has 13,000 employees. US Airways, based in Arlington, Va., has 24,000 employees. In its filing with U.S. Bankruptcy Court Judge Stephen Mitchell in Alexandria, Va., US Airways said it wanted to budget $50 million for severance payments and another $5 million for bonuses to key managers who stay with the company if a merger occurs. As much as $18 million would be set aside for severance pay for 25 officers, and another $32 million for 1,873 other salaried employees who aren't covered by union contracts, the filing said. But, US Airways said, it estimates that it probably would need to spend only a third of the $50 million, or about $16 million, because some officers and managers will stay with the new company and others could leave voluntarily before a merger occurred. Analysts said having a severance pay plan is common and necessary when merger talks in any industry become public. "People see what's going on," said airline consultant John V. Pincavage in Westport, Conn. "People are rational when it comes to their paychecks. I'm surprised they didn't have something like this in place already." Air Line Pilots Association spokesman Jack Stephan said the union wanted to learn more about the severance plan but would oppose it in court if it does not closely adhere to similar plans at other low-cost airlines like America West. Throughout negotiatons last year with the pilots and other unionized employees, US Airways' management said its goal in lowering its labor costs with concessionary contracts was to match the pay and benefits at low-cost carriers.