US Airways employees would be among the lowest paid in the airline industry if the company request to cut their wages is granted, union witnesses said during a bankruptcy hearing yesterday in Alexandria.
“Once again, you’ve got US Airways at the bottom,” Dan Akins, a financial adviser for the Association of Flight Attendants, said as he explained a chart showing pay scales.
US Airways is awaiting a federal judge’s decision on its request to cut the salaries of its employees by 23 percent as the airline tries to operate profitably. It declared bankruptcy Sept. 12 for the second time in two years.
US Airways executives have testified they would run out of money early next year unless they drastically reduce their expenses immediately. They also said liquidation was likely.
Mr. Akins said his research showed the airline could operate profitably without a 23 percent pay cut.
Currently, the pay scale of US Airways 28,000 employees is midrange for the airline industry, he said.
The requested pay cut would put US Airways employees 28 percent below the average for legacy carriers, or large airlines such as American Airlines and United Airlines, and 22.5 percent below the average for low-cost carriers, such as Southwest Airlines and JetBlue Airways, he said.
Sumanta Ray, a financial analyst for the Communications Workers of America, said the top pay scale for US Airways customer-service employees would drop from the current $20.05 per hour to $15.43 per hour with the pay cut the airline requested.
US Airways is trying to win the cost cuts through Chapter 11 bankruptcy it was unable to achieve in negotiations with its unions.
The airline declared bankruptcy after its unions refused to accept $800 million in labor contract concessions demanded by management. Union leaders said they already made concessions worth $1.2 billion during the airline’s previous bankruptcy, which should be enough.
Last week, David M. Davis, US Airways’ chief financial officer, said the airline needs $40 million a month in new cash flow to continue operating as it transforms its business model to be more like a low-cost carrier. A 23 percent pay cut would save about $38 million a month.
Without the savings, the airline’s cash “cushion” would be eliminated by the first week of March 2005, he said.
“At some point, we have to go down the liquidation path,” Mr. Davis said.
In other court action yesterday, Judge Stephen S. Mitchell approved an agreement between US Airways and airports in Denver and San Francisco for payment of the airline’s debts from a trust fund.
Please read our comment policy before commenting.