- The Washington Times - Friday, August 13, 2004

US Airways’ shares fell 22 percent yesterday as the airline’s chief executive warned of “nonexistent” progress in labor talks intended to avoid bankruptcy.

“People are trying to tell me that the pace of negotiations is typical for the airline industry and I shouldn’t get frustrated. As a newcomer to the industry … I think it’s silly that we are wasting so much time when we could be working together to fight off the competition,” Chief Executive Bruce Lakefield said in a weekly message to employees.

Mr. Lakefield replaced David Siegel as CEO in April partly because he had better relations with union leaders.

He also warned that employees could be hurt if the company files for Chapter 11 bankruptcy protection from creditors.

“If we file for Chapter 11 protection, nothing, and I repeat nothing can be guaranteed, especially a profit-sharing plan,” Mr. Lakefield said.

Last week, the company offered its unions a profit-sharing plan as an inducement for them to make concessions. Employees would share the earnings as soon as US Airways makes a pre-tax profit.

The Arlington airline is seeking $800 million in concessions from its unions as part of a plan to cut its costs by $1.5 billion a year.

On Thursday, an investment banker for the pilots’ union said the airline’s financial condition is precarious, in part because of labor costs.

“As a result of various financial pressures, it is highly likely the company will seek bankruptcy protection no later than mid-September,” said the report prepared by Glanzer & Co.

US Airways shares fell 56 cents yesterday to $1.98 on Nasdaq. Just more than a year ago, the shares traded as high as $32.

Management had previously warned it needed to have labor deals ratified by Sept. 30, when the airline must meet financial benchmarks to avoid default on a $900 million federally guaranteed loan.

The airline emerged from its previous Chapter 11 protection in March 2003.

The unions, which already have granted concessions of $1 billion a year, have said the airline’s problems lie with its business plan and management, not labor costs.

They did not respond to Mr. Lakefield’s message to employees yesterday.

“We are not making any comments about negotiations,” said Dana Hardek, Air Line Pilots Association (ALPA) spokeswoman.

The union’s negotiators have been meeting with the airline’s management daily on the airline’s request for $295 million in wage and benefit cuts from the pilots.

Unions for the flight attendants, reservations agents and gate workers also continue. Mr. Lakefield said the machinists refused to meet until Aug. 31, and only then to discuss cost-savings ideas proposed by the union.

US Airways, the nation’s seventh-largest airline, is one of several major air carriers struggling with its unions and bankruptcy issues. Others are Delta Air Lines and United Airlines.

Major airlines are losing market share to low-cost airlines, which operate with no-frills business plans that help them to keep fares low.

Delta Air Lines said in a Securities and Exchange Commission filing this week it would need to file for bankruptcy protection unless it can reduce costs.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2021 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide