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US Airways to cut 11,000 jobs

Airline trimming its flights, staff in attempt to survive terror fallout

Tuesday, September 18, 2001

By Jim McKay, Frank Reeves and Mark Belko, Post-Gazette Staff Writers

US Airways yesterday said it plans to slash 11,000 jobs from its work force, putting thousands of local workers in jeopardy, as it struggles to survive the fallout from last week's terrorist attacks on the Pentagon and the World Trade Center.

The cutbacks, which also include a 23 percent reduction in flying, were announced at the end of a day that saw the airline's stock plunge 52 percent to $5.57 on the New York Stock Exchange, leading the parade of steep sell-offs in the stock of all major domestic carriers.

US Airways employs 46,500, including 12,000 locally, the most of any of its scattered East Coast hubs. Pittsburgh is a major maintenance center, with roughly 5,000 mechanics and support personnel, and is home to roughly 2,000 pilots.

If the cutbacks are spread evenly, as many as 2,800 local US Airways workers, including flight attendants, reservations agents and dispatchers, may be furloughed.

The airline has not determined when or where the reductions will take place, spokesman Rick Schoen said. But it's expected they will come quickly in response to what's certain to be a plunge in business following last week's attacks.

Commuter operations that fly under the US Airways Express banner -- wholly-owned Allegheny, Piedmont, Potomac Air and PSA airlines -- also are expected to announce service and personnel cuts soon, the airline said.

Other major carriers also are cutting back. Some analyst speculate as many as 100,000 airline industry workers could be pared in coming weeks as the industry tries to offset travelers' reluctance to fly.

"The entire U.S. aviation system is in jeopardy, and without decisive actions the future of the system, along with its impact on the nation's economy, is imperiled," US Airways Chairman Stephen M. Wolf said, adding to the growing chorus of calls for relief for the industry. Airlines are asking the government for more than $12 billion of aid, through a mix of grants, loans and subsidies, to deal with the fallout from the attacks.

President Bush met yesterday afternoon for an hour with his economic advisers and other senior officials to discuss the economic consequences of the attacks, including the economic position of the airline industry. And U.S. Transportation Secretary Norman Mineta is scheduled to meet this morning with airline executives.

Sen. John McCain, R-Ariz., the top Republican on the Senate Committee on Commerce, Science and Transportation, called the threat of lost airline services a matter of "national interest" and said he was reviewing a variety of assistance proposals.

Rep. Don Young, R-Alaska, who chairs the House Transportation and Infrastructure Committee, failed early Saturday to win quick passage of an airline bailout package that would have provided $2.5 billion in cash assistance and another $12.5 billion in loan guarantees to the industry. He is expected to resume his efforts when Congress reconvenes later this week

"This is a very grave situation and it's likely to be prolonged," William Lauer, chairman of Tarentum-based money manager Allegheny Capital Management Inc., a US Airways investor, said. "Everybody out there in the business is looking at a minimum or one third or even a 40 percent loss in revenue for the balance of the year."

Darryl Jenkins, director of The George Washington University Aviation Institute in suburban Washington, D.C., said US Airways, Continental, Northwest, America West and Air Tran Airways could all be forced into bankruptcy if business doesn't improve much from current levels.

Allegheny County Chief Executive Jim Roddey, saying "there is no real good news these days," yesterday said he talked with US Airways President Rakesh Gangwal and pledged that the county and the Allegheny County Airport Authority "would do everything we can to help." Roddey also was planning to go to Washington, D.C., "as soon as possible" to lobby for special funding for the industry.

Roddey said Gangwal gave no indication whether the layoffs would be temporary or permanent. "He did say that the next six months would be critical" and "if they can get through the next six months that they think US Airways will be fine."

The union representing US Airways' 6,000 pilots yesterday criticized the airline's cuts.

"There has got to be a better solution than gouging such critical capacity and putting people out of work," said Roy Freundlich, spokesman for the Air Line Pilots Association. He said the union was preparing cost-cutting recommendations to management that would preserve more jobs.

US Airways executives told union leaders they were trying to conserve cash and hold the airline together until the crisis passes, perhaps in January or February. But they said they had no idea if they can hold on that long, according to union officers who took part in a Sunday morning conference call by Gangwal and others.

Allegheny Capital's Lauer said there was also talk of temporarily cutting wages by 20 percent or more, although that speculation was not confirmed by the company.

"They're asking the unions for concessions and asking us to come up with some creative ideas," said Chris Fox, president of a Communications Workers of America local that represents about 1,500 reservations agents and inside airport workers in Pittsburgh. "We're all willing to fulfill the needs to stay above water, but what that is I don't know."

An unknown number of mechanics represented by the International Association of Machinists were asked not to report to work yesterday at the Pittsburgh International Airport. The union said the company invoked a previously-unused clause that permits it to temporarily reduce employment in the event of war or an act of God.

Roddey said he and Gangwal did not discuss the proposed expansion of maintenance facilities during yesterday's conversation. But he said his guess was that "we've got a six-month delay on anything like that."

The cutbacks also could affect the budget for Pittsburgh International Airport. With fewer flights, Roddey expects landing fees paid by the airlines to increase.

He said the airport authority may have to raise fees for such ancillary services as parking.

He also raised concerns about the operations of the Airmall, the collection of shops and restaurants at the airport. They stand to lose business because of an FAA order barring all but ticketed passengers in the boarding areas.

Rachel Smolkin of the Post-Gazette National Bureau contributed to this report.

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