Larger text
Smaller text
Print
E-mail
Expert: Airline has '50-50' chance
"I think anybody would agree that it's going to be a difficult task, but I wouldn't go so far as to say it can't be done,'' said Bob Prorok, a labor lawyer with the Downtown law firm Reed Smith.
Marick Masters, a business professor at the University of Pittsburgh who is writing an academic paper about US Airways' labor relations, said he believes that the unions, in spite of recent protestations, will eventually cooperate -- but that their concessions won't be enough to save the nation's fifth largest airline from extinction.
"It's 50-50, at best, that the airline is going to make it,'' said Masters, who believes that US Airways' new business model just won't fly.
US Airways is trying to slash $1.5 billion in costs -- with more than half coming from labor -- as part of a last-ditch survival plan. Company executives have said they must reach their savings goal by mid-September. If they fail, US Airways may default on $760 million in government-backed loans, forcing bankruptcy and possible liquidation.
Union reaction to US Airways' plan has been mixed thus far. Several labor leaders have applauded management's more conciliatory negotiating tone, but say the company's demands are so draconian they will never be approved by the rank and file.
"We can reach an agreement at the bargaining table, but if you can't ratify, it's over,'' said Teddy Xidas, president of Association of Flight Attendants Local 40 in Pittsburgh.
According to Xidas, US Airways is seeking to cut flight attendants' salaries by almost 18 percent, to a median of about $27,000 a year.
US Airways wants to cut the salaries of ticket, gate and reservations agents by about 35 percent, to about $26,000 a year, according to the Communications Workers of America Internet site.
The company's goal is to reduce labor costs from more than 40 percent to about 33 percent of its total expenses, the level at low-cost carriers such as America West, one of the competitors US Airways is using as a benchmark in its latest restructuring.
In spite of recent protests, employees will accept company demands simply because they have no alternative, said Masters, who has interviewed labor leaders as part of his research.
What concerns Masters is whether US Airways has a successful business plan that will return the company to long-term profitability. He said an industrywide slump in air travel and increased competition from low-cost carriers will make it difficult for US Airways to be profitable in the East Coast corridor.
"They still have to make money, and I don't see how they're going to be able to make money hand over fist in the next several years,'' Masters said. "I have my doubts, and I don't see confident comments coming from management.''
A US Airways spokesman declined comment.
A spokesman for the Air Line Pilots' Association expressed confidence in US Airways' new business plan.
"We like their model,'' Jack Stephan said. "We like what we see, and we wouldn't be investing our time and money if we didn't think it would work.''
Prorok endorsed the company's strategy of negotiating simultaneously with all five unions. He said it reduces the union fear that those reaching agreement first will give up more than those who ratify later.
Whether US Airways succeeds in reaching new labor agreements "boils down to the question of credibility,'' Prorok said.
More Business headlines
- O'Hara company recalls devices after FDA action
- Pittsburgh Post-Gazette offers managers buyouts
- Pitt's hybrid 'campers' seek Insight from inside
- Borders Group to close 200 Waldenbooks stores
- MTR Gaming has third-quarter profit despite falling revenue
- Education Management reports net income for quarter
- General Nutrition Centers Inc. reports third-quarter profit
- Web gives authors options to publish
