CWA Update - October 17

[chipmunn]

US Airways Update: 10/17/02
Executives: “Iraq war will damage prospects for airline industry recovery…â€
CWA representatives meet with Retirement Systems of Alabama and US Airways executives…CWA representatives met Wednesday with Dr. David Bronner, chief executive of Retirement Systems of Alabama, the fund that has replaced Texas Pacific Group as the provider of the major portion of US Airways’ financing while in bankruptcy ($500 million), and which will also invest $240 million in US Airways in return for 37.5 percent of the airline after it emerges from bankruptcy next year. US Airways CEO David Siegel and other executives were present.
Dr. Bronner and others from RSA made it clear that they have confidence in US Airways’ medium to long-term success and that they are satisfied they have made a sound and potentially successful investment. They listened carefully to our statements that job security – i.e. growth that will end furloughs and allow agents and reps to be recalled – is 1, 2, and 3 on our list of priorities.
Dr. Bronner and US Airways executives also heard our message that passenger service has been extremely hard hit since 9/11 (almost 3,000 passenger service furloughees at this point), and that our contract restructuring and concessions, amounting to a $450 million contribution to the airline, should warrant a more pro-active role in terms of our
input and information flow for the passenger service group.
While expressing understanding for our job security concerns, and optimism about the medium-term prospects for the airline, RSA officials were quick to say that the turnaround of US Airways won’t be automatic and could be significantly slowed by two events which were not anticipated at the time the restructuring plan and its projections were devised: a double-dip recession and a U.S. war with Iraq. Either or both of these events would significantly change the company’s financial projections, and in fact would change the outlook for the entire airline industry, according to RSA officials.
US Airways executives at the meeting were even more blunt; they pointed out that many airlines continue to lose millions of dollars daily and stated that a war with Iraq would be so devastating to the airline industry, and to US Airways, that management may wind up asking for further concessions from the US Airways workforce. Executives pointed to the first meeting of the new US Airways Labor Advisory Committee in a few weeks as the first event where they might present this possibility.

 

[chipmunn]

Near-term pricing improvement for the major airlines appears unlikely and risks on the geopolitical and macroeconomic fronts appear to be to the downside. Airlines are planning for extreme circumstances, and this week's earnings news and strategic decisions are very somber.

It appears the industry is responding appropriately to adverse fundamentals, but the prospect of further economic headwind to thwart those efforts is vexing.

The airline industry is in a meltdown, but at this point there is no reason to believe US Airways cannot emerge from bankruptcy.

On November 7 the company is scheduled to receive $200 million in DIP financing and the agenda is for RSA to be approved as the DIP financier. Upon emergence, the company is scheduled to receive $240 million from RSA as the equity plan sponsor and the $1 billion loan guarantee; however, the $500 million in DIP financing must be repaid out of the loan guarantee.

These agreements will provide the company with a net capital infusion of $740 million scheduled for the first quarter. Seasonally, the second quarter followed by the third quarter are financially US Airways' best months; therefore, I still believe we can restructure and emerge from court protection. However, U.S. carriers haven't been able to cut costs and flights fast enough to match reduced demand.

In my opinion, it may be necessary to provide short-term relief with options of W-2 cuts, productivity improvements (which do not provide short-term help), or in light of the highly publicized pension problem throughout American business, changes to retirement plan contributions.

Obviously, the closer an employee is to retirement, the less this individual will desire a retirement plan change.

Chip

 

[chipmunn]

ALPA MEC CODE-A-PHONE UPDATE - October 17, 2002

This is Roy Freundlich with a US Airways MEC update for Thursday, October 17, with one new item:

The MEC reconvened its special meeting today at the Westin Diplomat Hotel in Hollywood, Florida.

Today, the MEC received a presentation from ALPA's Economic and Financial Analysis Department on the airline industry's financial and economic status. The overview covered the industry's current difficulties in recovering revenues and stemming losses.

 

[sabre]

Chip

I think that Pilots would be more inclined to give more for 'short term' than ground employees.

Ground employees are pretty much bottomed out as far as a living wage goes. I know some might say they could go another buck or two but 'as a whole' I believe it would be like taking blood out of Rock.

I am not saying that ALPA needs to shoulder short term concessions alone [or that ALPA should even consider further cuts] but rather it seems very unlikely to me that ground employees would not have the financial ability to shoulder any more cuts.

 

[chipmunn]

Joesy, nor do pilots. Most of the pilots have sustained pay cuts of between $60,000 to $100,000 per year. They have sold their houses, pulled their children out of private schools, stopped paying for college, and restructured their finances/lives.

Pilots unlike most other employee groups cannot work overtime to make up the difference. In fact, just prior to the cuts a CWA represented friend of mine worked extra shifts for double-pay and recieved $44 per hour and today can do that for $40 per hour. Not bad, that's more than starting pilot mainline or express pilot pay.

I'm not trying to pick a fight, but everybody needs to participate on a short-term basis or there will likely be no airline. Siegel or Bronner are not responsible for the continued terrorist attacks, the double dip recession, oil rising to over $30 per barrel, air fares at 20 year lows, rising security costs, and the pending war with Iraq.

Chip

 

[W:EXCH:INVOL]

Ahhhhh..paycuts for the short-term...the new mantra has arrived.

 

[N628AU]

It is nice when that overtime is offered, but rarely does that happen these days (at least in my department). Also, you cannot count count on overtime being a steady source of additional income since it tends to come in bunches when it is offered, but then you have dry spells.

 

[Res]

I believe more paycuts need to come from upper and middle management....seems they had the short term program...also I am certain there is alot of dead wood lying around...feel more housecleaning still needs to be done. Some say the glass palace is still overstaffed...

 

[gilbertguy]

[blockquote]
----------------
On 10/18/2002 1:23:58 PM W:EXCH:INVOL wrote:

Ahhhhh..paycuts for the "short-term"...the new mantra has arrived.

Come on.....work a couple of doubles.....one day off....voila! Yuo're back to 1992 pay levels.....

 

[gilbertguy]

[blockquote]
----------------
On 10/18/2002 1022 AM chipmunn wrote:


Pilots unlike most other employee groups cannot work overtime to make up the difference. In fact, just prior to the cuts a CWA represented friend of mine worked extra shifts for double-pay and recieved $44 per hour and today can do that for $40 per hour. Not bad, that's more than starting pilot mainline or express pilot pay.

Chip

And all you have to do is keep it up for 7 years!