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A NATION CHALLENGED: THE CUTBACKS
A NATION CHALLENGED: THE CUTBACKS; US Airways' Dim Outlook Deteriorates
By LAURENCE ZUCKERMAN
Published: September 20, 2001
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WASHINGTON, Sept. 19— It was only a week ago that the annual meeting of US Airways promised to be a nasty confrontation between management and union workers angry over executive pay and the airline's strategy after the collapse of its proposed merger with United Airlines.
Instead, anger gave way to desperation today, as union leaders used the meeting to plead with management not to cut jobs too hastily and to work with them on ensuring the airline's survival.
''This crisis does not have to generate the worst we can offer,'' said Chris Beebe, leader of the US Airways chapter of the Air Line Pilots Association, standing in his dark blue uniform to address Stephen M. Wolf, the chairman of US Airways, and about 60 other shareholders and employees attending the meeting at the Capitol Hilton here. ''We want to work with you in the common goal of bringing US Airways back up to 100 percent.''
But Mr. Wolf said he had no choice but to follow through on plans announced on Tuesday to lay off 11,000 workers and reduce its flight schedule 20 percent. ''What we are doing, you might say, is draconian, but our objective is to keep the entity alive,'' Mr. Wolf said. As with the other major carriers, he explained, the steep decline in airline traffic after last week's terrorist attacks is draining cash from company coffers at ''an alarming rate.''
The future of US Airways, the No. 6 carrier, based in Arlington, Va., was in doubt even before those extraordinary events. With higher costs than its rivals but a smaller route network, US Airways has been hurt badly by competition from Southwest Airlines and other low-fare carriers that have expanded on the East Coast in recent years.
But the fallout from the attacks has been a bigger blow to US Airways than any other airline. It is the biggest airline at Ronald Reagan National Airport here, the only major airport that remains closed. It also specializes in short flights, which are more easily supplanted by train, bus and car trips.
US Airways shares fell 16 cents today, to close at $5.65; the stock has dropped 51 percent since the markets reopened Monday.
Mr. Wolf would not say how much money US Airways was losing, and he declined to say how much was left of the $1.25 billion in cash it had on hand at the end of June.
He even declined to say whether he would stay to lead the airline through its current crisis. Under intense questioning from several shareholders, Mr. Wolf said that neither he nor two other top executives would exercise their rights, under terms of the abandoned merger with United, to collect $45 million in severance pay by retiring in November.
Mr. Wolf said the airline's future depended on how quickly passengers return.
Captain Beebe, the union leader, stressed that US Airways pilots would never fly if they thought there was any danger, a theme that was echoed by other employees. ''If anyone would like to fly with me tonight, my flights are safe,'' said Jacqueline Cornish, who has been a flight attendant at US Airways for 24 years and was to work a flight to Berlin this evening. ''I run a tight ship.''
She implored Mr. Wolf to tell her what she could do to get more passengers to return. ''Should we change our uniforms?'' she asked.
Photo: US Airways' chairman, Stephen M. Wolf, addresses shareholders. (Carol T. Powers for The New York Times)
A NATION CHALLENGED: THE CUTBACKS; US Airways' Dim Outlook Deteriorates
By LAURENCE ZUCKERMAN
Published: September 20, 2001
GOOGLE+
SHARE
REPRINTS
WASHINGTON, Sept. 19— It was only a week ago that the annual meeting of US Airways promised to be a nasty confrontation between management and union workers angry over executive pay and the airline's strategy after the collapse of its proposed merger with United Airlines.
Instead, anger gave way to desperation today, as union leaders used the meeting to plead with management not to cut jobs too hastily and to work with them on ensuring the airline's survival.
''This crisis does not have to generate the worst we can offer,'' said Chris Beebe, leader of the US Airways chapter of the Air Line Pilots Association, standing in his dark blue uniform to address Stephen M. Wolf, the chairman of US Airways, and about 60 other shareholders and employees attending the meeting at the Capitol Hilton here. ''We want to work with you in the common goal of bringing US Airways back up to 100 percent.''
But Mr. Wolf said he had no choice but to follow through on plans announced on Tuesday to lay off 11,000 workers and reduce its flight schedule 20 percent. ''What we are doing, you might say, is draconian, but our objective is to keep the entity alive,'' Mr. Wolf said. As with the other major carriers, he explained, the steep decline in airline traffic after last week's terrorist attacks is draining cash from company coffers at ''an alarming rate.''
The future of US Airways, the No. 6 carrier, based in Arlington, Va., was in doubt even before those extraordinary events. With higher costs than its rivals but a smaller route network, US Airways has been hurt badly by competition from Southwest Airlines and other low-fare carriers that have expanded on the East Coast in recent years.
But the fallout from the attacks has been a bigger blow to US Airways than any other airline. It is the biggest airline at Ronald Reagan National Airport here, the only major airport that remains closed. It also specializes in short flights, which are more easily supplanted by train, bus and car trips.
US Airways shares fell 16 cents today, to close at $5.65; the stock has dropped 51 percent since the markets reopened Monday.
Mr. Wolf would not say how much money US Airways was losing, and he declined to say how much was left of the $1.25 billion in cash it had on hand at the end of June.
He even declined to say whether he would stay to lead the airline through its current crisis. Under intense questioning from several shareholders, Mr. Wolf said that neither he nor two other top executives would exercise their rights, under terms of the abandoned merger with United, to collect $45 million in severance pay by retiring in November.
Mr. Wolf said the airline's future depended on how quickly passengers return.
Captain Beebe, the union leader, stressed that US Airways pilots would never fly if they thought there was any danger, a theme that was echoed by other employees. ''If anyone would like to fly with me tonight, my flights are safe,'' said Jacqueline Cornish, who has been a flight attendant at US Airways for 24 years and was to work a flight to Berlin this evening. ''I run a tight ship.''
She implored Mr. Wolf to tell her what she could do to get more passengers to return. ''Should we change our uniforms?'' she asked.
Photo: US Airways' chairman, Stephen M. Wolf, addresses shareholders. (Carol T. Powers for The New York Times)