US Airways CEO David Siegel has proposed adding
60 mainline jets to the carrier's fleet, according
to a pleased but skeptical pilots union.
If delivered, the additional aircraft would
result in the rehiring of many of the 1,879 US
Airways pilots who are on furlough, Airline Pilots
Association spokesman Jack Stephan said Wednesday.
"US Airways doesn't need our permission to go buy
airplanes. And we would be happy to see it,
absolutely," he said. "But we'll believe it when we
see it."
He said Siegel floated the fleet expansion
proposal during US Airways' senior management
meeting at its Arlington, Va., headquarters on Dec.
16. The chief executive has not approached the
pilots union with the idea, Stephan said.
US Airways now operates 279 mainline aircraft.
They consist of 152 jets made by Chicago-based
Boeing and 127 made by Airbus, a European
consortium.
Siegel's fleet proposal came the very day the
pilots union publicly called for the chief
executive's resignation, along with that of Chief
Financial Officer Neal Cohen. The union cited the
pair's lack of "accountability" for the carrier's
continued losses following deep concessions by
pilots.
"Considering their track record, we've lost
confidence in their ability to make a plan -- any
plan -- work," said Capt. Bill Pollock, chairman of
the US Airways ALPA unit and a member of the
airline's board.
In reaction, US Airways board Chairman David
Bronner issued a statement supporting Siegel and
Cohen. Bronner could not be reached yesterday.
"We told Dr. Bronner that Captain Pollock will
not step down for those comments and reminded him
that under the Railway Labor Act, they can not
retaliate against him for carrying out his duties at
ALPA," Stephan said.
"But we are glad Dr. Bronner is here and
interested in seeing this airline succeed," Stephan
said. He said the union is still "grateful" for
Bronner's investing $240 million in US Airways
equity when the airline exited from bankruptcy last
March.
As to the additional aircraft, it was not clear
yesterday which type Siegel had in mind last week,
where they would be dispatched or in what time frame
they might be delivered.
US Airways spokeswoman Amy Kudwa declined to
comment on the fleet or board matters.
Stephan noted that even if Siegel was talking
about 70-seat regional jets -- roughly half the size
of mainline aircraft -- the expansion would still
translate into pilots being called back
US Airways CEO David Siegel has been warning of a
new round of cost reductions at the airline. But
almost everyone else is wondering whose ox will
get gored.
Analysts expect Siegel will go after
practically anything from wages to aircraft leases
to catering contracts -- just about every aspect
of operations, in order to restore profits at the
money-losing airline.
Siegel is likely to reinvoke a war-time clause
in labor agreements that allow management to defer
5 percent of pay for up to 18 months, said Robert
Mann Jr., head of R.W. Mann & Co., an airline
consultancy on Long Island. He did so last March
after the U.S. invasion of Iraq, but lifted it in
July.
With the Iraqi conflict still raging, Mann
said, Siegel could defer pay again. Based on 2002
personnel costs, that would save more than $160
million next year -- well over half what the CEO
is targeting.
"It's inevitable he'll come back for that 5
percent. Maybe more," Mann said. "The low-hanging
fruit is labor costs. (But) they have to try to do
it consentually."
Siegel told Wall Street analysts on Nov. 14
that management will seek between $200 million and
$300 million in annual expense reductions for
2004. That equates to between 2.4 percent and 3.6
percent of operating costs this year.
"That's a small percentage of improvement, but
it should be enough to make them profitable," said
Mike Boyd, head of the Boyd Group, an airline
consultancy based in Evergreen, Colo.
"There's 20 percent less revenue in this
business than there was pre-9/11," said Boyd. So,
management also will "squeeze things out of
operations, not necessarily out of employees," he
said citing:
Changing work rules, such as ending the
practice of mechanics pushing planes off the
blocks.
Relocating gates to reduce planes' taxi time
where possible.
Improving the dispatching of aircraft and
crews.
Cutting departures to the same city when those
flights are bunched together.
"They'll also go back to every single vendor
and rebid their contract," from catering to
aircraft parts, Mann said.
Siegel had said the savings might come from
aircraft maintenance, human resources and flight
operations, but provided no details. But US
Airways spokesman David Castelveter said yesterday
that the carrier is examining "every aspect of our
business" to lower costs enough to compete with
low-cost competitors.
Siegel's comments quickly stoked fears among US
Airways workers that management was hunting for
their wages again. And union leaders had some
choice words over that prospect.
"We don't know what kinds of cuts he's talking
about," said Frank Schifano, president of
International Association of Machinists Local
1976, which represents about 1,900 US Airways
aircraft mechanics locally.
"(Siegel) has never conferred with us about how
he expects to reduce maintenance costs," Schifano
said. "But I can assure you, it won't be on our
guys' backs."
The CEO's comments drew similar fire from the
head of the US Airways flight attendants union.
Flight attendants had conceded $102 million in
annual wages and benefits last year, while
aircraft mechanics gave back twice that amount.
Another source of savings could be US Airways
leases at Pittsburgh International Airport, which
amount to $62 million annually. The airline wants
those costs slashed by Jan. 5, but without a new
lease by then could face even steeper terms
thereafter. And government and company negotiators
have not sat down together since September.
"I think you haven't see Siegel pull the last
rabbit out of the hat," Boyd said.
Thomas Olson can be reached at
tolson@tribweb.com or (412) 320-7854
