USAir asks workers to take pay cuts 2,500 workers at BWI to be affected by airline's request.

October 15, 1991|By Jon Morgan | Jon Morgan,Evening Sun Staff

USAir Group is asking its workers -- including 2,500 based at Baltimore-Washington International Airport -- for a series of temporary pay cuts and other cost-saving measures that it hopes will return the troubled carrier to profitability.

Executives of the company, which reported a third-quarter loss of $84.4 million, were in Baltimore yesterday laying out for employees a series of extraordinary proposals.

"There is obvious concern on the part of employees about the company's future," said James T. Lloyd, executive vice president and general counsel for the company, after two sessions with employees at BWI.

Many of the proposals will require approval by shareholders as well as the company's unions, which have, at the company's invitation, begun to review its financial books in preparation for negotiations, Lloyd said.

The company hopes to have agreements in place by the end of the year, but, Lloyd said, "certain of these unions have a history of being pretty tough in negotiations."

Nearly half of the company's 47,000 employees are union members, represented by The Airline Pilots Association, the Association of Flight Attendants, and the International Association of Machinists.

"We always maintain an open mind in negotiations. We will review it. But all of the contingencies have to be discussed," said Winston A. Rubie, president of Local 846 of the machinists union, representing about 600 USAir employees at Baltimore.

The machinists contract with the airline expired in March 1990 and has been extended indefinitely. Rubie said the company should revealed its proposals at the bargaining table, instead of employee meetings.

Several local employees, who spoke on the condition they not be identified, expressed anger at the proposed cuts. One woman said, "I think it stinks."

Another, a 36-year-old man, said the news came as a shock. But, he said, "It could be worse. It could be out the door altogether. At least I'm still employed."

USAir is BWI's most frequent flyer, operating about 60 percent of all fights at the airport. Some flights from Baltimore have been cut, but there are no plans to drop BWI as a hub, Lloyd said.

Yesterday's announcements, which are being conducted at USAir locations around the country, call for $400 million in savings next year through the following steps:

* Management and clerical staff will be reduced by 10 percent, about half through attrition and half through furloughs. The company had no estimate of how many of the 600 jobs lost would be in Maryland, but said the greatest cuts would be felt at USAir's Arlington, Va., headquarters and other headquarter sites.

* "Progressive salary reductions" potentially affecting all of its nearly 47,000 workers. The cuts would be: 20 percent of income in excess of $100,000, 15 percent on income of $50,000- $100,000, 10 percent of income from $20,000 to $50,000. No reduction will be sought on the first $20,000 of an employee's earnings. The pay cuts are expected to last for 15 months.

All officers of the company will take the pay cuts beginning Jan. 1, including company president Seth E. Schofield, whose base pay of $500,000 will be cut by 18 percent, or $90,500. Other non-union employees will take the cuts only if one of the company's major unions agrees to them.

The lost pay will be returned to employees twice over through a profit-sharing plan, but there is no guarantee about how long that will take. Also, employees will be offered stock options that would prove valuable only if USAir stock rises significantly over the next five years.

Even with the cuts, the company probably will not return to the level of pre-recession profits before the second half of 1993, Lloyd said. USAir estimates that it will lose $500 million this year and possibly the same amount next year, he said.

The nation's sixth-largest airline said yesterday that its third-quarter loss of $84 million compared with $120.3 million in red ink a year ago. On a per-share basis, the loss was $2.06 against a loss of $2.87 in the 1990 period. Revenues in the quarter fell to $1.60 billion, down from $1.64 billion last year.

Candace E. Browning-Platt, an analyst with Merrill Lynch in New York, said "I do think they are on the right track."

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