USAir executives give up $4.3 million in bonuses

December 05, 1992|By Suzanne Wooton | Suzanne Wooton,Staff Writer

Following an outcry from USAir union leaders, the airline's to managers have given up about $4.3 million in bonuses they would have received after a proposed alliance between USAir and British Airways PLC is completed.

But language in the now-abandoned bonus arrangement has fueled charges by other domestic airlines that the financially troubled USAir was willing to give up control to see its $750

million deal with British Airways go through.

And the agreement has left USAir union leaders infuriated that top-level management would even consider accepting such bonuses while employees were taking cuts in pay and benefits to help the ailing airline.

In initially accepting the bonuses, President Seth Schofield and nine other executives gave up their right to leave USAir with hefty severance benefits one year after "a change in control."

That waiver was intended to assure British Airways that USAir's top management would remain, according to David Shipley, a spokesman for the Arlington, Va.-based airline. In the wake of widespread criticism, the managers gave up the bonus Thursday, but still signed the waiver.

The phrase "change of control" was merely "legal jargon that has nothing to do with the effective management of the airline," Mr. Shipley said.

But opponents of the deal -- primarily other large domestic airlines that say it would give British Airways an unfair competitive advantage in the United States with no reciprocity in Britain -- said the language indicated the foreign airline would call the shots.

"It just further documents that British Airways would get control over all major decisions at USAir," Joe Hopkins, a spokesman for United Airlines in Chicago, said yesterday.

Changes in USAir management could easily affect Baltimore-Washington International Airport, where USAir is the largest carrier, handling more than half of the airport's 27,000 daily passengers.

The alliance, subject to approval by shareholders and federal regulators, would give the British air carrier ownership of a 21 percent voting interest in the USAir and a 23 percent non-voting interest. Federal law prohibits more than a 25 percent ownership stake by foreign owners in a U.S. airline.

USAir executives backed away from the bonuses this week after disclosure of the arrangement in a mailing to shareholders sparked criticism from the airline's employees.

"We are very, very upset that they would even attempt to do something like this," said David Melancon, spokesman for the Association of Flight Attendants, which represents 9,000 USAir attendants.

"The fact that they immediately said they won't take the money does not exonerate them," he said.

During the past three years, USAir has lost roughly $700 million. It has been seeking about $400 million in wage and benefit concessions from its employees.

Two of its unions, the International Association of Machinists and the Air Line Pilots Association, have already agreed to cuts. The flight attendants are still negotiating.

Mr. Melancon said his union learned about the managers' bonus agreement in the midst of bargaining sessions with the airline earlier this week.

"We couldn't believe this kind of upper level sort of deal," Mr. Melancon said.

The three unions have supported the USAir-British Airways deal which is expected to be acted on by federal regulators by Dec. 24.

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