Investor ups ante with USAir unions


June 24, 1994|By Suzanne Wooton | Suzanne Wooton,Sun Staff Writer

First, British Airways. Now investor Warren Buffett.

The two parties -- who collectively own more than a third of USAir stock -- have threatened serious stuff if the airline doesn't soon reach an agreement with its labor unions to cut operating costs.

A recent warning by Mr. Buffett that he may resign from USAir's board of directors comes just months after British Airways PLC vowed to withhold the next phase of its $750 million investment unless the airline gets its spiraling costs under control.

The messages are mostly seen as pressure tactics on USAir's labor unions, which have been asked to make major wage and benefit concessions. A group of the company's labor unions currently is analyzing the company's financial dilemma.

Neither Mr. Buffett's threat -- made last week in a USAir proxy filed with the Securities and Exchange Commission -- nor British Airways' warning in March has any immediate effect. British Airways isn't scheduled to make the second part of its investment for another two years. And Mr. Buffett's resignation from the board would, at worst, reflect a lack of confidence that the company can become profitable again.

Since 1989, USAir has lost more than $2 billion. Its stock has plummeted from $24.25 in April last year to $6.75 yesterday.

USAir has been one of few big losers for the Omaha, Neb., multimillionaire. In August 1989, Mr. Buffett paid $358 million for 358,000 shares of preferred stock. Those shares are convertible into 9.23 million shares of common stock worth $64.6 million today.

Through his holding company, Berkshire Hathaway, Mr. Buffett also has huge stakes in companies like Coca-Cola and Salomon Inc.

So far, he has played a far lower key role at USAir than at Salomon, for instance, where he took over as chairman and guided the securities firm out of a scandal involving U.S. treasury bonds.

Nuts were served in more ways than one

In a never-ending quest to promote its Peanut Fares, Continental Airlines rounded up 26 different people with the last name Nut or Nutt in Baltimore and Boston yesterday for a kind of exchange program. The Baltimoreans got a free flight to Bean Town for a lobster lunch and a day of sightseeing while the Bostonians got a first hand look at Charm City.

The airline offered the free flights to help inaugurate Continental's five nonstop flights a day between BWI and Boston.

New BWI ad mines the crab connection

In the cuteness department, Continental and the zany Southwest Airlines have nothing on the marketing folks at BWI.

"We're not all crabs" is their ad running in the well-respected Aviation Daily.

The ad is the latest in a series of offbeat ones running in the trade publication which is widely read by airline executives, consultants and travel agents. It is part of an ongoing campaign by BWI to convince them that the Maryland airport isn't all that far from Washington.

"It seems that when you're a user-friendly airport in the middle of America's fourth largest market, folks come out of their shells to use you," the ad says.

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