USAir hires Bell to run network

April 19, 1995|By Suzanne Wooton | Suzanne Wooton,Sun Staff Writer

In its continuing effort to cut costs, USAir is hiring Bell Atlantic to manage its communications network, including reservation and ticketing operations.

The move is expected to save the financially struggling airline between $4 million and $5 million a year.

USAir officials said yesterday that the agreement with Bell Atlantic Network Integration, a subsidiary of Bell Atlantic Corp., will have no effect on passengers; nor will it mean layoffs among the company's 45,000 employees.

As part of the agreement, however, Bell Atlantic will offer jobs to the 137 employees in USAir's telecommunications department. The contract with Bell Atlantic is valued at $140 million over 5 1/2 years.

"This agreement is an important part of our continuing effort to reduce the cost of doing business and to remain a strong, competitive airline,` said John W. Harper, USAir senior vice president and chief financial officer.

The deal is part of a growing trend in the airline industry to cut costs by contracting various services. USAir and other airlines also have hired outside firms to handle its cargo operations and food service. Delta Airlines recently formed a partnership with AT&T to provide its telecommunications services.

The agreement with Bell Atlantic marks the first time the telecommunications giant has provided such a service for an airline.

Since 1988, Arlington, Va.-based USAir has lost more than $3 billion, including $684.9 last year when other carriers began rebounding from the worst financial period in airline history.

In its annual filing with the Securities and Exchange Commission last week, USAir's auditors expressed "substantial doubt" that the company could continue operating as it is.

The company's earnings statement for the first quarter of 1995 is expected to be released today.

The Bell Atlantic agreement is the latest in a series of operating cuts by USAir designed to save $500 million a year. In addition, the company is seeking $500 million a year in wage and benefit concessions from its unionized employees.

Thus far, the carrier has reached tentative agreement with its pilots on a 22 percent salary cut, but that pact is contingent on similar deals being struck with the airline's other unions.

Negotiations with groups representing other employees are continuing.

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