US Airways teeters on the brink

Workers anxious

attacks might speed strapped airline's end

September 19, 2001|By Paul Adams | Paul Adams,SUN STAFF

The multiple crises facing US Airways Group Inc. have been described by analysts as the perfect storm: a failed merger, expensive labor contracts, a slumping economy and, now, the aftermath of four deadly hijackings that could leave hundreds of Baltimore-area employees out of jobs.

Even before last week's terrorist attacks, analysts were skeptical of the Arlington, Va.-based airline's chances for survival. Today, US Airways has a negative net worth of $1.8 billion, a net debt ratio of 92 percent, the industry's worst debt rating and less than 52 days of cash reserves on hand.

"I think even with a congressional bailout of the industry, what has happened may speed up the process that we thought was happening already," said Raymond Neidl, an analyst with the investment firm ABN-Amro, referring to previous speculation that the airline might fail.

The storm clouds are building, industry analysts say. And the airline's 46,500 employees wait and wonder whether they will have jobs next week.

"It's just so surreal, the grand scale of it and the big loss," said Linda Bok, one of 1,100 US Airways flight attendants based in the Baltimore area. "You just wonder how we're all going to get through this, but I have a lot of faith that we will."

US Airways, which lost $195 million in the first half of this year, said Monday that it would eliminate 11,000 jobs and reduce capacity by 23 percent in an effort to conserve cash while the industry waits for passengers to return to the skies.

Bok and other anxious employees are waiting to hear where those cuts will occur. Most of the information employees receive is from company news releases. A spokesman for the airline said further details might be available in the next two days.

Union leaders said yesterday that they are anticipating the job furloughs to cut across all departments, possibly resulting in "several hundred" fewer jobs in the Baltimore-Washington area. US Airways is the second-biggest carrier at Baltimore-Washington International Airport, where it operates 74 mainline jet flights daily and a similar number of regional express flights. About 70 of the airline's mainline flights operated yesterday, though one airline employee said many of the planes left less than half full.

"Our usual Los Angeles flight that's usually booked heavy with 180 to 200 people had about 40 on it today, so load factors are really low," said Ernest Anderson, a utility agent for the airline at BWI and vice president of Machinists union Local 846. The union represents almost 300 mechanics and ramp service workers at BWI.

The airline, which will hold its annual shareholders meeting today, might face difficulty from its unions, most of which have no-layoff clauses in their contracts. But several union leaders said employees realize there is a crisis and are willing to make tough choices in order to save the airline if the cuts are temporary and reasonable.

Roy Freundlich, a spokesman for the US Airways unit of the Air Line Pilots Association, said the airline's 6,100 pilots might be willing to consider temporary pay cuts in the form of fewer hours worked. Early retirement of some pilots is also being considered to help reduce head count.

"However, we do think management's capacity reduction plan is excessive and hasty, and we want them to slow down and develop a methodical process to deal with this crisis," he said.

Jeffrey Zack, a spokesman for the Association of Flight Attendants, said the union is skeptical of the airline's plans.

"We know there's a need for some sort of relief for these companies. We know Congress is going to act to support the airlines, and at that point we are going to demand that the airlines not take advantage of the situation and cut their workers just to make themselves look good on Wall Street," he said. The union represents more than 10,000 US Airways flight attendants.

Analysts say US Airways could be hurt more than other airlines in the current crisis because of the nature of its routes and because of Reagan National Airport in Washington, where the airline operates about 45 percent of the airport's flights, remains closed. The airport was closed indefinitely out of concern that terrorists could use it as a launching pad for attacks against the White House and Pentagon, among other government sites.

The government officials and business passengers who fly out of National make it one of the most lucrative markets in the nation and a key source of profits for US Airways.

Neidl said US Airways' lucrative Washington-New York shuttle operation and valuable landing slots at Reagan National account for nearly half of the airline's value. The airline has temporarily shifted four daily shuttle flights to Dulles International Airport near Washington, but analysts say the long commute to Dulles and airport security delays negate some of the advantages of taking the fast and convenient shuttles out of National. The fear is that many passengers will take a three-hour train ride instead.

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