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US Airways to cut pay by 21 percent; Delta warns it's near bankruptcy

By MATTHEW BARAKAT
The Associated Press

SHAWN THEW / GETTY IMAGES, 2001 US Airways jets taxi in Washington, D.C. A judge authorizing a slash in airline pay called the company's outlook "a ticking fiscal time bomb."

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The 21 percent pay cut is nearly all of the 23 percent reduction the air carrier had sought.

"I have absolutely no doubt that wage cuts of this magnitude would and will result in severe financial hardships," U.S. Bankruptcy Judge Stephen Mitchell said. But US Airways' financial situation is so unstable that "basically what we have here is a ticking fiscal time bomb."

The pay cuts are in place until Feb. 15, 2005, six weeks short of what the airline had sought. Mitchell also granted the airline authority to reduce the size of its jet fleet.

That wasn't the only bad news for the industry yesterday. Delta Air Lines, the nation's third-largest carrier, said it was only weeks away from being forced to file for bankruptcy because of widening losses — ranging from labor and pension costs to fuel expenses. United Airlines said it would need even more labor cuts than anticipated to get out of bankruptcy, and that it would seek the court's help if it is unable to reach an agreement with its unions.

	CEO Bruce Lakefield says he wants to save jobs.

Yesterday's ruling means the average US Airways salary would drop from $59,509 to $47,012, putting the airline below the other five major traditional carriers as well as Southwest Airlines, but higher than JetBlue and America West — two carriers US Airways now seeks to emulate.

After yesterday's ruling, the airline's chief executive, Bruce Lakefield, said the company was still calculating the financial effect of the decision, but he was very pleased.

"Our mission here is to save as many jobs as possible. We are being attacked on every front" by low-cost competitors, he said when asked about the ruling's effect on workers.

The judge gave the airline authority to impose the cuts immediately, but Lakefield told employees in a recorded message that a timeline will be announced in the next few days.

Mollie McCarthy, leader of the Association of Flight Attendants' Philadelphia-based local, said the pay cuts are devastating and particularly galling given that management is not taking a similar hit.

"That's what's going to make my people really angry," she said.

US Airways pilots earlier reached a tentative agreement on a deal that provides the airline the long-term savings it needs while only imposing an 18 percent pay cut.

A ratification vote on the pilots deal will conclude Thursday. The 21 percent pay cut will apply to the pilots only if they reject the tentative agreement.

US Airways, the nation's seventh-largest airline, employs 34,000 workers, of which 84 percent are represented by unions.

Copyright © 2004 The Seattle Times Company

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