US Airways Seeks Further Restructuring

US Airways announced today that it will furlough approximately 2,500 more employees over the next three months and seek work rule and benefit changes to complete its cost-cutting initiatives and emerge from Chapter 11 protection in the first quarter of 2003. As part of management’s commitment to preserve jobs where possible, the company has committed to maintain the mainline fleet at its current level of 279 aircraft - 34 more than required under the Restructuring Agreements ratified this past summer - provided the company`s labor unions also agree to additional cost-cutting initiatives that have been proposed by the company for approval prior to the company`s filing of its plan of reorganization in the Bankruptcy Court in December.

“Every mature network airline is struggling with how to adapt to fundamental changes in the airline business, where high costs will no longer be subsidized by passengers paying premium fares and low-cost airlines have become a major force in the industry. Cost-cutting and furloughs are an unfortunate and painful part of that process, and as difficult as these furlough decisions are, we must take these actions to ensure our successful restructuring and stay on plan to emerge from Chapter 11 protection in March 2003,” said David Siegel, US Airways president and chief executive officer.


All work groups will be affected as a result of this action. Included in today’s announcement are plans to close a heavy maintenance hangar in Tampa and a reservations call center in Orlando. Employees who hold seniority-based priority at those two facilities will be offered positions at other US Airways facilities in Pennsylvania and North Carolina where these functions will be consolidated. Further specific details about the number of employees and locations are not available at this time, but will be communicated to employees as they are finalized.


Siegel said that as part of its final push to reduce costs and, in recognition of reductions in fourth-quarter and 2003 industry-wide financial performance estimates, the company has begun the process of meeting with its labor union leadership to identify work rule changes and other cost-saving initiatives. While the airline has met its original target of cost savings as outlined to the Air Transportation Stabilization Board (ATSB) in conjunction with its application for a federal loan guarantee, industry-wide revenue shortfalls have forced the company to revise its business plan and further reduce operating costs.


“Our airline has some of the most inefficient work rules in the industry that drive up our costs in ways we can no longer afford in this new, tough revenue environment. The good news is that changing some of these rules will make us much more competitive, without the need to further reduce pay rates. We are clearly focused on saving as many jobs as possible, and on preserving competitive pension and benefits compensation, but we can only do that if we have a viable business,” said Siegel. “We have an obligation to all of our stakeholders to use this Chapter 11 process to make permanent, structural improvements to our airline so that we are positioned for long-term success.”

ADVERTISEMENT


The Tampa maintenance hangar will be closed immediately, with work shifted to US Airways facilities at Charlotte and Pittsburgh. The Orlando reservations center will be closed on Jan. 10, 2003, with work moved to Pittsburgh and Winston-Salem, N.C., offices. Non-management employees at the Tampa and Orlando facilities who hold seniority will be allowed to transfer, should they so choose.


The airline intends to file its disclosure statement and plan of reorganization on or prior to Dec. 20, 2002, in time for the Bankruptcy Court to consider the adequacy of the disclosure statement at a scheduled Jan. 16, 2003, omnibus hearing, and hopes to complete the process of meeting all remaining conditions of the ATSB loan in the near future.


US Airways currently has approximately 35,000 active employees and provides service to 200 destinations in the U.S., Europe, Canada, the Caribbean and Mexico. Since filing for Chapter 11 protection in August 2002, it has reduced its work force by almost 2,500. Prior to Sept. 11, 2001, the airline had 49,000 active employees.


Reporters needing additional information should contact US Airways Corporate Communications at (703) 872-5100.


——-