"US Airways' Pittsburgh airport plan coming 'soon'"

Wednesday, August 20, 2003

US Airways' airport plan coming 'soon'
By Mark Belko
The Pittsburgh (PA) Post-Gazette


Two months after receiving a $263.9 million proposal from state and local
politicians aimed at preserving its Pittsburgh hub, US Airways finally may
be ready to counter with its own plan.

A spokesman for Pennsylvania Gov. Ed Rendell said yesterday that the state
was expecting to receive a proposal from the airline soon, based on
discussions with US Airways officials.

But neither Rendell spokesman Tom Hickey nor US Airways spokesman David
Castelveter would say exactly when the proposal would be delivered to
Rendell, who is leading the negotiations on behalf of the state, and
Pittsburgh and Philadelphia authorities.

"We've been working on a solution that we expect to present soon,"
Castelveter said. "We're not going to put a timeline on it."

Hickey said the governor expected the proposal within the next month -- and
probably sooner -- but could not be more specific.

The comments came less than a week after Allegheny County Chief Executive
Jim Roddey expressed frustration with how long it has taken US Airways to
respond to the $263.9 million proposal delivered to the airline during a
meeting in Washington on June 11.

The proposal calls for cost savings and capital improvements at Pittsburgh
International Airport and Philadelphia International Airport, but it did
little to address the major issue US Airways claimed was confronting the
Pittsburgh airport -- $673 million in debt.

US Airways, Pittsburgh's dominant carrier, pays $54 million a year to pay
off that debt, most of which was incurred in the construction of the
midfield terminal, which the airline agreed to build.

It wants the airport to cut that debt by $500 million -- a figure Roddey and
other local officials believe is unrealistic unless the airport defaults on
bonds or stretches out the debt, incurring millions in additional interest
costs.

In an interview last week, Chris Chiames, US Airways senior vice president
of corporate affairs, said the airline was working with municipal finance
experts to examine ways to reduce the debt. 

Told yesterday that US Airways soon might be providing a response, Roddey
replied simply, "I hope that's correct, and that we do get it soon." He
declined further comment.

Before emerging from bankruptcy, US Airways canceled its leases at
Pittsburgh International, effective Jan. 5, and is seeking to lower its
costs through the negotiations. Without cost reductions, it may shut down or
dramatically scale back its Pittsburgh hub.


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