"Airlines brace for crisis"

Monday, October 18, 2004

Airlines brace for crisis
Labor, non-labor cuts expected as fuel costs soar.
By Mary F. Albert
The San Francisco (CA) Chronicle


S.F. AIRPORT -- Citing high fuel prices and worsening industry conditions,
two airlines announced impending labor cuts while another sat poised to file
for bankruptcy.

A bankruptcy judge granted US Airways authority to temporarily cut the pay
of its union workers by 21 percent, comparing the airline's financial
outlook to a "ticking fiscal time bomb." The 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, he said,
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. Friday's ruling means the average US Airways salary
would drop from $59,509 to $47,012.

Also on Friday, United Airlines announced its intention to start scheduling
labor negotiations to determine how to trim another $1 billion from its
costs.

Citing a continued slump in the airline industry, United Airlines
spokeswoman Jean Medina explained that this additional round of cuts is
necessary for the airline to get back on its feet. 

"The realities of the airline industry mean accelerating the plans for cost
cutting," she said. "We recognize that this is a difficult process for all
involved, but [the slump in the industry] is unrelenting."

United -- which employs almost 11,000 people at the San Francisco
International Airport -- plans to implement a combination of labor and
non-labor cuts by mid-January, said Medina. The airline will also consider a
variety of non-labor cuts to include how the business handles its ticket
distributions, she added.

Exactly how many benefits or jobs will be reduced will depend in part on how
labor negotiations unfold. The reactions of Carl Finamore, president of the
International Association of Machinists and Aerospace Workers Local 1781,
foretold of future resistance to additional cuts.

"This isn't the first time they've done this," said Finamore, who explained
that the union, which represents about 2,100 Bay Area United Airlines
employees, has already taken 18 percent in salary and benefits cuts since
the airline filed for bankruptcy in 2003. 

"They keep coming back to the employees to subsidize their total
mismanagement of the airline," he said. "I'm sick and tired of United
Airlines coming back to us. If you want the average worker's opinion, United
can take their attitude and shove it."


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