By TIMOTHY LOGUE
09/01/2004
While US Airways officials are hopeful they can win concessions from their union employees and stave off a second bankruptcy filing, an industry analyst claims the airline's problems run much deeper than its collective bargaining agreements.
"You can have very low-paid employees, but if you don't use them in the most efficient way you can still end up with problems," said Ronald Kuhlmann, vice president of Unisys R2A Transporta-tion Management Consultants. "Cutting costs is only half of the equation. The other half centers on the structure and the operational philosophy."
US Airways is seeking $295 million a year in concessions from its pilots, $263 million from mechanics, $122 million from reservations agents and gate workers, $116 million from flight attendants and $4 million from workers represented by the Transport Workers Union.
After a weeklong lull, talks between the company and the Air Line Pilots Association resumed over the weekend. In two previous renegotiations, US Airways pilots have taken the lead in restructuring their contracts.
"The talks with the pilots are hot and heavy, but they are the only ones negotiating right now," said Scott Zdawczyk, vice president of Prospect Park-based Local 13301 of the Communications Workers of America (CWA), which represents reservations agents and gate workers.
"The CWA hasn't broken off negotiations, but there are no talks scheduled at this time."
Along with American, Continental, Delta, Northwest and United Airlines, US Airways is one of the six remaining "legacy" airlines that were operating in the U.S. prior to deregulation in 1978. In the current low-fare climate, all of them are struggling to maintain or increase market share.
US Airways emerged from Chapter 11 last year after securing more than $1 billion in givebacks from hourly workers.
"US Airways made the same mistakes that other legacy carriers have made," Kuhlmann said. "They got their costs down considerably but only on par with other legacy carriers, not with the low-cost airlines like Southwest.
"They set the bar too low."
Kuhlmann said US Airways was also unprepared for Southwest Airlines' recent march into its second largest hub city, Philadelphia. Traditionally, Southwest has avoided cities that serve as hubs to legacy airlines.
"When the announcement was made, it was if no one at US Air had ever considered the possibility of Southwest coming to Philadelphia," Kuhlmann said. "The take-backs from the unions will help but they will never add up to the amount they gave away during boom times.
"If they want to turn things around, they need a streamlined business model. Whether it's good times or bad, make sure you are offering the lowest cost possible for whatever service you are providing ... It is a change that requires a totally different mindset."
Negotiators for US Airways and the Air Line Pilots Association exchanged proposals over the weekend. The company will meet with leaders from the International Association of Machinists and Aerospace Workers today to "share their cost-savings ideas," a company spokesman said.
So far, the IAM and Transit Workers Union have refused to reopen their contracts. US Airways has said that new labor deals with unions are necessary to avoid a return to bankruptcy court and possible liquidation. The airline has warned that bankruptcy looms if deals are not reached by at least Sept. 30.
Told that some employees have said they would prefer another trip to bankruptcy rather than renegotiate, Kuhlmann said, "They make a valid point that givebacks will not make a lasting difference, but you would have to be a real optimist to believe that a second bankruptcy would leave anyone standing."
The Associated Press contributed to this report.
09/01/2004
While US Airways officials are hopeful they can win concessions from their union employees and stave off a second bankruptcy filing, an industry analyst claims the airline's problems run much deeper than its collective bargaining agreements.
"You can have very low-paid employees, but if you don't use them in the most efficient way you can still end up with problems," said Ronald Kuhlmann, vice president of Unisys R2A Transporta-tion Management Consultants. "Cutting costs is only half of the equation. The other half centers on the structure and the operational philosophy."
US Airways is seeking $295 million a year in concessions from its pilots, $263 million from mechanics, $122 million from reservations agents and gate workers, $116 million from flight attendants and $4 million from workers represented by the Transport Workers Union.
After a weeklong lull, talks between the company and the Air Line Pilots Association resumed over the weekend. In two previous renegotiations, US Airways pilots have taken the lead in restructuring their contracts.
"The talks with the pilots are hot and heavy, but they are the only ones negotiating right now," said Scott Zdawczyk, vice president of Prospect Park-based Local 13301 of the Communications Workers of America (CWA), which represents reservations agents and gate workers.
"The CWA hasn't broken off negotiations, but there are no talks scheduled at this time."
Along with American, Continental, Delta, Northwest and United Airlines, US Airways is one of the six remaining "legacy" airlines that were operating in the U.S. prior to deregulation in 1978. In the current low-fare climate, all of them are struggling to maintain or increase market share.
US Airways emerged from Chapter 11 last year after securing more than $1 billion in givebacks from hourly workers.
"US Airways made the same mistakes that other legacy carriers have made," Kuhlmann said. "They got their costs down considerably but only on par with other legacy carriers, not with the low-cost airlines like Southwest.
"They set the bar too low."
Kuhlmann said US Airways was also unprepared for Southwest Airlines' recent march into its second largest hub city, Philadelphia. Traditionally, Southwest has avoided cities that serve as hubs to legacy airlines.
"When the announcement was made, it was if no one at US Air had ever considered the possibility of Southwest coming to Philadelphia," Kuhlmann said. "The take-backs from the unions will help but they will never add up to the amount they gave away during boom times.
"If they want to turn things around, they need a streamlined business model. Whether it's good times or bad, make sure you are offering the lowest cost possible for whatever service you are providing ... It is a change that requires a totally different mindset."
Negotiators for US Airways and the Air Line Pilots Association exchanged proposals over the weekend. The company will meet with leaders from the International Association of Machinists and Aerospace Workers today to "share their cost-savings ideas," a company spokesman said.
So far, the IAM and Transit Workers Union have refused to reopen their contracts. US Airways has said that new labor deals with unions are necessary to avoid a return to bankruptcy court and possible liquidation. The airline has warned that bankruptcy looms if deals are not reached by at least Sept. 30.
Told that some employees have said they would prefer another trip to bankruptcy rather than renegotiate, Kuhlmann said, "They make a valid point that givebacks will not make a lasting difference, but you would have to be a real optimist to believe that a second bankruptcy would leave anyone standing."
The Associated Press contributed to this report.
