Washington Post article on the webcast:
US Airways Employees to Hear Plea for Cuts
CEO Will Make Case for More Concessions in Internet Speech Today
By Keith L. Alexander
Washington Post Staff Writer
Wednesday, March 24, 2004; Page E01
The head of financially struggling US Airways plans to appeal directly to employees today to agree to more cuts in wages and benefits.
Executives from US Airways declined to give specifics on president and chief executive David N. Siegel's speech, which will be made during a meeting with about 75 employees and broadcast to others over the Internet. Spokesmen for the airline's pilot and machinist unions who have been briefed on the speech said they expected Siegel to share details of the airline's restructuring plan.
In his latest weekly recorded telephone message to employees, Siegel encouraged workers to watch the meeting.
"This is a truly important time for all of us here at US Airways," Siegel said in the recording. "We're faced with some very tough choices. That's why I urge all of you and your families to view this webcast. My hope is this information will help you make some informed decisions. "
US Airways is trying to cut costs by at least 25 percent because, the company said, cuts of nearly $2 billion made while in Chapter 11 bankruptcy reorganization last year was not enough to make it competitive with expanding low-fare carriers such as Southwest and JetBlue. So far, only the pilots have agreed to talks on concessions.
Last year, the Air Transportation Stabilization Board, which Congress created following the Sept. 11, 2001, terrorist attacks to help stabilize the weakened airline industry, granted US Airways a $900 million loan guarantee to help it reorganize. US Airways recently made an early payment on its loan, securing more time to repay the balance. But as part of that new agreement, the airline has to reduce its costs this year, accumulate a cash reserve of $700 million by June 30 and report a profit next year.
Other traditional airlines also are struggling to return to profitability. Delta Air Lines and Northwest Airlines are trying to secure pay and benefit concessions from its pilots. And United Airlines -- currently reorganizing under bankruptcy protection -- last week said it needed more time to cut costs and doesn't plan to emerge from Chapter 11 reorganization until late summer. United had planned to emerge by June.
Siegel was expected today to address the increased possibility that US Airways will sell one of the airline's most prized assets, such as its Northeast shuttle or one of its hub airport operations, to raise cash. The stabilization board this month gave US Airways permission to sell any assets the airline deems necessary to raise cash.
Siegel is also expected to outline several crucial problems facing the airline.
First, fuel prices have increased to record levels. That means that the second and third quarters -- which usually are among the strongest periods for airlines because of vacation travel -- could be much weaker than had been expected by the industry.
Also, in May, low-cost rivals Southwest and Frontier airlines will begin service at Philadelphia International Airport, one of US Airways' largest and most profitable operations. US Airways must cut costs quickly to fend off the new competition by lowering its fares, adding routes and flights, or both.
"This is kicking off a campaign to bring more specific proposals to organized labor and to justify them to the employees. He's laying the groundwork for substantive negotiations," said Standard & Poor's airline analyst Philip Baggaley.
Today's meeting will be the first company-wide employee gathering Siegel has held this year. The meeting had been scheduled for earlier this year but was postponed after union leaders objected to negotiating with Siegel in view of statements by US Airways executives that the airline needed additional concessions from employees.
Today's meeting will be the first for US Airways employees to be broadcast on the Internet, said David Castelveter, a company spokesman. He said using the Internet was less expensive than flying around the country to meet with employees, factoring in Siegel's time away from the office, equipment rental and other factors.
Spokesmen for the pilot and machinist unions said separately that US Airways "hand-picked" about 75 workers to attend Siegel's hour-long presentation in person and the question-and-answer period afterward. Only those workers present will be able to ask questions; however, the airline said other employees could e-mail questions before the meeting.
Castelveter denied that the airline's executives picked the attendees. Instead, he said, supervisors from various operations were asked to solicit volunteers.
Jim
