Typical Airline Management

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Dec 21, 2002
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Give execs $55 million, airline asks
Karen Ferrick-Roman, Times Staff
05/11/2005
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US Airways wants to give its executives, managers and salaried workers up to $55 million in bonuses and severance pay while it discusses a possible merger.

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That's equivalent to about a month-and-a-half of savings from union workers who endured 21 percent, bankruptcy court-imposed pay cuts from October to February.

That's an average of about $29,000 for each of 1,898 executives and managers, according to a petition filed in U.S. Bankruptcy Court in Alexandria, Va., Monday evening.

"They must be crazy!" said Rep. Mike Veon, D-14, West Mayfield. "You can't ask for bonuses for your management while you're demanding salary cuts from even your lowest-paid workers, and you're cutting benefits for people who are retirees of your company. It's just outrageous. It sounds like a corporate death wish."

According to documents, the airline needs to keep key personnel as it progresses in talks with America West.

"Why is it that the company is so dead-set on keeping and retaining managers that haven't been successful in operating this airline?" asked Teddy Xidas, president of the local and national US Airways flight attendants union.

She's been told there's not $900,000 to extend flight attendants' medical leave. "And (Chief Executive Officer Bruce Lakefield) comes up with $55 million for retention bonuses for a company that's going over the cliff. I don't understand that."

The plan wouldn't change Lakefield's contract. He still would get 300 percent of his $425,000 salary upon leaving.

Key points are:

* Severance and bonuses for 25 top executives at US Airways, PSA Inc. and Piedmont Airlines, paying 100 to 200 percent of their salaries for both severance and bonuses, totaling up to $18 million.

* Expanded severance of three months to a year for salaried employees, totaling up to $32 million.

* Discretionary $2,500 to $50,000 incentives, totaling up to $5 million.

"Whether or not this is the best use of that money probably depends on who you are," said Randy Nutter, chairman of Geneva College's business department. "Fifty-five million dollars, that's a lot of jobs. That's a lot of pay. ... For the remaining employees they have, it's a little hard for most persons to watch management declare a special set of bonuses for themselves. But it is not unheard of."

Why is it necessary to give this amount of money to get these people to stay, Nutter asked.

"And probably the most basic question is, is it fair? It may well be a measure of how little loyalty to the company is left in the ranks if they have to buy the loyalty," he said.

"At a time when employees' jobs and retirees' pensions are at risk, the company should not be considering excessive severance packages for executives," according to a statement from U.S. Sen. Rick Santorum, R- Penn Hills.

U.S. Rep. Melissa Hart, R-4, Bradford Woods, who in the past has criticized US Airways' executives departing with millions, said she saw a difference. "This is clearly aimed at employees who are lower level (salaried employees), who probably are the folks who would keep the airline going," she said.

According to the court document, this "is not a change of control bonus plan that pays tens of millions of dollars as success fees for consummating a transaction."

From March 2004 to this month, the number of US Airways employees systemwide dropped from 28,278 to 23,770 while the number of Pittsburgh workers plummeted from 7,198 to about 4,600, including 800 managers, the airline said.