US Airways chief turns up the heat
Stay at table until deals done, Lakefield urges union leaders
Friday, July 16, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette
A frustrated US Airways Chief Executive Officer Bruce Lakefield cranked up the pressure on the company's labor groups yesterday, urging recalcitrant union leaders to "get to the table and stay there until we get deals."
"We can't control our destiny if we waste the entire summer without reaching labor agreements," he said, "because then we are going to be faced with even uglier choices."
In a blunt telephone message available to the company's 28,000 employees, Lakefield pleaded with labor groups to speed up their cooperation as the airline rushes to cut $800 million in labor costs and $1.5 billion in total costs by the end of September. Failing at that means a possible default on $726 million in federally backed loans that allowed US Airways to emerge from bankruptcy last year.
For Lakefield, a former Lehman Bros. executive who left the comfort of his Naples, Fla., retirement home in the spring to rescue the nation's seventh-largest airline, yesterday's message marked his first use of sharp words in three months at the helm, a period that has earned him plaudits as an honest and straightforward CEO.
It came a day after US Airways' flight attendants responded to his plea for new bargaining, joining the pilots as only the second union to engage this year in official contract negotiations.
"This isn't the typical labor negotiation," he said, "where we can spend months passing pieces of paper back and forth or worse, tossing rhetorical hand grenades at each other in order to soften up the other side for negotiation. There are too many people with a stake in this."
Lakefield is still hoping for official negotiations with the International Association of Machinists and Aerospace Workers and the Communications Workers of America -- two other big unions representing mechanics, ramp workers and gate and reservation agents.
Both groups have yet to approve a new round of negotiations, although each has offered their own ideas for cost cutting. The CWA has not ruled out new contract talks, but the machinists have. IAM spokesman Joe Tiberi reiterated yesterday that nothing Lakefield can say will change the union's position.
"We are not feeling any pressure at all," he said. "Our members directed us not to reopen our contract and that's where we stand."
Beyond persuading the machinists to talk about their contract, Lakefield also needs to speed up the pace of talks with the pilots, who are being asked to give up $295 million in annual concessions -- the most of any union.
A month into talks, the two sides are at odds over the amount of hours each pilot should work per month, and some pilot leaders are upset that the company has not put a value to a proposal the pilots made on June 23 that called for a 12.5 percent pay cut.
Some are also upset that the company has not explained how it plans to fill the gap between $800 million being asked of the unions and the $1.5 billion the company plans to cut overall.
Lakefield has been pleading with the pilots to lead by example, showing the other unions that cost cuts are needed quickly. He told the pilots in a June 17 meeting at the Pittsburgh International Airport that while "I know you guys can't do it alone," the airline needs the pilots to "provide leadership," according to a transcript of the meeting obtained by the Post-Gazette.
"The other employee groups expect the pilots to provide the leadership," Lakefield told the pilots. "They know you guys have the resources to know whether it's necessary."
The backdrop to Lakefield's pleas is the industrywide problems now facing the nation's largest and oldest airlines.
United, Delta and American Airlines are all struggling for ways to reduce their sky-high costs, fight off rising fuel prices and compete with more efficient, low-cost rivals such as JetBlue Airways and Southwest Airlines. Lakefield acknowledged that yesterday, saying that "we are not alone" among airlines in "serious financial trouble."
But, he argued, "we are the smallest and the most vulnerable. ... That is not a good place to be."
That vulnerability is underscored by the fear that, if US Airways is not able to get its costs down this summer, it may have to file for bankruptcy again.
Lakefield addressed that possibility yesterday, saying, "there are some people who stated they would prefer another trip through bankruptcy." Representatives for both the machinists' and customer service agents have suggested that it will take a bankruptcy judge to force them to make deep concessions again.
"That just boggles my mind," Lakefield said. "Another trip through Chapter 11 could have a severe impact on our ability to maintain our current size, much less grow."
In his remarks to the pilots on June 17 at the Pittsburgh International Airport, Lakefield said the Retirement Systems of Alabama, which became the airline's majority shareholder during the last bankruptcy in 2002 and 2003, "will not bail us out of another Chapter 11."
Lakefield repeated that theme yesterday, saying "our labor leaders and negotiators must get to the table before our financial partners run out of patience."
"We have talked about the need for change so long, and I know we are all sick of hearing about it, so let's get to the table, cut the deals and get to the other side of the lake before the other legacy carriers do, so that we can get to the business of making money.
"That is a lot more fun."
Stay at table until deals done, Lakefield urges union leaders
Friday, July 16, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette
A frustrated US Airways Chief Executive Officer Bruce Lakefield cranked up the pressure on the company's labor groups yesterday, urging recalcitrant union leaders to "get to the table and stay there until we get deals."
"We can't control our destiny if we waste the entire summer without reaching labor agreements," he said, "because then we are going to be faced with even uglier choices."
In a blunt telephone message available to the company's 28,000 employees, Lakefield pleaded with labor groups to speed up their cooperation as the airline rushes to cut $800 million in labor costs and $1.5 billion in total costs by the end of September. Failing at that means a possible default on $726 million in federally backed loans that allowed US Airways to emerge from bankruptcy last year.
For Lakefield, a former Lehman Bros. executive who left the comfort of his Naples, Fla., retirement home in the spring to rescue the nation's seventh-largest airline, yesterday's message marked his first use of sharp words in three months at the helm, a period that has earned him plaudits as an honest and straightforward CEO.
It came a day after US Airways' flight attendants responded to his plea for new bargaining, joining the pilots as only the second union to engage this year in official contract negotiations.
"This isn't the typical labor negotiation," he said, "where we can spend months passing pieces of paper back and forth or worse, tossing rhetorical hand grenades at each other in order to soften up the other side for negotiation. There are too many people with a stake in this."
Lakefield is still hoping for official negotiations with the International Association of Machinists and Aerospace Workers and the Communications Workers of America -- two other big unions representing mechanics, ramp workers and gate and reservation agents.
Both groups have yet to approve a new round of negotiations, although each has offered their own ideas for cost cutting. The CWA has not ruled out new contract talks, but the machinists have. IAM spokesman Joe Tiberi reiterated yesterday that nothing Lakefield can say will change the union's position.
"We are not feeling any pressure at all," he said. "Our members directed us not to reopen our contract and that's where we stand."
Beyond persuading the machinists to talk about their contract, Lakefield also needs to speed up the pace of talks with the pilots, who are being asked to give up $295 million in annual concessions -- the most of any union.
A month into talks, the two sides are at odds over the amount of hours each pilot should work per month, and some pilot leaders are upset that the company has not put a value to a proposal the pilots made on June 23 that called for a 12.5 percent pay cut.
Some are also upset that the company has not explained how it plans to fill the gap between $800 million being asked of the unions and the $1.5 billion the company plans to cut overall.
Lakefield has been pleading with the pilots to lead by example, showing the other unions that cost cuts are needed quickly. He told the pilots in a June 17 meeting at the Pittsburgh International Airport that while "I know you guys can't do it alone," the airline needs the pilots to "provide leadership," according to a transcript of the meeting obtained by the Post-Gazette.
"The other employee groups expect the pilots to provide the leadership," Lakefield told the pilots. "They know you guys have the resources to know whether it's necessary."
The backdrop to Lakefield's pleas is the industrywide problems now facing the nation's largest and oldest airlines.
United, Delta and American Airlines are all struggling for ways to reduce their sky-high costs, fight off rising fuel prices and compete with more efficient, low-cost rivals such as JetBlue Airways and Southwest Airlines. Lakefield acknowledged that yesterday, saying that "we are not alone" among airlines in "serious financial trouble."
But, he argued, "we are the smallest and the most vulnerable. ... That is not a good place to be."
That vulnerability is underscored by the fear that, if US Airways is not able to get its costs down this summer, it may have to file for bankruptcy again.
Lakefield addressed that possibility yesterday, saying, "there are some people who stated they would prefer another trip through bankruptcy." Representatives for both the machinists' and customer service agents have suggested that it will take a bankruptcy judge to force them to make deep concessions again.
"That just boggles my mind," Lakefield said. "Another trip through Chapter 11 could have a severe impact on our ability to maintain our current size, much less grow."
In his remarks to the pilots on June 17 at the Pittsburgh International Airport, Lakefield said the Retirement Systems of Alabama, which became the airline's majority shareholder during the last bankruptcy in 2002 and 2003, "will not bail us out of another Chapter 11."
Lakefield repeated that theme yesterday, saying "our labor leaders and negotiators must get to the table before our financial partners run out of patience."
"We have talked about the need for change so long, and I know we are all sick of hearing about it, so let's get to the table, cut the deals and get to the other side of the lake before the other legacy carriers do, so that we can get to the business of making money.
"That is a lot more fun."
