Us Airways Seeking Tax Increases

FlyingHippie

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Jan 27, 2003
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US Airways seeking tax increases

Airline's plan to cut debt won't fly, lawmaker says

Saturday, September 20, 2003

By Mark Belko and Tom Barnes, Post-Gazette Staff Writers

The long-awaited US Airways proposal for maintaining its hub at Pittsburgh International Airport calls for increasing hotel, sales and car rental taxes to cut $500 million in debt.

But the plan appears to have no support from top state and Allegheny County leaders.

In a proposal to state and county negotiators Wednesday, US Airways officials called for increasing the taxes by varying percentages to raise $31 million a year to pay down the airport debt, which totals $673 million.

The exact percentages were not available yesterday.

"It's just stuff you might as well not even propose because it won't get off the ground," said state Rep. Tom Stevenson, a member of the Allegheny County Airport Authority board. "They've proposed stuff that is just untenable."

US Airways spokesman David Castelveter declined to comment on details of the airline's proposal but did say the solution "was one that would creatively bring down the airport debt."

The sales tax is now 7 percent in Allegheny and Philadelphia counties and 6 percent elsewhere in the state.

Car rentals in Pennsylvania are now subject to a 2 percent tax. There's also a $2 a day rental fee imposed statewide. Car renters also pay sales tax.

The tax on hotel rooms varies from county to county but is now 7 percent in Allegheny County. The sales tax also is added to hotel bills.

At a news conference yesterday, before details of the US Airways proposal became available, Gov. Ed Rendell appeared to rule out sales or other taxes for paying down the airport debt.

"We certainly are not going to wipe out the debt using direct tax dollars," he said. "First of all, that doesn't make sense. Second of all, I don't think it's the right thing for the citizens of Pennsylvania or the citizens of Pittsburgh."

Allegheny County Chief Executive Jim Roddey, while refusing to discuss the US Airways plan, also said he would not consider raising taxes.

"I would agree with the governor's statement. He said raising taxes was not an option for this project," he said.

Likewise, Stevenson, R-Mt. Lebanon, said he saw no support in the state Legislature for the plan.

"None of us is buying into US Airways' take-it-or-leave-it scenario," he said. "I don't think they'll bite off their nose to spite themselves. They need Pittsburgh to stay profitable. Their threats of leaving Pittsburgh are very hollow."

Robert Macey, another member of the Airport Authority board, said he's equally opposed to raising taxes.

"If it comes to taxes, I don't think we're going to get public support and I don't support it. I don't believe it should be put on the shoulders of the taxpayers," he said.

US Airways presented the proposal to state and county negotiators roughly three months after receiving from Rendell a $263.9 million plan to cut costs and make capital improvements at Pittsburgh and Philadelphia International airports.

In addition to using taxes to reduce the Pittsburgh debt, US Airways is calling for the same types of tax increases to reduce its rent at Philadelphia International Airport. The airline has asked for $140 million in rent relief.

The state presented its plan in response to US Airways canceling its leases at Pittsburgh International, effective Jan. 5, shortly before emerging from bankruptcy. It has threatened to close down its hub unless it gets the cost reductions it wants.

The airline said Wednesday that retiring $500 million in debt would require $31 million in new revenues annually -- a "small price to pay" compared to the economic activity the airport hub generates for the Pittsburgh region. US Airways did not specifically identify revenue sources for the $31 million in its public statements.

A US Airways-commissioned economic impact study released the same day said closing the hub would cost the region $1.8 billion a year and 17,100 jobs.

During the meeting, airline officials also compared the public subsidies it was seeking to the public investments made to build PNC Park, Heinz Field and the new David L. Lawrence Convention Center.

The $673 million in debt is mostly from construction of the midfield terminal, a project the airline approved and agreed to finance largely through rates and charges paid to the airport.

At his news conference, Rendell also said he won't help US Airways reduce the Pittsburgh airport debt until the airline makes a specific commitment about jobs.

"We may take steps to make the Pittsburgh airport and the Philadelphia airport become better airports [through capital improvements], but we sure as heck aren't going to reduce the debt levels that they are contractually obligated to pay without significant guarantees on jobs," he said.

"There are a lot of jobs at stake One of the problems is that US Airways refused to give us a job-level guarantee. We're certainly not going to do anything that would help them ... without job guarantees."

In August, US Airways Chief Executive Officer David Siegel irked Allegheny County and state officials by saying the airline "cannot make commitments to the state on employment levels or types."

Siegel has repeatedly said the airline must reduce its costs in Pittsburgh and, if it can't, it is "fully prepared to exit Pittsburgh."

As for job guarantees, Castelveter said, "It's difficult for anyone to make any kind of job guarantee knowing how fragile the marketplace is."

He said the economy has yet to fully recover, many businesses aren't growing and there is always the threat of additional terrorist attacks that make people afraid to fly.

"We certainly want to maintain our hub in Pittsburgh and we want to develop our regional jet hub in Pittsburgh," he said. "The only way to do that is by finding a creative solution to reduce the airport debt."

Rendell said he expects that the Pittsburgh airport "will get other airlines if [US Airways] leaves, but I don't think we'll ever have the level of activity with [them] staying and hubbing. So we are going to try to the best of our ability to give them help."

Rendell said his plan for capital improvements at the Pittsburgh and Philadelphia airports "is a good one, and I think they recognize that, but they are concentrating on reducing the level of debt. To the extent we can do that by creative financing, we are willing to help."

Rendell said that while he "hasn't always been pleased" with some of the statements Siegel has made, the negotiations to try to keep US Airways in Pittsburgh "have been a good-faith process."



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(Mark Belko can be reached at [email protected] or 412-263-1262. Tom Barnes can be reached at [email protected] or 717-787-4254.)
 
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Dear Dave, if US Airways pulls the hub from Pittsburgh I just want you to know that I, and lot of of other people, will be using a ton of sick time to find a new house in one of the other bases. Closing down a hub could be quite costly. By contract the company must pay for the move. My last move had 28,000 pounds for a moving company. Came to over $30,000, US paid for that one too. I hate to think what that will cost now that we have more pounds to move. It's gonna cost you Dave!
 
Well, just look at that...U has found creative ways to HELP them stay in PIttsburgh....why not? Screw the tax payers once again by raising sales taxes and hotel car rental taxes. That should hurt these businesses for sure. Why not hurt the surrounding business just to save U. All of Pittsburgh has just been invaded by USAirways managment. The arrogance of these men never ceases to amaze me.

POINT HERE: If the community workers don't have money now to go out and spend in order to pay higher sales tax qbove 7% already on purchases....raising sales tax only forces folks to spend even LESS. Especailly if the jobs only offered are Mid -poverty-wage-employer-Atlantic Airways. What about the elderly in this community. We have the second largest elderly community per capita than any other state.

Job Proetctions? I have to go and contact Rendell again and make sure his retorhic is MAIN LINE HUB STATUS protection. The jobs will be there by default.

Mid-Atlantic are jobs for the area, but at what quality?????? What does U plan for the future in regard to "quality jobs" for all that money they are plotting to suck out of Pittsburgh and PA?

These state officials promised there would be NO deal unless they get in writing Mainline hub status with quality jobs.....we will just see how much HELL I have to create around here as I watch U sipher out my tax dollar on my ALREADY reduced wage being employed here. They are attempting now to "invade" my family, friends, citizens and customers with their "sick" financial logic.
 
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PITbull, sadly I've come to the conclusion that the PIT base is toast. I wish I didn't feel that way, but it looks grim. Those jerks in CCY have pushed things to a completely unreasonable level. As a PA taxpayer, I want them to tell Siegel to shove it. The thing is, Dave and his henchmen have the state of PA and the city of PIT by the balls, so to speak. Look at the nice new 300 million dollar convention center in downtown PIT. How on earth are they going to be able to attract conventions here with limited air service? Some people in PIT are delusional to think another airline is going to come in here with a lot of service. Maybe somebody like AirTran or JetBlue will step in with an additional 30 flights, but that's it! Somebody suggested Southwest. Well, hello, Southwest's biggest so called hub, Phoenix, only employs 4,500 workers. If they come to PIT, they might add on 20 jobs at the most. So, there you have it. Those pieces of crap in CCY know this and are playing that card to the hilt. What they haven't thought about is if they stay, how much damage have they done to future negotiations? Its kind of like Bush going into Iraq, didn't think about the reality AFTER the war. Duh!
 
Hippie,

Nothing sad about it...

I do not expect My state Reps to bend over for the likes of these sadistic clowns using MY TAX dollars, unless it benefits Pittsburgh, PA, and LABOR!

They will do what is in the best interest of PIttsburgh and PA, AND THAT DOES NOT MEAN THAT IT HAS TO BE USAirways. About time we cut our "blackmailing" strings full of threats and intimidation of "ooohhh,- you -need- us, you -need us"...bull #### slime talk from these yo-yos on the property. IF I were Rendell, I would want to speak with the "stake holder" only. I would not waste my "air" on these clowns. Deal fairly, reasonably, or bye, bye. Take your money and shove it!

And read between the lines, Hippie". If U wants a piece of Pittsburgh and PA action, they too will have to pay a fair price with equal risk and in writing. If they want to draw that line in the stand, and keep it there and not budge,.....fine. THEY CAN PULL THEIR #### OUT OF OUR GREAT CITY, and there won't be a Pittsburgh, or PA passenger that will fly this airline anywhere. Its called a "boycott" for life! Competition, is a great thing. That's what makes our System Grand!

Learn to deal fairly OR PAY THE PRICE. We here at U, writing has been on the wall, we can either transfer out and follow U to another base for as long as it will lasts, or look for work in another state. That's real reality.

I have had it with the "gun to the head" negotiations. Pull the damn trigger already.

Hope U can find a spot for those 400 RJs in CLT and PHL and still operate on time. And they might not need to look at PHL cause I doubt the state will bend on that arena either. So, they need to look to spend some more millions and millions and billions of dollars setting up shop to have these RJs balcken the skies in another city. Hope they can run'em on time...LOL...
 
Flying,

If Dave furloughs more employees, then THE COMPANY CAN AFFORD TO PAY FOR THE MOVE'S. Period!

He's got it, he's being a TIGHTWAD.....

Take it and run with it- Express wages are nothing to write home about...Come the New Year I'm changing my Medical from 90% to 100% BABY._FAMILY Plan AND WE PLAN ON USING IT IMMEDIATELY>>
206.00 per month fam plan is a heck alot cheaper when you're having routine checks every 6-7 months, @ 3000.00-6000.00 a pop...

US THOSE BENEFITS AND TAKE WHAT IS rightfully earned. :up: >>
 
AFA has theirs intact.

PIT AFA President made copies of their contract "moving expenses"and furnished them to the PA State Reps when they asked for it.
 
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Pretender2003, that's not good! How did you guys lose this? Like PITbull said FA's and pilots still have this clause in their contract. Start getting the paperwork ready. According to the pilot contract, we have three years from the time the paperwork is approved to move. They will only pay for the move that is within 300 miles of the base. My neighbors just had their move approved.
 
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Pretender2003, sorry about that :( What worries me is that Dave will take the moving expenses away. It wouldn't surprise me. He's breaking a bunch of stuff in the contract. After all, we are dealing with lower-than-pondscum management. Arlen Specter was too kind to call Dave Siegel a soundrel, he's a *&^%$#@$%^&** of cr*p!
 
Dear Cast of Characters at CCY/ALA -

As a former resident of Allegheny, Lancaster and Bucks counties in the beautiful state of Pennsylvania, as a person that sends their child to college in the the pristine environment of rural Pennsylvania, as a person that has life-long friends and family residing in Pennsylvania, and finally, as a person that still reserves hotels and rents cars in the Keystone State .... GO POUND SAND! :down:

Why would the residents of, and those of us visiting Pennsylvania have to pay for your extensive long-term mismanagement and consistently bad business decisions? GO POUND SAND! :down:

Oh, and just in case I didn't make it clear regarding my stance on your proposed non-solution, solution: GO POUND SAND! :down:
 
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USFlyer, add flights into PIT. More flights, costs go down, oh and better connections for passengers. Why was it built? Because this airline wanted it.
 
Technically, the US Airways of today is not the one that created the debt problem; the former company went bankrupt and a new company emerged out of Chapter 11. We really need to look towards resolving the problem and not focusing on how it was created. US has always had a flawed business plan, and the PIT hub may have been a large part of that.
 

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