The latest US Airways restructuring plan includes the largest request for wage concessions request the airline has ever made - $950 million worth of which $300 million would be in pension and benefits.
That is about a third of last year's labour expenditures. It will also seek more than $200 million in concessions from suppliers while requesting about $1 billion in federal loan guarantees. The plan came as new US Airways chief executive David Siegel presided at his first annual meeting of shareholders.
The plan echoes similar US Airways revival plans stretching as far back as the early 1990s and the days of USAir. However, the difference this time is that Siegel faces time constraints: the airline was burning through about $3.5 million a day more than it was taking in during the first quarter, when it was down to about $560 million in liquidity.
US Airways as recently as early May said that a bankruptcy was indeed likely without dramatic changes. A deadline of 28 June to seek loan guarantees also looms, and the Air Transport Stabilization Board has made it clear that carriers must have cost cuts already approved by its unions if they are to win consideration.
Siegel's plan makes, as expected, more use of small jets, which it would increase from the 140 allowed for in a recent mini-deal with its pilots, to as many as 300 within three years. It also envisions both domestic and international code sharing alliances to produce between $150 million and $300 million more in annual revenues.
It is believed to have begun talks with United, Northwest and Continental airlines. Siegel has ruled out Delta Air Lines, with which it has significant east coast overlap. A United alliance would bring it closer to the Star Alliance, but United is in its own dire straits
The history of US Airway as an ally is mixed at best: an international alliance with British Airways collapsed in 1996 and a domestic pact with AMR produced limited benefits before ending as US Airways sought its ill-fated merger with United Airlines in 2000.
Source: Airline Business
