After massive cuts, US Airways workers cautious about future

| Sunday, Sept. 27, 2009

The merger of US Airways and America West Airlines completed on Sept. 27, 2005, begs the familiar question: Are you better off than you were four years ago?

The answer from most observers is, yes. The reason, say experts, is then-bankrupt US Airways probably would have vanished from Pittsburgh entirely had it not combined with the Phoenix carrier.

"Pittsburgh is better off today because of that merger," said Mike Boyd, industry consultant in Evergreen, Colo., who spent several years as a consultant for the Allegheny County Airport Authority.

"As a result of that combination, a lot of people still have jobs in Pittsburgh," Boyd said. "The alternative is they would have liquidated, absolutely."

US Airways has shed about 1,000 local jobs since the merger that closed exactly four years ago. But it still employs nearly 2,000 people here. That's a long way from the nearly 12,000 it employed at peak in 2001, but still enough to be among the region's largest 25 private employers.

"I've seen it all," said Bill Hollowood, a 40-year aircraft mechanic with US Airways and president of Moon-based Local 1976 of the International Association of Machinists. Local mechanics and related maintenance workers who once topped 2,300 for US Airways now number 717.

But Pittsburgh remains a jewel in US Airways' fleet maintenance system. It's the only place the airline performs major overhauls on Airbuses, which is because of the IAM's experienced work force here, he said. The carrier's Boeings are overhauled in Charlotte, a US Airways hub.

"I feel like we've stabilized now, after all the cuts," Hollowood said.

"In fact, we've called back over 30 people since February to do heavy maintenance work on Embraer 190s," he said, referring to the 90-seat Brazilian aircraft.

Some other local work groups don't feel as secure. Pittsburgh gate and ticket agents have fallen to about 140 from 500 in 2002. Reservation agents, who once numbered 900, are no longer based here at all.

"And it isn't getting any better," said Debbie Gula, a 30-year customer-service worker and president of Communications Workers of America Local 13302, Green Tree. "The airport is dead. It's like a ghost town."

US Airways spokesman Morgan Durrant said the airline has no "plans presently to alter our service levels in Pittsburgh." He adds the airline's local commitment is largely tied to its aircraft maintenance and flight operations control centers here, whose workers he terms "business-critical."

That's why Don Wright feels fairly optimistic about the airline's presence in Pittsburgh. He is president of Transport Workers Union Local 545, Moon, and works at US Airways' new operations control center there.

The $25 million center replaced one in Findlay when it opened in November and controls all 1,300 mainline US Airways flights per day across 11 time zones. About 600 people work at the center, including 155 dispatchers.

"It represents a serious commitment to Pittsburgh that US Airways maintains this," said Wright. "You can't operate an airline without an operations control center. So as long as the airline is in business, we're going to be here."

Pilots and flight attendants, however, are no longer even based in Pittsburgh, which once was home to about 900 pilots and about 1,900 flight attendants. They also are US Airways' only main work groups still working under separate, pre-merger contracts, which impedes operations, analysts say.

"They've made changes to the route network since the merger. So you want to rebase work groups and change the fleet," said Robert Mann Jr., airline consultant at R.W. Mann & Co., Port Washington, Long Island. "But separate labor contracts mean they can't reduce the number of hours flown or reduce the number of (larger) aircraft."

Another Chapter 11, an option US Airways exercised in 2002 and 2004, does not seem likely anymore, analysts said.

"I don't see another bankruptcy at all," Mann said. He said business travel that fell during the recession is perking up again, which will help US Airways and all network carriers.

Still, US Airways, along with other airlines, has suffered from plenty of turbulence since the merger. Jet fuel spiked up to a record $3.50 a gallon last year, a more than 60 percent jump over 2007 levels. Then, the global financial meltdown hit one year ago, hurting traffic and companies' access to financing.

As CEO Doug Parker told shareholders in June: "2008 was about oil. 2009 is about the economy."

Experts give Parker much credit for pulling US Airways back from the brink, especially for his ability to raise operating cash, both on Wall Street and on planes.

US Airways became one of the first airlines to charge passengers for checking a bag in May 2008 when it imposed a $25 levy on a second bag. It ramped that up to $20 for the first bag, plus $30 for a second bag in August 2008.

Next came fees for beverages onboard. US Airways began charging $2 for soda, bottled water, juices and coffee in August 2008, and raised alcoholic drink charges to $7 from $5.

Boyd said passengers essentially "just swallowed these fees," even though they didn't go down easily. Parker estimated in June the fees should raise more than $400 million in extra revenue this year alone.

Like an animal fattening up for a harsh winter, US Airways continues to fortify itself amid a harsh recession as the traditionally slow winter quarter approaches. Just last week, the carrier said it will raise more than $100 million from selling additional shares to Citigroup.

In the past 12 months, US Airways stock has closed as high as $10.86 in November, and as low as $1.97 in March. The shares ended trading Friday at $4.96, up 5 cents.

"Some management teams just sit there and watch the cash tide go out, and Parker does anything but," analyst Mann said. "He and Derek Kerr (chief financial officer) have been very creative."

One of the creative maneuvers Parker engineered was a "slot swap" with Delta Air Lines early last month. A slot is a carrier's right to land or take off; so, two equal a round trip.

US Airways gave up 125 slot pairs at New York La Guardia, where it has a meager market share. In exchange, US Airways got 42 slot pairs at Washington Reagan National, along with an ability to expand to Brazil and Asia. The deal, effective sometime in 2010, should add about $75 million in revenue annually, the airline estimates.

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