US Airways in pay cuts

ARLINGTON, Virginia – US Airways announced plans to cut US$45 million (N$292,5 million) a year in pay and benefits to roughly 3 700 management employees, a move the airline hopes will convince its union employees to collectively accept US$950 million in annual cost cuts.

An airline source who briefed reporters Monday on condition of anonymity said the planned cuts will include hundreds of layoffs and shed at least US$45 million off the US$201 million collective payroll for its management workers. The source acknowledged that proportionately, management workers are facing less severe cuts than the airline is seeking from its union workers.But the source said the bankrupt airline’s transformation plan seeks to get US Airways’ costs in line with those of low-fare competitors like JetBlue and America West.When measured against that yardstick, management employees are often already at or below the necessary targets.The company’s 10 most senior officers will receive a 10 per cent pay cut and a 25 per cent cut to retirement benefits.Vice presidents and managing directors will take a 7,5 per cent pay cut, while other management employees face a five per cent pay cut.The retirement plan is being cut for all management workers.The management work force will be cut about 10 per cent from its current level of 3 700 through attrition, reorganisation and layoffs, the source said.He estimated that “hundreds” of layoffs will be required, in addition to permanent elimination of jobs now being held vacant.The airline’s plan for management cuts comes as its pilots’ union is scheduled to resume debate Tuesday on whether to allow its 3 000 rank-and-file members to vote on a package of US$300 million in annual cuts, including an 18 per cent pay cut, the airline says it needs to return to profitability.Also tomorrow, the airline will ask a bankruptcy judge to impose temporary pay cuts of 23 per cent on all union workers, along with cuts to retirement plans.The company has warned that it may be forced to liquidate by mid-February if it cannot implement its cost cuts.The company employs 28 000 workers in its mainline operations and about 34 000 workers overall.About 84 per cent of its workers are covered under union contracts, according to the company’s annual report.-Nampa-APThe source acknowledged that proportionately, management workers are facing less severe cuts than the airline is seeking from its union workers.But the source said the bankrupt airline’s transformation plan seeks to get US Airways’ costs in line with those of low-fare competitors like JetBlue and America West.When measured against that yardstick, management employees are often already at or below the necessary targets.The company’s 10 most senior officers will receive a 10 per cent pay cut and a 25 per cent cut to retirement benefits.Vice presidents and managing directors will take a 7,5 per cent pay cut, while other management employees face a five per cent pay cut.The retirement plan is being cut for all management workers.The management work force will be cut about 10 per cent from its current level of 3 700 through attrition, reorganisation and layoffs, the source said.He estimated that “hundreds” of layoffs will be required, in addition to permanent elimination of jobs now being held vacant.The airline’s plan for management cuts comes as its pilots’ union is scheduled to resume debate Tuesday on whether to allow its 3 000 rank-and-file members to vote on a package of US$300 million in annual cuts, including an 18 per cent pay cut, the airline says it needs to return to profitability.Also tomorrow, the airline will ask a bankruptcy judge to impose temporary pay cuts of 23 per cent on all union workers, along with cuts to retirement plans.The company has warned that it may be forced to liquidate by mid-February if it cannot implement its cost cuts.The company employs 28 000 workers in its mainline operations and about 34 000 workers overall.About 84 per cent of its workers are covered under union contracts, according to the company’s annual report.-Nampa-AP