The struggling airline is scrambling for ways to defend its turf as the the discount carrier makes its ballyhooed arrival.
By STEVE HUETTEL
Published May 5, 2004
PHILADELPHIA - For thousands of US Airways workers here in the airline's most important city, the noisy approach of Southwest Airlines is difficult to ignore.
Solicitations for Southwest-branded credit cards come in the mail, offering a free flight for buying one ticket and transferring a credit balance. Southwest commercials promoting its arrival on Sunday fill up morning drive-time radio.
Then there are the personal reminders, such as the FedEx deliveryman who complained to stock clerk Charles Klementowich about the $350 he paid to fly US Airways to Las Vegas and back.
"He says, "I can't wait for Southwest to get here,' " said Klementowich, who works in US Airways' maintenance hangar at the airport. "I'm hoping the Philadelphia flying public isn't like the sports fans here and jump on the other wagon."
Alarm bells went off when Southwest said last October it would start flights into Philadelphia. Top brass at US Airways already had been warning employees that cost cuts made during an earlier seven-month bankruptcy reorganization weren't enough to turn the carrier around.
With the nation's biggest discount carrier targeting US Airways' largest market and No. 2 connecting hub, then-chief executive David Siegel said the airline had to reduce costs another 25 percent to compete on price with Southwest and other low-cost competitors.
During a presentation in March to employees, Siegel said Southwest's goal in Philadelphia was to "kill" US Airways. Projected on a screen was an image of Southwest chairman Herb Kelleher in an Uncle Sam suit with the message: Herb Kelleher Wants Your Job.
Many US Airways workers weren't sorry when the combative Siegel resigned April 19, saying the company needed a change in leadership. But employees such as Klementowich say Siegel was right about Southwest. "I think we've got to change fast or else," he said.
US Airways began meetings with employee unions Tuesday, presenting its restructuring plan to the Air Line Pilots Association. The pilots union is the only group that has agreed to renegotiate its contract.
The International Association of Machinists, which represents the mechanics and ramp workers, says it won't reopen contracts. Other unions, including the one representing flight attendants, want to see the restructuring plan before deciding to consider concessions.
When low-cost carriers flew in only 10 percent of markets, traditional airlines with high costs could make money catering to last-minute business travelers paying top dollar, said Ben Baldanza, US Airways senior vice president of marketing and planning.
But discounters have expanded rapidly, driving down fares. Many companies won't pay full fare for their travelers when there is a low-cost alternative. US Airways is introducing a lower fare structure but needs lower costs to support it, Baldanza said.
"Revenue is the problem, but cost is the solution," he said.
US Airways has cut its workforce by nearly 40 percent since the 2001 terrorist attacks. Besides losing pay and benefits, remaining employees have been moved to lower-status jobs, night and weekend shifts or even different cities.
That hurts morale among senior workers, said John Minor, a former US Airways manager who now is Southwest's station manager in Philadelphia.
"One of the problems at US Airways is that it's not expanding," he said. "Working a night shift with Tuesdays and Wednesdays off is okay if you expect to do better. But in an airline where you don't have that (opportunity), it's hard."
Klementowich and Michael Touhey, an aircraft inspector, know the feeling. Both came to Philadelphia after US Airways closed its maintenance hangar in Tampa. But they say US Airways is a better airline than Southwest and has a fighting chance.
"If the unions work something out with the company, the company has tremendous potential to turn around," Touhey said.
