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By BILL ADAIR, STEVE HUETTEL and JEAN HELLER
© St. Petersburg Times, published September 19, 2001
WASHINGTON -- This time, US Airways is really in trouble.
Tampa's No. 1 airline has always been sensitive to economic dips because of its high labor costs and unique route system. But suddenly the company's prospects are especially bleak.
Reagan National Airport in Washington, the crown jewel of the US Airways system, is still closed because of fears of terrorism. That has robbed the airline of some of its most profitable routes at a critical time.
"National is their franchise," said Darryl Jenkins, the head of the Aviation Institute at George Washington University. "When you remove that franchise, it puts them in an even more desperate situation."
As Congress considers a bailout of the airline industry, US Airways has a lot at stake. Although it has more cash than some competitors, that may only keep it alive until the end of the year. The company's fate could hang on the size of the bailout and whether National Airport reopens.
"If they want to return and be a strong airline, they need National to reopen," said Jeff Zack, a spokesman for the Association of Flight Attendants.
National, which is less than a mile from the Pentagon and just a few miles from the White House and the Capitol, is the only airport in the nation still shut down. The Bush administration is keeping it closed because of fears of more terrorist attacks.
US Airways accounts for nearly half National's flights. They are especially lucrative because National has a limited number of takeoffs and landings every hour, which allows carriers to charge 20 to 25 percent more than in other cities. US Airways also has an hourly shuttle service to New York and Boston that builds brand loyalty with business travelers.
US Airways chief executive Rakesh Gangwal and other airline CEOs met with congressional leaders and Bush administration officials Tuesday to discuss the industry's problems since the terrorist attacks. The airlines' bookings have plummeted, and they are facing huge costs for new security procedures.
After those meetings, administration officials and congressional leaders said they support a bailout plan, but they do not know what shape it will take. The bailout will be the topic of a hearing today before a House committee.
There is so much support for a bailout that US Airways unions have called off plans to raise a fuss about a controversial restructuring plan during the airline's annual meeting in Washington today. But they plan to ask the company to slow layoff plans.
"We want to work with them to slow down, take a breath and be a little less reactive," said Roy Freundlich, a spokesman for the Air Line Pilots Association. "The cutbacks are rash and excessive. There's got to be a better alternative than throwing 11,000 employees out on the street."
Well before the cuts proposed after last week's attacks, the unions had objected to a costly salary and benefits packages for company executives, including $45-million in severence for executives who might leave. But the flight attendants' union said that won't be a sticking point now.
"We're looking for bailout money," said Zack, the spokesman for the flight attendants union. "We're not putting conditions on it." It was not clear Tuesday whether executive compensation would be limited in a congressional bailout plan.
Likewise, US Airways executives have not issued any ultimatums, but they have said their company is in a serious predicament and needs both financial help and the reopening of National Airport.
The airport "ought not to be held hostage to what happened last Tuesday," said Rick Weintraub, a US Airways spokesman. "Terrorism cannot be allowed to win. There ought to be a way that airport can reopen under the strictest of security procedures."
Senate Majority Leader Tom Daschle said Tuesday it probably won't be closed forever.
"I think there is a consensus that at some point it ought to be reopened," said Daschle, D-S.D.. "Once we have the assurance that planes and airports are safe, I think we'll see it reopened."
Bush administration officials said Tuesday they are considering gradually reopening the airport but have not made any decisions.
US Airways has long been an underdog in the turbulent airline industry. Competitors such as United, Delta and American have bigger fleets, larger planes and more international flights. But US Airways, which was built from a hodgepodge of smaller airlines, has had lots of growing pains.
It has alternated between growth spurts and painful cutbacks -- buying smaller airlines and then closing hubs and maintenance bases. The resulting mishmash of airplane types and inefficiencies led to high costs.
US Airways employee costs account for about 5 cents for every seat that travels 1 mile, said Jon Ash, managing partner for Global Aviation Associates, airline consultants in Washington, D.C. That's double what low-fare competitors such as Southwest Airlines and JetBlue pay.
Last month, Gangwal proposed using regional jets on poorly traveled routes with full-sized jets. He left open the possibility of paying crews less than their counterparts flying bigger planes and said the company would cut the low-fare MetroJet service unless employees took pay cuts.
Union support of the company's plans is critical.
"Unless employees jump on board . . . and they get their overall labor costs down, it won't work," Ash said.
On Monday, the airline announced plans to reduce its schedule by about 23 percent and lay off 11,000 workers. The company has yet to give specifics on those cutbacks, but Louis Miller, the executive director of the Hillsborough County Aviation Authority, said Tampa should fare well.
He said Tampa is a more profitable market than other Florida cities because Tampa has a larger share of business travelers.
"If profits are an airline's motivation, it will fly where the business travelers want to go," Miller said.
Another factor in TIA's favor is its large US Airways maintenance hangar. The airline is more likely to send its planes where they can be serviced, Miller said. The Tampa hangar has picked up some of the work that was done at National Airport.
In Tampa on Tuesday, the airlines were getting back to normal. The airport had about 83 percent of normal operations, although the passenger loads were a reminder of the industry's troubles.
The planes were half-full.