Salaried US Airways Workers May Get New Deal

US Airways is asking a bankruptcy court to allow it to pay as much as $55 million to executives and other white-collar workers to encourage them to stay with the company.


US Airways is asking a bankruptcy court to allow it to pay as much as $55 million to executives and other white-collar workers to encourage them to stay with the company, the airline said in a court filing late Monday.

The bulk of the incentives -- up to $32 million -- would be in the form of a promise of severance benefits to up to 1,900 salaried workers who might not be retained if US Airways merges with America West. The two airlines have said they are talking about merging, as US Airways looks for a way out of bankruptcy court.

The retention program would likely cost between $16 million and $21 million, the company said, although it could cost the full $55 million if all employees lost their jobs -- which the company says is unlikely.

In the court filing, US Airways said many of the employees covered by the plan are "absolutely critical to the operations" of the company and "to lose them on an accelerated and unplanned basis would present dangerous risks." The airline said it has already lost 60 workers to competitors in the past year, and that now the prospect of a merger with America West has created anxiety about employees' work prospects.

US Airways has its largest hub in Charlotte, which is home to about 5,600 of the airline's 25,000 workers. Most are union workers who would not be covered under the plan.

Although retention programs for executives and salaried workers are common in bankruptcy cases, the idea of paying big money to US Airways' top brass likely won't sit well with many of the company's workers.

During US Airways' last bankruptcy in 2002-03, the machinists union fought $6 million in bonuses paid to management and executives. That money, though, was owed to the roughly 500 workers for the company's previous performance, not as a retention bonus.

Then-CEO David Siegel, though, argued that a reason for paying was to keep the workers away from headhunters.

The airline's four major unions have agreed to take deep pay cuts over the past few years.

"It is the typical corporate philosophy to take care of those in charge, those in control, and waste employee morale by paying off management employees to remain during a possible merger," said Mike Flores, a flight attendant union leader from Charlotte.

The retention plan detailed Monday comes in three parts:

New contracts for the company's top 25 executives, at a cost of up to $18 million. Some of the details of the payments would actually be less generous than their current employment contracts allow. For instance, the company's nine executive and senior vice presidents -- who earn up to $317,000 a year -- would take only twice their annual salary in severance, as opposed to triple their annual salaries now guaranteed under their contracts.

The contract of CEO Bruce Lakefield, who makes $425,000 a year, would be unaffected. His contract calls for him to earn triple his base salary if his job is eliminated because of a merger.

A new severance policy for nearly 1,900 salaried employees, guaranteeing between three months and one year of pay, based on experience. This would cost up to $32 million.

A fund of up to $5 million for the airline's chief executive to pay on a case-by-case basis to encourage an employee to stay with the company. Nobody would be allowed to take more than $50,000 under this program.

The airline lost $282 million in the first quarter. News reports about the deal have indicated that America West's chief executive would likely run the company out of that airline's Arizona headquarters.

A hearing is set for May 19.

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