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  •   US Airways Chief Tells Employees
    He Will Begin `Operational Changes'

    By Frank Swoboda and Don Phillips
    Washington Post Staff Writers
    Tuesday, May 6, 1997; Page C03

    US Airways Inc. yesterday told its employees that it soon would begin a series of wide-ranging "operational changes" -- without saying what they would be -- while continuing to press its three major unions for contract concessions that would cut the carrier's labor costs.

    US Airways Chairman Stephen M. Wolf, in a telephone hot-line message to the company's 42,000 employees, said the Arlington-based airline would soon "begin to put in place some operational changes to make us more efficient." Without offering examples of the changes to be made, Wolf said they would be "wide-ranging, affecting many parts of the company."

    Two weeks ago company sources said the airline would begin laying off employees and closing down some routes starting June 30 unless new contract agreements were reached with its unions. June 30 is the date the "no furlough" clause expires in the pilots' union contract. Company officials would not comment yesterday on Wolf's announcement.

    Wolf's warning is the latest step in a continuing war of nerves between US Airways and its unions, particularly its pilots, over the company's demand for contract concessions to allow the airline to grow.

    Since taking over as chairman of then-named USAir 17 months ago, Wolf has been working with the airline's three major unions -- the Air Line Pilots Association, Association of Flight Attendants and International Association of Machinists -- in an effort to cut labor costs. US Airways has the highest labor costs in the industry and Wolf has warned the airline cannot grow to become a major global carrier unless those costs are reduced. Most of the company's efforts have been directed at the pilots union, where key concessions are needed to enable the airline to compete in the east with new low-cost competition from airlines such as Southwest and Delta Express.

    Wolf and US Airways President Rakesh Gangwal conducted a 10-city tour of the airline's major bases last month, warning they would be forced to downsize the airline unless the concessions were quickly forthcoming.

    Wolf has already warned that unless he has concessions from the unions before Sept. 30, he will be forced to cancel a $14 billion order for up to 400 new airplanes from Airbus Industrie, the European aircraft consortium. Cancellation of the Airbus order would automatically force the airline to downsize into a regional carrier, Wolf has said.

    Even sooner, US Airways may be forced to decide whether to buy the USAir Shuttle between Washington, New York and Boston, which is owned by a consortium of banks.

    In his message to employees yesterday, Wolf said "It is absolutely vital that each of us fully understand the threatening competitive position in which US Airways finds itself, and the critical decisions that now confront us.

    "The time has come to move ahead by beginning to put in place some operational changes that enable us to become more efficient. The board of directors has stated that we need to move forward, and therefore the company shortly will announce a series of measures designed to position our airline for whatever path in the future we ultimately choose to follow.

    "These measures will be wide-ranging, affecting many parts of the company. They are designed to strengthen the platform upon which the new USAirways will be built, no matter what direction we take together."

    An ALPA spokesman said yesterday that the union had no comment on the Wolf announcement. ALPA is negotiating with the company and has insisted for some time that it has given the airline the concessions it needs to establish a low-cost service to compete with the other airlines.

    Officials of the other two unions, which are also involved in negotiations with US Airways, were not available for comment yesterday.

    © Copyright 1997 The Washington Post Company

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