US Airways Group Inc. won bankruptcy court approval yesterday to spend up to $15 million to keep nonexecutive managers the company says are critical to completing its proposed merger with America West Holdings Corp.
The Arlington-based airline, which has filed for Chapter 11 bankruptcy protection twice in the past three years, asked the court for more than $50 million for a severance and retention plan for its more than 1,800 management-level employees and for its senior executives. The plan included severance payments for managers who lose their jobs as a result of the merger. U.S. Bankruptcy Judge Stephen S. Mitchell denied the request for senior officers, citing the "magnitude of the proposed severance payments."
Ruling in favor of the nonexecutive retention plan, Mitchell noted that it "seems clear that the company is experiencing a serious exodus of management employees" that threatens its ability to join forces with America West and emerge from bankruptcy protection.
US Airways said in a prepared statement that it was pleased that the court granted "an important retention tool to complete our merger" and said it will revisit the contracts of senior officers.
US Airways' unions, which have agreed to nearly $1 billion in cuts to wages and benefits during the airline's restructuring, opposed the retention plan. "I can't say this is a victory," said Theodora Xidas, master executive council president for the US Airways unit of the Association of Flight Attendants. "But we are relieved that the executives are not getting these unrealistic severance and retention monies."
Jeff Miller, spokesman for the Communications Workers of America, which represents US Airways passenger service employees and is affiliated with flight attendants, said the judge's ruling was "a step in the right direction." He added: "We would have liked to have seen the whole program thrown out. . . . Management has not by any means paid the same price that the unions have."