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STATE SEEKS US AIRWAYS SUMMIT
Issues are lower costs, capital improvements
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| by Frank Reeves and Johnna A. Pro |
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May 21, 2003 - Post-Gazette - Gov. Ed Rendell and the state's two U.S. senators have invited US Airways Chief Executive David Siegel to meet in Washington, D.C., next month to discuss the airline's request for cost-saving reductions and capital improvements at Pittsburgh and Philadelphia international airports.
The airline has indicated that unless it can reduce its costs at Pittsburgh it may abandon the airport as a major hub, a possibility that has alarmed and angered government officials.
The invitation was extended yesterday in a letter to Siegel signed by U.S. Sen. Arlen Specter on behalf of himself, Rendell, and the state's junior U.S. senator, Rick Santorum.
He said the three men "would very much appreciate" meeting with Siegel on June 11 in Specter's Capitol Hill office.
US Airways spokeswoman Amy Kudwa said, "We have always been willing to meet with elected officials on this issue. We think this meeting will be the first of many in the process of resolving our lease issues in Pittsburgh."
In extending the formal invitation, Specter reminded Siegel that US Airways "has received enormous support from federal, state and local officials on many matters," including the carrier's request for a $900 million federal loan guarantee as well as federal legislation to aid the airline industry following the Sept. 11 attacks.
However, "it is imperative that binding assurances be obtained as a matter of reciprocity and fairness before federal, state and local authorities commit to further efforts in support of US Airways," Specter wrote.
Those "binding assurances" presumably would be a promise from US Airways to maintain significant operations in Pennsylvania in exchange for help in cutting costs and building new facilities at the Pittsburgh and Philadelphia airports.
Kate Philips, the governor's spokeswoman, said that Rendell was looking forward to meeting with Siegel in hopes of finding a way to encourage the airline to remain in Pennsylvania.
The meeting with Siegel also is likely to include Pennsylvania's entire congressional delegation as well as top Philadelphia and Allegheny County officials.
Allegheny County Chief Executive Jim Roddey, one of those invited, said he believes the meeting will provide an opportunity for officials to indicate what they expect from US Airways in exchange for additional government assistance.
Pittsburgh Mayor Tom Murphy has also been invited and said through a spokesman that he planned to attend.
On March 31, shortly before emerging from bankruptcy protection, US Airways rejected its Pittsburgh airport leases and contracts and has given county officials until Jan. 5 to renegotiate new ones.
The airline wants the county to reduce its long-term debt at the airport as a way of reducing its own costs, since 80 percent of the $62 million it pays annually to the airport goes toward paying off the debt. The airport's debt now stands at about $673 million.
The airline wants about $155 million in capital improvements, including the construction of a regional jet terminal and maintenance facility.
US Airways also is pressing for $140 million in lease concessions and another $95 millions in capital improvements at the Philadelphia International Airport. However, it did not reject its Philadelphia airport leases while in Chapter 11.
Looking at the airline's long-term future, Siegel told ATWOnline, a Washington, D.C.-trade publication, that US Airways likely will consolidate its regional operations over the next several years.
US Airways currently operates a network of 10 regional airlines, flying under the US Airways Express banner. Three of the regional airlines are wholly owned subsidiaries of US Airways. The remaining seven lease the planes to US Airways.
"We don't need 10. Two or three are more likely," he said during an interview with ATWOnline, while he was attending the Regional Airline Association's annual meeting in Phoenix.
US Airways has recently ordered 170 regional jets, which it plans to deploy at its own MidAtlantic Airways division and with PSA, one of its wholly owned US Airways Express carriers.
It also is phasing out the use of turboprop airplanes and replacing them with regional jets. Both developments would likely lessen the need for US Airways to continue alliances with so many regional carriers.
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