Washington acts to avert USAir crisis

THE UNITED STATES government is trying to restart cost-cutting talks that could save USAir, the airline 24.6 per cent owned by British Airways, from seeking Chapter 11 protection against creditors.

A Department of Transportation official will meet representatives of the Air Line Pilots Association (Alpa) this week in an attempt to bring it back to the table with the management.

Alpa walked out of talks earlier this month after USAir said it proposed to sell 37 aircraft, including all the 767s currently flying the Atlantic in BA livery. 'We thought that was a terroristic negotiating ploy,' a union spokesman said.

USAir, which last week announced a higher-than-expected dollars 180m (pounds 112m) loss for the third quarter, has said it needs to cut dollars 1bn in annual costs to compete with low-cost rivals such as Southwest Airlines and Continental Lite. It has never recovered from a merger with Piedmont Airlines in the late 1980s, which was not followed by the rationalisation needed, and has lost dollars 2.8bn in the past four years.

Half the cost cuts must come from labour savings, the airline has said, and in July Alpa suggested all employees should take a 20 per cent pay cut in exchange for a 25 per cent shareholding and other benefits. Other airlines, including United, have already traded a union stake for pay cuts, but USAir rejected the proposal and talks finally broke down a month ago.

Analysts believe USAir will survive, whether or not it goes into Chapter 11, but say that BA's stake will be diluted. Either the unions will be given equity, or a wholesale restructuring will inject extra capital. Both are likely to lead to lower wages for the staff: it was a Chapter 11 restructuring that allowed Continental to launch its low-cost 'Lite' operation. Glenn Engel, analyst with Goldman Sachs in New York, does not believe the airline will reach Chapter 11, however. 'There is too much at stake for them not to come to terms,' he said.

BA has invested dollars 400m in USAir since the beginning of 1993, but said last week that it would not contribute the extra dollars 450m it had planned for this year until a satisfactory restructuring had been arranged. Last month USAir said it was postponing the dividend it paid its two key preference shareholders, BA and the investor Warren Buffett.

Apart from its financial problems, the airline's reputation has been undermined by two plane crashes in July and September, which killed 159 people.

Despite the series of disasters, BA says the USAir link-up has brought it the operating benefits it wanted, including pounds 70m in extra revenues and reduced costs, and that its plans to become the world's first global airline have barely been affected. The 'code sharing' arrangement allows BA to sell one ticket that will take a passenger from London to any USAir destination.

It has similar shareholdings and arrangements with other airlines, including Qantas of Australia and TAT of France, and aims to provide worldwide coverage through a network of link-ups.

BA originally wanted to take a 44 per cent stake in USAir. This was blocked by the US government, which demanded greater access for American carriers into Heathrow. Ian Wild, analyst with BZW, says that a restructuring could reduce its stake to below 15 per cent, but that it will build it back up as soon as it can. 'British Airways would still like to get to 40 per cent plus,' he said.

(Photograph omitted)

Arts and Entertainment
books
Voices
Caustic she may be, but Joan Rivers is a feminist hero, whether she likes it or not
voicesShe's an inspiration, whether she likes it or not, says Ellen E Jones
Arts and Entertainment
The Doctor and the Dalek meet
tvReview: Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Sport
Diego Costa
footballEverton 3 Chelsea 6: Diego Costa double has manager purring
PROMOTED VIDEO
Life and Style
3D printed bump keys can access almost any lock
techSoftware needs photo of lock and not much more
Arts and Entertainment
The 'three chords and the truth gal' performing at the Cornbury Music Festival, Oxford, earlier this summer
music... so how did she become country music's hottest new star?
Life and Style
The spy mistress-general: A lecturer in nutritional therapy in her modern life, Heather Rosa favours a Byzantine look topped off with a squid and a schooner
fashionEurope's biggest steampunk convention heads to Lincoln
News
Dr Alice Roberts in front of a
peopleAlice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
News
i100
Arts and Entertainment
Star turns: Montacute House
tv
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
i100Steve Carell selling chicken, Tina Fey selling saving accounts and Steve Colbert selling, um...
Arts and Entertainment
Unsettling perspective: Iraq gave Turner a subject and a voice (stock photo)
booksBrian Turner's new book goes back to the bloody battles he fought in Iraq
News
The Digicub app, for young fans
advertisingNSPCC 'extremely concerned'
News
i100
Arts and Entertainment
Some of the key words and phrases to remember
booksA user's guide to weasel words
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Law Costs

Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...

Network Engineer (CCNP, CCNA, Linux, OSPF, BGP, Multicast, WAN)

£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...

DevOps Engineer (Systems Administration, Linux, Shell, Bash)

£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...

Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

Day In a Page

The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Fashion walks away from the celebrity runway show

Fashion walks away from the celebrity runway show

As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

Meet the stars of TV's Wolf Hall...

... and it's not the cast of the Tudor trilogy
Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

Europe's biggest steampunk convention

Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
Don't swallow the tripe – a user's guide to weasel words

Don't swallow the tripe – a user's guide to weasel words

Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

Daddy, who was Richard Attenborough?

The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor
She's dark, sarcastic, and bashes life in Nowheresville ... so how did Kacey Musgraves become country music's hottest new star?

Kacey Musgraves: Nashville's hottest new star

The singer has two Grammys for her first album under her belt and her celebrity fans include Willie Nelson, Ryan Adams and Katy Perry
American soldier-poet Brian Turner reveals the enduring turmoil that inspired his memoir

Soldier-poet Brian Turner on his new memoir

James Kidd meets the prize-winning writer, whose new memoir takes him back to the bloody battles he fought in Iraq
Aston Villa vs Hull match preview: Villa were not surprised that Ron Vlaar was a World Cup star

Villa were not surprised that Vlaar was a World Cup star

Andi Weimann reveals just how good his Dutch teammate really is
Bill Granger recipes: Our chef ekes out his holiday in Italy with divine, simple salads

Bill Granger's simple Italian salads

Our chef presents his own version of Italian dishes, taking in the flavours and produce that inspired him while he was in the country
The Last Word: Tumbleweed through deserted stands and suites at Wembley

The Last Word: Tumbleweed through deserted stands and suites at Wembley

If supporters begin to close bank accounts, switch broadband suppliers or shun satellite sales, their voices will be heard. It’s time for revolution