Originally created 01/17/97

Airbus says it can't guarantee jet deliveries to USAir

Airbus Industries has told USAir that it can't guarantee delivery of 57 jets that had been scheduled for delivery in the next three years, adding pressure on the airline to cut its own costs in order to meet a caveat on which the $2.6 billion purchase hinged.

The announcement came as USAir and the Air Line Pilots Association, which represents its 5,000 pilots, began to negotiate on critical wage and productivity issues and may raise the stakes in the talks.

USAir, based in Arlington, Va., has a memorandum of understanding with Airbus, a European consortium, to buy up to 400 planes by 2001, but the purchase is contingent on the airline's ability to reduce costs to a competitive level.

Industry sources had said that the agreement, valued at up to $18 billion, involved heavy discounting and generous financing by Airbus.

Airbus spokesman Dave Venz told The Charlotte Observer on Wednesday that other airlines want the planes, and that 22 planes set for delivery in 1997 and 29 scheduled for delivery in 1998 can't be reserved for USAir under the current conditions.

However, he said that until Airbus signs a deal with someone else, the delivery slots may still be available for USAir.

Last week, Airbus said it would not deliver six airplanes scheduled for delivery in 1997. Those planes were already committed to leasing companies, but Airbus had been expected to arrange for them to be leased to USAir.

The change in Airbus' position might be in response to a letter that top union officials sent to pilots last week, according to the Observer, which cited sources close to the negotiations.

The letter was critical of the airline's proposal to cut some pilot salaries by 12.5 percent while increasing monthly flying time by up to 11.7 percent.

"Management has proposed a seven-year agreement with excessive wage, benefit, work rule and job security reductions for all pilots," the letter said.

A taped message for ALPA members noted that USAir Chairman Stephen Wolf had been slated to meet with union leaders on Wednesday. It said, "We should expect that Mr. Wolf might use the opportunity to put additional pressure on us."

Wolf has only been at the helm of USAir for a year, and has been widely credited with moving to fix its myriad of problems. The Airbus order was the centerpiece of his efforts.

Airlines such as American and USAir recently have been linking their aircraft orders to their ability to negotiate favorable contracts with their pilots. Last week, American put on hold a $6 billion aircraft order with Boeing while it seeks to renegotiate a contract turned down by its pilots.

Neither USAir nor its pilots would comment Wednesday on the announcement. The Airbus decision was relayed to employees in an employee newsletter.

"USAir remains hopeful it can affirm its contract with Airbus," the newsletter said.


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