US AIRWAYS GETS OK TO EMERGE FROM BANKRUPTCY

US Bankruptcy Judge Stephen Mitchell gave the go ahead for US Airways to emerge from bankruptcy at a hearing this morning in Arlington, Va. By confirming the airline's plan of reorganization the judge clears the way for the merger with America West. After the normal 10 day waiting period the confirmed plan will allow the airline to exit bankruptcy by the end of the month. "I have every hope and confidence the airline will prosper in the future," Mitchell said. 

The judge's approval came after he ruled on the last remaining objections to the airline's plan of reorganization. Most significantly, the unions had objected to an executive severance package that would provide $12 million in pay to 11 top executives who will not be given jobs with the merged airline. Union attorneys gave several hours of testimony yesterday in an attempt to sway the court's opinion. Jeff Bartos, representing AFA, contrasted our maximum 4.5 months of furlough pay with the executive severance package consisting of three to four hundred percent of their yearly salary. The company position was these executives had done a fine job of positioning the airline for emergence and securing a merger with America West. Company counsel also stated management compensation was below market value and the severance package was in line with other executive packages industry wide. Mr. Bartos pointed out that some of the executives had been in their positions for less than two years and by contrast a 30 year flight attendant received only a fraction of his/her salary to leave the company.

Lost on the court was the fact the primary job of these executives was to enter bankruptcy to lower labor costs. The business plan was to reduce pay and benefits and terminate pension plans. The real reason US Airways is poised to succeed is because of the sacrifices labor has made. While I had hoped for a different ruling I expected this outcome. 

Thank you,

Mike Flores
MEC PRESIDENT