ALEXANDRIA, Va. (AP) – A bankruptcy judge granted US Airways authority Friday to temporarily cut the pay of its union workers by 21 percent, comparing the airline’s financial outlook to “a ticking fiscal time bomb.”

The 21 percent pay cut is nearly all of the 23 percent reduction the air carrier had sought.

“I have absolutely no doubt that wage cuts of this magnitude would and will result in severe financial hardships,” U.S. Bankruptcy Judge Stephen Mitchell said. But US Airways’ financial situation is so unstable that “basically what we have here is a ticking fiscal time bomb.”

The pay cuts are in place until Feb. 15, 2005, six weeks short of what the airline had sought. Mitchell also granted the airline authority to reduce the size of its jet fleet.

Friday’s ruling means the average US Airways salary would drop from $59,509 to $47,012, putting the airline below the other five major traditional carriers as well as Southwest Airlines, but higher than JetBlue and America West – two carriers US Airways now seeks to emulate.

US Airways had projected that a 23 percent pay cut would save $165 million between now and March 4, when it feared it would essentially run out of cash.

After Friday’s ruling, the airline’s chief executive, Bruce Lakefield, said the company was still calculating the financial effect of the decision, but he was pleased.

“Our mission here is to save as many jobs as possible. We are being attacked on every front” by low-cost competitors, he said when asked about the ruling’s effect on workers.

The judge gave the airline authority to impose the cuts immediately, but Lakefield told employees in a recorded message that a timeline will be announced in the next few days.

Mollie McCarthy, leader of the Association of Flight Attendants’ Philadelphia-based local, said the pay cuts are devastating and particularly galling given that management is not taking a similar hit.

“That’s what’s going to make my people really angry,” she said.

US Airways, the nation’s seventh largest airline and a unit of US Airways Group Inc., employs 34,000 workers, of which 84 percent are represented by unions.

In closing statements to Mitchell on Friday, the airline said the paycuts were crucial to its survival.

Still, Leitch acknowledged US Airways would need to do more to prevent a collapse, including obtaining permanent cost-savings from its unions twice as large as those achieved by the temporary cuts.

Those savings, however, can be achieved without deeper salary cuts.

US Airways pilots, for example, reached a tentative agreement on a deal that provides the airline the long-term savings it needs while only imposing an 18 percent pay cut, with additional savings through benefit reductions and work rule changes.

The 21 percent pay cut will only apply to the pilots if they reject the tentative agreement in an Oct. 21 ratification vote.

“Our pilots have now what we wanted them to have all along – a choice,” said Jack Stephan, spokesman for the Air Line Pilots Association.

US Airways has yet to reach agreements with the majority of its union work force, and, in court Friday, the judge expressed concerns his rulings could handicap those groups in their negotiations.

The unions had argued that cuts of such a severe magnitude were unnecessary and the bankruptcy code only permits a judge to take such steps in unforeseen and extraordinary circumstances such as natural disasters and terrorist attacks.

“What we have here is a trend dating back since before 9/11” of financial difficulties for traditional carriers like US Airways, Sharon Levine, a lawyer for the International Association of Machinists, told the judge. “We have a malaise in the airline industry. These are not surprises.”

Unions also complained that the airline was unfairly singling them out. Most of US Airways’ 3,700 management employees are receiving only a 5 percent pay cut even though they received a 4 percent pay raise earlier this year.

Leitch attributed the disparity to US Airways’ attrition rate for nonunion workers – who make $52,000 annually on average – saying it was dangerously high because other airlines are hiring them away at higher salaries.

But union wages in the airline industry are dependent on seniority, he said. So a flight attendant, for instance, might see his or her wages drop from $41 to $31 an hour as a result of the pay cut.

But if they left US Airways to join another airline they’d have to start at the bottom of the ladder at $19 or $20 an hour.

In trading Friday on the New York Stock Exchange, Delta shares closed down 79 cents, or 18.8 percent, at $3.42 – near the low end of their 52-week range of $2.78 to $15.14.


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