Just emerging from bankruptcy, US Airways has angered key political supporters throughout the state by canceling leases at Pittsburgh's airport, a move that some officials fear may jeopardize the airline's Pittsburgh hub, as well as the financial health of the airport.
"A lot of people who have been relying on US Airways to operate in good faith are in a state of shock," said Sen. Arlen Specter (R., Pa.), a champion of the airline in helping it win federal aid and address other matters.
Throughout the airline's eight-month reorganization, no proposal was put forth to save money by cutting lease costs at Pittsburgh International Airport, which operates more US Airways flights than the airline's Philadelphia hub.
But on Monday, the same day it came out of bankruptcy, US Airways announced that it decided to negotiate new, less costly terms for the 77 airport gates it leases there out of Pittsburgh's 100 total gates. It gave the Allegheny County Airport Authority until Jan. 4 to reach a new agreement. The leases were not set to expire for 20 years.
The airline's sudden move in Pittsburgh underscores the unpredictability in the shaky economic climate that has engulfed the struggling airline industry.
"We assumed they would continue to look for ways to cut costs, but we didn't expect them to basically reject all their leases," JoAnn Jenny, an airport authority spokeswoman, said yesterday. "The ordeal calls into question the entire future of US Airways in Pittsburgh."
Revenue from the airline is central to the airport's ability to operate. The airport pays about $66 million annually in debt service for construction of a new terminal that opened in 1992. About 85 percent of those payments come from US Airways' gate leases.
Any reduction in US Airways' payments would have to be made up by the airport's other carriers - which is largely viewed as unlikely since US Airways leases three-quarters of the gates.
Besides gates, the airline also canceled leases for office space, skycap service, employee parking spaces, and other agreements.
A US Airways spokesman said the airline's decision was last-minute and a result of the wartime economy. "The impact of the war is deeper and broader than anyone anticipated, and the length of the war looks to be uncertain," the spokesman, Chris Chiames, said yesterday.
"We were forced to make this decision late on Sunday to give us some flexibility to go back and sit down with the Pittsburgh airport authority, and renegotiate the cost of doing business in Pittsburgh," he said. Since it was still operating under Chapter 11 bankruptcy laws, the airline was permitted to cancel the leases.
"Once they were out of bankruptcy, if they did not need all those gates, they would be in a weaker position to ask," airline analyst Ray Niedl said.
Neither officials at the airline nor at Philadelphia International Airport said any changes in leases were planned here.
Shrinking the Pittsburgh hub could have a statewide impact. Between the two hubs, the airline now has 13,341 employees in Pennsylvania, including 5,603 who are based in Philadelphia. It is responsible for $1.3 billion in annual salaries and other related expenditures statewide.
Pittsburgh officials had been prepared for some change because of plans announced months ago by the airline to replace big, mainline jets and small, turboprop aircraft with something in between. Called regional jets, these 50- to 70-seat aircraft are cheaper to operate, and will be part of US Airways' new Pittsburgh-based unit, MidAtlantic Airways. But having given no hint earlier that it would seek new leases, the airline has incensed not only Pittsburgh officials, but the state's senior senator.
Specter said he had a "long, heated talk" about the renegotiated leases with US Airways' chief executive officer David N. Siegel on Monday morning after the decision was made. "When they come to us and want more assistance, we'll have to wonder as to how they are going to treat the working men and women of the airline," the senator said.
Sen. Rick Santorum (R., Pa.), also a key US Airways supporter, did not respond to a request for comment.
Contact staff writer Marcia Gelbart at 215-854-2338 or mgelbart@phillynews.com.
