[ OUR OPINION ]
Skepticism needed
in airline assistanceHAWAII'S tourism relies considerably on a healthy airline industry, which has been dealing with turbulence since prior to the terrorist attacks of Sept. 11. The attacks made things worse, but poor business practices are more to blame for the problems resulting in US Airways seeking bankruptcy protection, American Airlines laying off thousands of workers and United Airlines recording record losses. Federal assistance should be provided on condition that airlines change their ways.
THE ISSUE The airline industry is struggling to recover from financial problems that began before the Sept. 11 terrorist attacks.
Not all airlines are experiencing nosedives. Southwest Airlines, focusing on efficiency and cheap fares, is making money, as are European carriers that have had to contend with cut-rate competition by offering bargain walkup fares.
US Airlines is likely to receive a $900 million loan guarantee it seeks from the Air Transportation Stabilization Board because it is taking steps needed to stop its money drain. The airline's labor unions have agreed to $1 billion in wage and work-rule concessions and it plans to use the Chapter 11 bankruptcy status to trim costs from suppliers and lenders. As a result, US Airlines has a good chance of recovering.
American has made cutbacks intended to save $1.1 billion a year, adopting more spartan conditions that it believes customers will accept. For example, passengers will be given brown-bag lunches at the gate instead of being served hot meals. Also, American's Boeing 767-300s flying to Hawaii will be reduced from three seating classes to two, eliminating first-class.
Although United lost an industry record $2.1 billion last year and is burdened with debt, its application for federal backing of $1.8 billion on a private loan of $2 billion deserves to be viewed with skepticism. United has failed to win sufficient concessions from its labor unions, which is not surprising since employees have majority ownership of the airline.
United gave its pilots the industry's top wage hike two years ago so it would look attractive to pilots at US Airways, with which United hoped to merge. After the proposed merger was rejected by the Justice Department, its pilots were left with the generous salaries. Pilots at other airlines then were able to negotiate similarly large salary hikes, extending the increased labor costs throughout the industry.
United pilots now have agreed to a $520 million wage reduction over three years, but a proposed $90 million cut over the same period has been rejected by the airline's flight attendants, who average $32,000 a year.
If its unions refuse to accept further concessions and management fails to adopt efficient measures, United could be forced into bankruptcy, which may be the only way the airline can be jarred into taking the needed steps to recovery.
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Published by Oahu Publications Inc., a subsidiary of Black Press.Don Kendall, Publisher
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