Airline Exec: Southwest 'Coming To kill Us'

The head honcho at US Airways is keeping his eye on southwest airlines, as the low-fare carrier begins service in Philadelphia. US Airways chief executive David Siegel warned Wednesday that survival is at risk now that the airline is bracing for competition at its Philadelphia hub from Southwest.

"Southwest is coming to Philadelphia in May," Siegel said in a meeting with employees that was broadcast on the Internet. "They're coming for one reason. They're coming to kill us."

Siegel (pictured below) said US Airways has twice gone head-to-head with low-fare king Southwest and lost -- once on the West Coast and once at Baltimore-Washington International Airport, where Southwest quickly replaced US Airways as that airport's leading carrier. But Siegel said his airline can no longer afford to run from the growing competition of low-cost carriers, and that if US Airways cannot hold its dominant position in Philadelphia -- one of its three hubs along with Charlotte, N.E., and Pittsburgh -- then the airline will die.

Siegel warned US Airways will have no choice but to match Southwest on fares, and it must therefore reduce its cost structure to match Southwest. That could require labor groups to accept pay cuts of as much as 25 percent, even though employees agreed to significant cuts just a year ago as US Airways Group Inc. emerged from bankruptcy. Siegel said it's possible US Airways will have additional furloughs in all of its labor groups. The airline has already shrunk dramatically, from 48,100 employees in January 2001 to 31,700 employees in January 2004.

He also promised that management would share in the sacrifice, and said he was willing to take a pay cut to put his salary in line with CEOs at discount airlines. Siegel joined the airline in March 2002, with a $750,000 annual salary that was later reduced to $600,000, according to the company's last annual report.

Some employees at the meeting questioned management's past record, noting that Siegel has made similar demands of employees in the past, which have not produced results. Siegel said the airline must have new labor agreements in place by June. Negotiations are to begin with labor groups next month.

FMI: www.usairways.com