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Wednesday, 27 November, 2002, 00:10 GMT
US Airways reveals job cuts
US Airways employee
The airline needs to radically cut costs
US Airways, the second-largest airline in the United States, has announced further job cuts as part of its struggle to avoid bankruptcy.

The group said it would cut 2,500 staff and that employees would be forced to take pay cuts as part of new stringent measures to cope with the sharp downturn in the industry.

The cuts come on top of the $1.3bn annual cost savings already identified by US Airways as part of its restructuring.

Weakened demand after September 11 followed by the rising popularity of low-cost airlines has hit the sector hard.

"Our airline has some of the most inefficient work rules in the industry that drive up our costs in ways we can no longer afford in this new, tough environment," said chief executive David Siegel.

The company hopes to emerge from bankruptcy protection in early 2003.

Tighten belts

US Airways said it plans to close its heavy maintenance hanger in Florida immediately, and its call-centre in Orlando in January.

The 2,500 job losses - officially 'furloughs', whereby workers are laid off but given priority if new jobs come about - represent about 7% of the group's workforce.


Every mature network airline is struggling with how to adapt to fundamental changes in the airline business

David Siegel, United Airways CEO

Mr Siegel said the measures were "an unfortunate and painful part" of the company's restructuring, but were needed to save up to $1.6bn a year to offset falling revenue.

The group has already cut its workforce by 30% since September 11.

US Airways applied for Chapter 11 bankruptcy protection in August - a procedure under which a company seeks to cope with insupportable debt levels under court supervision.

The airline group was the first in the sector to file for protection following the September 11 terrorist attacks, which shook the airline industry.

Meeting targets

But it is not alone in struggling to keep its head above water.

Mr Siegel said: "Every mature network airline is struggling with how to adapt to fundamental changes in the airline business.

"High costs will no longer be subsidised by passengers paying premium fares, and low-cost airlines have become a major force in the industry."

US Airways last week asked the bankruptcy court to extend its deadline for filing its reorganisation plan from December to January.

A spokesman for US Airways said the group was still planning to file its plan by the end of the year but that "in the event that we need it, we've asked for that extension".

See also:

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