ALEXANDRIA, Va. -- US Airways' unions say the bankrupt airline is ''barking up the wrong tree" as it seeks to ensure its solvency by imposing a 23 percent pay cut on its workers.
Meanwhile, an airline executive testified yesterday that without those cuts, the airline's cash reserve will be so low by mid-February that the airline may be forced to liquidate, putting all its 34,000 employees out of work.
US Bankruptcy Judge Stephen Mitchell must decide whether he will grant the airline's request for the temporary 23 percent pay cuts, along with other benefits reductions. The hearing on the issue will resume on Tuesday, and the company has requested a ruling within the next week.
In court papers, union lawyers argued that US Airways Group Inc. is seeking to improperly hoard its cash reserve through the bankruptcy process at the expense of workers who are being asked to bear unfair burdens in the airline's proposed transformation into a low-cost carrier.
The airline projected that, without the pay cuts, its cash reserve will drop to $313 million by early March -- and probably less, given the skyrocketing cost of fuel.
Chief financial officer David Davis said a reserve that low is unacceptable because it is an insufficient cushion against events that could harm revenues.
He also said the Air Transportation Stabilization Board is uncomfortable with such a low reserve and could withdraw its financing.
But the unions counter that the company has no proof that $300 million is a dangerously low level of financing, though they acknowledge such a cash reserve would be significantly less than that held by other airlines.