US Airways Pilots Call for CEO, CFO to Step Down - TheStreet

US Airways Pilots Call for CEO, CFO to Step Down

The pilots cite disappointing third-quarter results and high costs.
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US Airways

(UAIR)

pilots called for the removal of CEO David Siegel and CFO Neil Cohen on Tuesday, citing disappointing third-quarter results and high costs, despite wage concessions from the union.

"US Airways pilots have supported this management through two restructuring plans, and our management is still unable to produce positive results. Pay, benefits and work rules have been slashed, and the pilots' pension plan has been terminated. We've given billions of dollars' worth of concessions, the largest concessionary package in the history of commercial aviation. In bankruptcy, these senior executives had every tool, every advantage they needed, to turn the airline around -- yet they've failed," said Bill Pollack, US Airways captain and chairman of the pilots' union executive council.

While USAir's management has stressed the need for lower costs to compete with low-cost rivals such as

Southwest

(LUV) - Get Report

, the pilots counter that costs are already competitive. Specifically, the pilots said that USAir spends 38 cents of every dollar of revenue on labor costs, while Southwest spent 40 cents on the revenue dollar.

"US Airways' labor costs already are at or below industry standards. The problem is not labor -- the problems are high operating costs and low revenues resulting from failed business strategies. We've emerged from fiscal bankruptcy; but we're hamstrung by a management that remains bankrupt of vision, leadership, management skills and ideas," said Pollock.

But costs may not be as low as the pilots suggest. A look at cost per available seat mile, or CASM, which is the metric Wall Street analysts use to view expenses, shows US Air still lags its rival by a wide margin. On a CASM basis, US Air spent 9.52 cents in the third quarter, down 6.8% from the previous year, when the effects of restructuring are factored out. In comparison, Southwest's CASM came in at 7.51 cents in the third quarter, 2 cents cheaper.

In a seasonally strong third quarter in which rivals

Continental

(CAL) - Get Report

and

Northwest

(NWAC)

surprised Wall Street with profits without the help of bankruptcy protection, the newly restructured US Air posted a net loss of $90 million. In the third-quarter earnings release, CFO Cohen stressed that revenue was improving while costs continued to fall, but nonetheless termed the quarter "disappointing."

In that same third-quarter earnings release, CEO Siegel said US Air's post-bankruptcy plan "must continue to evolve and adapt." But with Southwest announcing new service out of Philadelphia, one of US Air's most important hubs, the pressure in on at US Air to find a way to stay competitive.

ALPA's call for the removal of US Air's upper management comes just weeks after

Delta

(DAL) - Get Report

CEO Leo Mullin announced his resignation from the company, which is currently negotiating with pilots over wage concessions.

In reaction to the news, shares of USAir ended Tuesday's session up 10 cents, or 1.7%, at $6.15. (US Air did not return a call for comment by press time.)