When Jim Roddey got a phone call from US Airways Chief Executive Officer David N. Siegel yesterday morning, he expected a conversation about the carrier's emergence from bankruptcy.
He offered his congratulations and then Siegel broke the news: US Airways had decided to negotiate new leases at Pittsburgh International Airport, an option permitted during bankruptcy but not one it had discussed with the county.
Roddey, Allegheny County's chief executive, was stunned.
"I can't remember exactly my reaction but it was less than positive. My congratulatory tone changed," he said.
The airline said it wanted to negotiate new, less costly agreements to reflect its decision to deploy dozens of smaller, more economical regional jets at the airport.
The decision will have no immediate impact, Roddey said. US Airways will continue to make payments under its existing lease, at least until it is re-negotiated. But there could be big changes if there is no agreement before next January.
The airline finances the lion's share of the airport's operating budget each year and is responsible for 85 percent of debt service payments on the new terminal, which opened in 1992.
In 2001, the airline paid $60.5 million in rental charges and $11.8 million in landing fees. Should US Airways pull out of Pittsburgh, the other airlines operating here would be obligated under their leases to pick up the costs, which Roddey conceded was "not practical." None has anywhere near the number of daily flights from Pittsburgh as US Airways.
"It's a serious situation, much more serious than it has been at any one time in our negotiations," Roddey said, adding that the airline already has re-negotiated its leases at its hubs in Philadelphia and Charlotte to lower its costs.
He said he plans to meet with Siegel as quickly as he can, possibly later this week, to begin discussions. He also plans to meet with US Airways unions.
The decision surprised and angered Roddey and county Airport Authority officials, who were not expecting the airline to take any action on the leases as it emerged from bankruptcy, which it did yesterday.
With federal bankruptcy court approval, companies in Chapter 11 may cancel leases and other obligations as part of their efforts to reorganize so they can survive once they are no longer shielded from their creditors.
Roddey said that before yesterday's conversation, US Airways officials had always said they did not intend to reject the airport leases. He described county and airport officials as "very disappointed" with the way US Airways had handled the matter.
"We hope that we can negotiate and solidify their position here but at this point, given the circumstances and given their actions today, I no longer will take anything for granted," Roddey said.
Roddey ruled out the use of county tax dollars to help the airline. He said lease savings would have to come from cutbacks in operating costs at the airport.
He said the county and the Airport Authority also are talking with other airlines about the possibility of starting or expanding service in Pittsburgh.
US Airways expects to place an order within the next 30 days with either Bombardier Inc. of Canada, or Empress Brasileira de Aeronautica SA of Brazil for 50 50-seat jets and 50 70-seat jets, plus options to purchase another 100 of each aircraft.