Siegel: Delta trying to put US Airways out of business

WASHINGTON - Delta Air Lines is trying to put US Airways out of business by pursuing predatory, anticompetitive business practices, US Airways President David Siegel in an unusually blunt speech Tuesday.

``Delta's strategy is built on one basic element: US Airways' failure,'' Siegel said in a speech to the International Aviation Club of Washington. ``So far it obviously isn't working.''

Siegel jokingly called Delta Chairman Leo Mullin ``Dr. Evil'' and referred to a proposed alliance of Delta and two other carriers as the ``Axis of Evil.''

Tuesday's comments are in part a response to statements made by Mullin that he would pursue ``an armada'' of products and subsidiaries to combat an alliance between US Airways and United Airlines.

US Airways, the nation's seventh-largest carrier, filed for bankruptcy Aug. 11 and has made numerous changes in recent months to get its cost structure in line. Seven of its nine union locals have agreed to wage cuts totaling about $619 million a year; the remaining locals concluded voting Tuesday evening on proposals for an additional $221 million in cuts.

One of the two remaining unions, the Communication Workers of America, ratified its concession package Tuesday by a 3-to-1 ratio. The deal calls for an 8 percent pay cut, dropping the top rate for its 8,000 passenger service employees to $20.05 an hour. Employees making less than $30,00 a year are exempt from the deal. The amended contract will save the airline $70 million a year.

The last remaining union local, the 6,600 mechanics represented by the International Association of Machinists, was expected to announce its results late Tuesday or early Wednesday. The union rejected the same deal last month by a 57-43 margin, but decided to vote again.

Union officials said some members were unclear about the consequences of a no vote.

If the union rejects the concessions, it's possible that a bankruptcy judge will invalidate the entire collective bargaining agreement, and the airline could impose its own pay schedule and work rules.

Union leadership offered workers no recommendation on the proposal.

The wage cuts are the largest concession package in the history of the airline industry, Siegel said, and will bring what had been the indusry's highest labor costs in line with its competitors.

In addition, the airline has eliminated hundreds of flights on unprofitable routes, greatly expanded the use of smaller, cheaper regional jets and announced a code-sharing agreement with United Airlines, which allows the two carriers to sell tickets on each other's flights.

Tuesday's speech, though, focused on external competition rather than internal restructuring. In particular, Siegel criticized a proposed code-share agreement between Delta, Northwest and Continental airlines that he said ``is unprecedented in its scope and scale.''

The Delta alliance would be 50 percent larger than the US Airways alliance and would constitute 40 percent of all domestic air traffic, Siegel said. In addition, he said, the Delta alliance is anticompetitive because it includes more overlapping routes.

The United-US Airways alliance, in contrast, features complementary routes, combining US Airways' strength in north-south flights on the East Coast with United's strength in cross-country flights.

``Ours is complementary; theirs is overlapping,'' Siegel said. ``We have a pro-competition, pro-consumer alliance in contrast to the unprecedented three-way alliance that is being proposed by Delta.''

Delta spokeswoman Catherine Stengel acknowledged that the proposed Delta alliance is in part a response to the US Airways alliance. But she said the company is not trying to put US Airways out of business.

``US Airways is clearly a competitor on key markets such as the east Coast,'' she said. ``We welcome all healthy competition.''

The two airlines compete in several markets, particularly the lucrative shuttle service between Washington, Boston and New York.

The Justice Department is reviewing both proposals. Siegel said he is confident that the US Airways-United alliance will receive approval in the near future. Last year, the Justice Department rejected a full-scale merger between the two airlines.