Letter to Mr. W. Douglas Parker, Chairman and CEO of US Airways Group, Inc. - Airline Merger

Letter

As Congress examines the American Airlines-US Airways merger, which is currently under review at the Department of Justice, U.S. Reps. Tim Murphy (PA-18) and Mike Doyle (PA-14) today issued the following letter to US Airways Chairman and Chief Executive Officer W. Douglas Parker.

The letter expresses "serious concerns about the recent merger announcement between US Airways and American Airlines, and the effect it will have on the region, both in terms of job loss and decreased frequency of flights." The letter seeks information about the impact on the Pittsburgh region, as well as an update from US Airways about the status of the considerable financial investments made by Pennsylvania taxpayers at the Pittsburgh International Airport and the nearby US Airways operations center and maintenance facility.

Reps. Murphy and Doyle are holding a meeting this afternoon at the Airport with key state and local officials and airline employees to discuss the merger and its impact on the region.

A copy of the letter can be viewed below.

Mr. W. Douglas Parker
Chairman and CEO
US Airways Group, Inc.
111 W. Rio Salado Parkway
Tempe, AZ 85281

Dear Mr. Parker,

Southwestern Pennsylvania is the proud home to the Pittsburgh International Airport, the US Airways flight operations center, maintenance facility, and hundreds of US Airways employees.

Our region has a history of a strong partnership with US Airways from construction of a new airport in 1992 to financial incentives that ensured the airline remained globally competitive while maintaining a strong presence in the Pittsburgh region.

When US Airways decided to reverse Pittsburgh International Airport's hub status in 2004, shifting planes to Philadelphia and Charlotte, more than 10,000 jobs were lost and departure flights were slashed considerably. It was a hard economic hit, yet Southwestern Pennsylvanians did not walk away from helping the airline remain competitive. County taxpayers agreed to a $13.5 million contribution to the airport's debt obligation, helping to reduce gate fees for US Airways. Meanwhile, as part of its bankruptcy reorganization proceedings, US Airways cancelled leases with the Airport Authority worth $1.4 billion.[1] The revenue from these leases was the lynchpin of the agreement by taxpayers to finance the new midfield terminal. In fact, Allegheny County agreed in 1988 to build a new $567 million terminal according to US Airways' specifications. County taxpayers contributed $42.5 million in incentives just to finalize the deal.[2] But with the cancelled leases, US Airways went from paying $50 million a year toward the facility's annual $59 million debt service to $10 million a year. This action was a devastating blow to our partnership.

Given these past events and the fractured nature of the relationship between US Airways and Southwestern Pennsylvania, we have serious concerns about the recent merger announcement between US Airways and American Airlines, and the effect it will have on the region, both in terms of job loss and decreased frequency of flights.

As you know, the US Airways flight-operations center, which employs 700 workers, was largely constructed with taxpayer dollars. The region provided $17 million in low-interest loans, grants, and land value to build this state-of-the-art facility in 2008.[3] US Airways signed a 20-year lease with the county, with two 10-year options attached. Promises were made at the time about its long-term benefits.[4] Now, according to a US Airways filing with the Securities and Exchange Commission, we see the facility characterized this way: "But I also don't want to delude people into thinking that […] we're going to keep it in Pittsburgh because if I was going to bet right now my guess is it would -- the jobs would move to Dallas." This does not bode well for the local employees or the region, and leads us to believe US Airways was not acting in good faith when local taxpayers made this investment.

Moreover, in January 2011, US Airways signed a new lease through December 2015 for its heavy maintenance operations at the Airport. At the time, a US Airways spokesman said "[Pittsburgh] remains an important location for US Airways, with the opening of an all new state-of-the-art operations control center, which opened in 2008, and the presence of our heavy maintenance facility." Today, it is our understanding this maintenance facility, which at one time employed 930 people, could be shuttered as early as 2014.

As you can imagine, we have serious doubts about the benefits of this partnership to the Pittsburgh region, and frankly, our meetings with US Airways representatives have only confirmed those concerns. It is our goal to prevent further job loss in Southwestern Pennsylvania while maintaining flight frequency at the Pittsburgh International Airport. There are several questions that must be resolved. We request that you provide details of US Airways' plan to pay back the millions in taxpayer subsidies used by US Airways to keep the airline competitive -- from construction of the midfield terminal, leasing agreements, low-interest loans, grants, etc. -- should the US Airways-American merger receive regulatory approval.

Thank you for your timely attention to these concerns. As the American-US Airways merger develops, we ask you consider our partnership, what it has meant to local taxpayers, and your plan to resolve these outstanding obligations if the merger leads to further consolidations and closures.

Sincerely,

Tim Murphy
Member of Congress

Mike Doyle
Member of Congress

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