PENNSYLVANIA State bears brunt of US Airways' employment cuts

It will take time before the full impact of the cutbacks is known, economists say.
PITTSBURGH (AP) -- Further layoffs and service cuts could help US Airways trim $1.6 billion this year in costs and pull the airline out of bankruptcy, but could cause turbulence in the state's economy, especially around Pittsburgh and Philadelphia.
The bankrupt airline, based in Arlington, Va., has cut about 11,000 jobs -- almost one-fourth of the 46,600 people it employed before the Sept. 11, 2001, terrorist attacks -- and has announced plans to cut 2,100 more by the end of the year.
Although US Airways declined to specify and union officials said they don't know where the jobs were lost, most likely came from the airline's three major hubs in Charlotte, N.C., Philadelphia and Pittsburgh, said Roy Freundlich, spokesman for the Air Line Pilots Association.
Freundlich estimated as many as two-thirds of the job cuts came from Pennsylvania, where the airline employed 19,000 people in September 2000.
A gradual impact
So far, the effects of the layoffs appear to be limited, economists said.
The state's unemployment rate in September was 5.2 percent, lower than the national average of 5.6 percent. And unemployment in Philadelphia was lower -- 5.1 percent -- while Pittsburgh's unemployment rate was lower yet at 4.9 percent.
US Airways' cutting jobs "is not good, it is the wrong direction, but it's like a thousand little cuts, not like the knockout in the first round," said Robert P. Strauss, a professor of economics and public policy at Carnegie Mellon University in Pittsburgh.
Christopher Briem, an economist for the University of Pittsburgh's Center for Social and Urban Research, agreed, saying US Airways had "localized the pain" with gradual cuts and voluntary furloughs.
Economists warn it may be too early to tell how deeply the layoffs will hurt.
"There is a well-designed intent to have a safety net, but the reality is US Air's downsizing in an attempt to survive is a permanent loss. They can be replaced in time, but in time is the key," said Stuart Hoffman, a senior vice president and chief economist for PNC Financial Corp.
Other factors
The unemployment rate is low, especially in Pittsburgh, partly because the jobless are leaving the state, Hoffman said.
And other airlines are contending with the same climbing fuel costs and continued weakness as US Airways, which could make it difficult for laid-off workers to find jobs.
"Although highly skilled, they are limited to the airline industry," Freundlich said. "When it begins to enter panic mode and they start throwing employees out the door, it is very difficult."
More layoffs could come next year.
US Airways last week told creditors it needed to reduce costs by $1.6 billion this year -- $400 million more than previous estimates -- to return to profitability. The airline needs to have a solid business plan to get a $1 billion loan package when it emerges from bankruptcy.
Last year, US Airways lost $2.1 billion on revenue of $8.3 billion.