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USAir chief outlines airline's tough road to recovery President thanks pilots for concessions on wages


USAir President Seth E. Schofield outlined for shareholders yesterday efforts to return the airline to profitability, but he declined to say when he thought USAir would be back in the black.

Last year, USAir Group Inc., the airline's parent, lost $305 million, a performance Mr. Schofield described at yesterday's annual meeting as "absolutely unsatisfactory." The airline continued to struggle in the first quarter this year, during which it lost $63 million.

Mr. Schofield expressed gratitude to the airline's 5,600 pilots, who tentatively agreed last week to a new contract that would save the airline millions of dollars this year.

Mr. Schofield would not say how much the contract will save the airline if approved by pilots later this week, but he did say the contract would serve as "the foundation for correcting some of the cost difficulties on the airline."

The pilots have estimated that the agreement would save USAir $55 million a year in lower salaries and an additional $145 million in productivity gains from revised work rules and health benefits.

In October, the airline announced a separate cost-cutting program -- including wage concessions from employees -- designed to save the airline $400 million over 12 months.

In turn, shareholders approved yesterday a stock option plan that permits the issuance of up to 8 million shares to the company's employees as compensation for their concessions.

"The employee stock option plan is an integral element in the payback to employees in our comprehensive cost-cutting program," Mr. Schofield said. Employees whose pay is cut would receive options to purchase 50 shares of common stock at $15 a share for each $1,000 of annual salary reduction. USAir Group closed yesterday at $13.625, down 25 cents.

While USAir has been trying to cut costs, it also has been trying to expand its market at airports in the Boston-Washington corridor that Mr. Schofield called "the Big East." The list included Boson, LaGuardia in New York, Newark, N.J., Philadelphia and Washington National. Missing from the list was Baltimore-Washington International Airport, where USAir is the dominant carrier with about two-thirds of the market.

Mr. Schofield said the federal government seems to be favoring bigger airlines with the biggest jets in awarding international routes, an approach that threatens USAir's ability to expand.

USAir would like to increase its international operations, but the federal stance on selecting carriers "puts us in a terrible quandary," he said.

After the shareholders meeting, the company's board of directors announced that Edwin I. Colodny will retire June 30 as chairman. Mr. Schofield will assume the responsibilities of chairman in addition to his duties as president and chief executive officer.

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