Judge Says US Airways Can Cut Pay 21%

A Bankruptcy Court judge granted US Airways Group Inc. the authority Friday to temporarily cut the pay of its union workers by 21%, comparing the airline’s financial outlook to “a ticking fiscal time bomb.”

The airline had sought a 23% reduction.

“I have absolutely no doubt that wage cuts of this magnitude would and will result in severe financial hardships,” U.S. Bankruptcy Court Judge Stephen Mitchell said. But the situation is so unstable that “basically what we have here is a ticking fiscal time bomb.”

The pay cuts are in place until Feb. 15, six weeks short of what the airline had sought. Mitchell also granted the airline authority to trim its fleet.

That wasn’t the only bad news for the industry Friday.

Delta Air Lines Inc., the nation’s third-largest carrier, said it was only weeks away from being forced to file for bankruptcy protection because of widening losses. And United Airlines, a unit of UAL Corp., said that it would need even more labor cuts to get out of bankruptcy protection, and that it would seek the court’s help if it could not reach an agreement with its unions.

The US Airways ruling means the average salary at the airline would drop to $47,012 from $59,509, putting the company below the other five major traditional carriers.

After the ruling, Chief Executive Bruce Lakefield said the company was still calculating the financial effect of the decision, but he was pleased.

Although the airline could impose the cuts immediately, Lakefield told employees that a timeline would be announced in the next few days.