Pa. pitches Pittsburgh to US Airways

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WASHINGTON -- Pennsylvania officials are negotiating with US Airways in an effort to persuade the airline to keep its Pittsburgh hub.

The key issue is money. US Airways is threatening to leave Pittsburgh if state and local officials don't contribute $864 million for improvements at both its Philadelphia and Pittsburgh hubs, primarily to accommodate its plans to use more regional jets.

At a June 11 meeting that included the state's governor and two U.S. senators, Pennsylvania officials offered US Airways $264 million.

Pennsylvania and US Airways officials hope to close that $600 million gap, and close a deal, by mid-July. To that end, state Gov. Edward Rendell appointed a negotiating team June 17. The governor's press secretary called the $264 million offer "a first step in the negotiating process."

When US Airways was in bankruptcy court under Chapter 11 protection, it received approval to walk away from its Pittsburgh Airport leases in January if it cannot renegotiate them and lower its costs. But the spokesman also said the airline is optimistic an agreement can be reached.

"We have a common goal," he said. "Ours is to continue to operate at Pittsburgh, and theirs is to continue to have us operate at Pittsburgh. We just have to do that in a cost-effective manner."

US Airways is not questioning the quality of the airport, which continues to place high in airport rankings. Even David Siegel, president and CEO of US Airways, has called Pittsburgh "a great airport."

But in a recent speech he also added this: "As impressive as it is, and as much as people like connecting there to shop the stores of the airport mall, not one passenger is willing to pay us extra for the privilege of connecting at our Pittsburgh hub."

Siegel said it costs US Airways $9 per passenger to use the airport, and $8 of those $9 are used to service the facility's $675 million debt.

"I believe that the issues at play in Pittsburgh will soon confront other airports and other airlines as the industry continues to restructure," he added.

But Pittsburgh isn't the only place US Airways has been threatening to leave. Siegel has been issuing similar warnings about the airline's home near Washington, chiding local business and community leaders for not lobbying hard enough on the airline's behalf.

Siegel wants Congress to include US Airways in any legislation to increase the number of long-range flights allowed to fly out of Washington's Reagan National Airport and to let the airline use its new, larger regional jets there.

Where did Siegel suggest the airline might move if it left the Washington area?

According to a May 28 speech Siegel gave to Washington-area business leaders, the airline's new majority owner, the Retirement Systems of Alabama, would love to find an economic justification for moving the company's headquarters to Montgomery, Ala.

Meanwhile, the business community in Charlotte, N.C., where US Airways also has a hub, "has long courted us to relocate to North Carolina," he added.

"Most recently," he continued, "the governor of Pennsylvania has suggested that we should relocate to that state as part of our negotiations to maintain our hub in Pittsburgh."

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