ALEXANDRIA, Va. (AP) -- A bankruptcy judge on Thursday approved a plan by US Airways Group Inc. to create a severance package for about 1,800 management employees to prevent an exodus of managers in advance of the airline's anticipated merger with America West.
The judge rejected a plan, though, to provide similar severance packages for about two dozen of the airline's top corporate officers.
Unions had opposed the severance plan, saying it was a slap in the face to reward management after labor groups agreed to steep pay cuts to keep the airline afloat.
The retention plans provide non-union employees severance benefits of 12 to 52 weeks pay, depending on seniority and job status, to workers who will lose their jobs when the airline consummates its planned merger with America West Holdings Corp.
Workers must remain at the company until they are no longer needed to collect the benefit. They will also be ineligible if they are offered a job with the merged company.
Theoretically, the severance payments could total more than $50 million if every eligible employee received them. The company estimated that roughly one-third to one-half of management could eventually be eligible for the payments; U.S. Bankruptcy Judge Stephen Mitchell estimated that the program would likely cost $20 million to $28 million.
Mitchell said he sympathized with the unions' concerns but was worried about the continued impact of a drain on the management work force.
''If the exodus continues at the present rate, there simply will not be enough management employees left to see the company through the merger,'' Mitchell wrote in a ruling released Thursday.
The airline argued a retention/severance plan was necessary because it was losing management workers at rate of almost 20 percent annually and was completely unable to fill those slots. About 340 management positions are currently vacant at US Airways.
The severance packages sought by the airline for its top 23 executives were not approved by Mitchell. The airline still can seek to implement them by submitting them with the airline's final plan of reorganization.
But that means the airline's creditors will be able to weigh in on the plan. The airline already scaled back its plan once at the request of a committee of creditors, eliminating a potential $4 million severance package for chief executive Bruce Lakefield and making other changes.
The airline's unions had argued that the severance plan was particularly unfair given that union workers accepted much steeper pay cuts than management after the airline sought to cut $1 billion annually in labor costs upon filing for bankruptcy protection in September.
''We were happy the judge did not approve the golden parachute proposal for the 23 top executives,'' said Jeff Miller, a spokesman for the Communications Workers of America, which represents reservations agents and other passenger service employees at the airline. More than 2,000 CWA members had signed a petition opposing the severance packages.
The airline issued a statement Thursday saying it was ''pleased that the court has recognized the value of retaining the management staff at US Airways during this important transition period. ... With respect to the company officers, we will abide by the court's decision'' and submit new officer contracts later this summer with a plan of reorganization.
The severance plans were opposed not only by the unions but by the U.S. Trustee, who represents the public interest in the bankruptcy case. Trustee Dennis Early warned that such a plan would hurt company morale among the rank-and-file at a critical time. Early also expressed some skepticism that the merger itself would be successful.
''It's going to be a real challenge to make this merger successful financially,'' Early said.
US Airways said the management severance was warranted because those employees are the ones who will suffer in a merger. As it stands now, management employees find themselves in the awkward position of working to complete a merger that eventually will cost many of the workers their jobs.
The company is estimating that few union workers will be furloughed due to the merger, even though the merger calls for a 15 percent reduction in the companies combined jet fleet. US Airways employs about 30,000 and America West about 14,000.
