USAir reaches tentative 4-year pact with pilots Agreement includes temporary pay cut

May 07, 1992|By John H. Gormley Jr. | John H. Gormley Jr.,Staff Writer

USAir Group Inc. reached tentative agreement with its pilots yesterday on a four-year contract that includes temporary pay cuts to help the financially troubled airline return to profitability.

David W. McLarney, a USAir pilot acting as the union's spokesman in Baltimore, said the Air Line Pilots Association estimates the contract would save the airline $200 million -- $55 million in pay cuts and $145 million in savings from changes in work rules and health insurance benefits.

The agreement is subject to ratification by the union's 5,600 members, but Captain McLarney said the rank and file will accept the recommendation of the union negotiators and endorse the contract. "This is a done deal," he said.

USAir President Seth E. Schofield declined to disclose details of the contract beyond a brief press release until the agreement is submitted to the union for ratification Wednesday.

"We are gratified with the results of the agreement, which will provide the company with near-term cost savings through immediate salary reductions for a 12-month period," he said in the release. It also provides considerable improvements in pilot productivity and cost savings in health care."

The agreement should give the airline breathing room. The Arlington, Va.-based company lost more than three-quarters of a billion dollars in 1990 and 1991.

The losses continued during the first quarter of this year, when the company lost $63 million.

The pay cuts will apply to pilots represented by the association, the highest-paid employee group at USAir, the most important carrier at Baltimore-Washington International Airport, where it has two-thirds of the market.

But USAir officials have said similar pay cuts are planned for the 23,000 non-contract employees who make up about half of the airline's work force.

The agreement reached with the pilots also is expected to serve as a model for the company's other two unions, which represent mechanics and flight attendants.

If ratified by the USAir pilots, the agreement will effectively end the threat of a potentially catastrophic strike by pilots.

"It helps enormously," said Harold E. Shenton, vice president of Avmark Inc, an aviation management consulting firm in Arlington. "From the morale point of view, the pilots are now part of the team."

With the pilots' agreement in hand, USAir will have a much easier time getting the other two unions to come to similar terms, Mr. Shenton said.

The pay cuts are to last about a year, and pilots will receive the first of a series of raises Sept. 1, 1993, to return their wages to "industry levels," the airline said.

Captain McLarney said he expected the cuts to take effect upon ratification. The union received a guarantee of no furloughs, he said. In addition, the raises eventually will increase the pilots' pay to the level of pilots at Delta Air Lines, one of the nation's three largest carriers.

The changes in work rules affect what are known in the industry as "duty rigs." A pilot's base pay is determined by flying time. Duty rigs govern pay adjustments for such things as the time pilots spend on the ground away from home between flights.

USAir issued a precise outline last fall of the pay cuts it wanted its unions to accept. That proposal included a "progressive salary reduction program" similar to a graduated income tax.

Under the plan, the first $20,000 in income would not be cut; the next $30,000 would be cut 10 percent; the next $50,000 would be cut 15 percent; and all income over $100,000 would be cut 20 percent.

Captain McLarney said his calculations indicated that the agreement followed that proposal closely, although he was not certain about the precise percentage cuts agreed to.

The contract would not change the pilots' retirement plan, he said.

Under the old contract, the airline paid for pilots' medical insurance. Under the new contract, pilots could contribute to the cost of their current medical insurance plans or switch to "managed care" programs, Captain McLarney said.

Lee Howard, president of Airline Economics Inc., a Washington-based consulting firm, said the agreement could play a key role in the airline's survival. "This will be a big help in reducing expenses immediately," he said.

"I give them a good chance for survival," he said, although the key issues -- airfares and the state of the economy -- remain largely outside USAir's control.

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