Unions ponder response to USAir plea for cuts

July 09, 1994|By Suzanne Wooton | Suzanne Wooton,Sun Staff Writer

A coalition of USAir labor unions is expected to respond within the next two weeks to the financially troubled carrier's request for pay and benefit cuts.

In March, the Arlington, Va.-based airline asked its unionized workers -- including pilots, flight attendants, mechanics and some other ground workers -- to come up with a proposal to help curb its spiraling costs. Since then, labor has been analyzing the company's finances and operations, though no direct negotiations have taken place.

The labor coalition met much of last week in Arlington, where the company is headquartered. Kelly Ison, a spokesman for USAir's division of the Airline Pilots Association, declined to discuss specifics of the plan but said:

"We do realize the company needs employee help. We intend to do what's necessary to work out a plan."

Mr. Ison said that labor will be seeking "a major restructuring" of the airline. Some have speculated that the unions will ask for an equity stake in the company in exchange for their concessions.

About half of USAir's 45,500 workers are represented by unions, and concessions from them are seen as critical to the airline's survival. In 1990, the unions agreed to temporary concessions in exchange for job protection.

USAir is the dominant carrier at Baltimore-Washington International Airport, offering half of BWI's daily flights. In the past year, the airline added flights and cut fares significantly to compete with Continental Airlines' CalLite program and with Southwest Airlines.

Continued losses, however, could force the airline to cut back its operation at BWI and elsewhere.

"We've given them the numbers we need to achieve and asked them to come up with a proposal about how we can get there," Dave Shipley, a spokesman for the Arlington, Va.-based airline, said yesterday. "There's no timetable."

While the company has been low-key, two major stockholders, who together own more than a third of USAir stock, have publicly pressured the unions. Last month Omaha investor Warren Buffett threatened to resign from the airline's board of directors unless the carrier soon reaches an agreement with its unions.

That warning came just months after British Airways PLC vowed to withhold the next phase of its $750 million investment unless the airline gets its spiraling costs under control.

During the past four years, USAir has lost more than $2.2 billion, including $200 million in the first quarter this year. Its stock has plummeted from $24.25 in April last year to $6.375 yesterday.

Some analysts have speculated that without labor concessions, the carrier could be forced to file for Chapter 11 bankruptcy protection. But Mr. Shipley said last week the airline had $386 million in cash at the end of the first quarter.

"There's no cash crunch," he said. "And our cash position has improved somewhat since the first quarter."

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