USAir pilots may seek equity stake

July 23, 1994|By Suzanne Wooton | Suzanne Wooton,Sun Staff Writer

USAir pilots are considering seeking an equity stake in the airline and representation on its board as they meet through the weekend to prepare a response to the company's plea for givebacks.

The Air Line Pilots Association, meeting in Reston, Va., declined to comment on how large a stake it might seek. Working in conjunction with unions for USAir's flight attendants and machinists, however, the pilots are not expected to ask for a majority stake.

In March, USAir -- which has lost $2.2 billion since 1989 -- appealed to its unions to devise a plan to help it cut costs and to increase productivity. In an effort to speed up the unions' response, the company said last week that it wanted labor to provide about half of the $1 billion annual cost cuts it needs.

The response from USAir's labor unions has been expected to parallel the strategy by unions at other financially struggling carriers. Just recently, United Airlines' workers received a 55 percent stake in the company in exchange for work rule changes and pay cuts. Employees at Trans World Airlines and Northwest Airlines have struck similar deals, involving minority stakes.

Officials at Arlington, Va.-based USAir said yesterday that they have not received the proposal from the three unions but that the company is willing to consider an equity plan.

"We've said all along that we'll entertain the idea," said Dave Shipley, a spokesman for the nation's sixth-largest carrier, which accounts for half the daily traffic at Baltimore-Washington International Airport.

In 1992, USAir workers agreed to $170 million in temporary pay and benefits cuts which expired after a year. But continued losses have forced the company to seek more labor givebacks.

This week, however, USAir lost some of its flexibility in dealing with its workers as the company's 7,800 fleet service workers, who load and unload the airplanes, joined the International Association of Machinists and Aerospace Workers. Later this summer, the airline's 9,600 ticket agents and reservation clerks will be deciding whether to join the Steelworkers union. If successful, unions would represent 90 percent of USAir's 44,000 employees.

Most analysts see labor concessions as critical to the airline's survival, particularly as the carrier faces intense competition from discount airlines along the East Coast, primarily Southwest Airlines and Continental Airlines.

USAir has the highest cost structure in the airline industry.

Earlier this week, the company announced second-quarter earnings of $13.8 million, an $8 million increase over results for the same period last year. After the payment of preferred dividends, however, USAir reported a per-share loss of 9 cents, compared with a loss of 23 cents a year earlier. And, with first-quarter losses near $200 million, the company still is expecting a loss this year.

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