USAir calls pilots' plan inadequate

August 06, 1994|By Suzanne Wooton | Suzanne Wooton,Sun Staff Writer

USAir Group Inc. said the cost-cutting proposal by its pilots falls "far short" of what the company needs, and said their union is effectively seeking employee control of the financially beleaguered carrier in exchange for a minority investment.

The pilots' plan, outlined to the company earlier this week, envisions $2.5 billion in cuts by all employees over five years, with $750 million of that coming from the airline's pilots.

But the Arlington, Va.-based company said that the cost reductions are "illusory." The airline insisted that the $750 million savings from pilots must be based on April 1994 wage levels, not on higher, future salaries as the pilots envisioned.

"The net result is that actual savings fall far short of what is needed, even before considering the financial benefits the pilots are seeking in return," said the airline, which is the dominant carrier at Baltimore-Washington International Airport.

In exchange for the total $2.5 billion cuts, the pilots have proposed a 25 percent common stock ownership for all employees and $700 million in preferred stock.

For their part, the pilots said they are willing to take $750 million in salary cuts, or a 20 percent pay cut. The remaining $1.75 billion, they said, would come from other workers, including flight attendants, mechanics and other ground workers who are also represented by unions.

But USAir's flight attendants and the company mechanics and ground workers this week indicated they would come up with a plan that hinges far less on salary cuts.

"It is a starting point," said Carol Austin, president of the Association of Flight Attendants. She said the flight attendants will not join with the 5,200-member pilots union now.

"The issue of who pays and how much is something that has to be worked out," she said.

USAir's 10,000 flight attendants cannot afford the 20 percent pay cuts proposed by the pilots, she said. Flight attendants make an average of about $30,000 a year, while the average pilot's salary exceeds $100,000.

The attendants' proposed cuts instead will likely hinge more heavily on productivity concessions. Likewise, the International Association of Machinists, which represents 15,000 USAir workers, has said it will focus more on productivity improvements than pay cuts.

Both groups have met with the pilots but are preparing their own response to USAir's plea for concessions that could help the struggling airline become more competitive with the low-cost, discount fare airlines. No date has been set for their proposals.

The airline also said this week that the pilots' proposal -- which calls for a new, 15-member board of directors -- would jTC "disenfranchise" USAir's common stockholders who already have watched the value of their stock drop considerably since last year.

The plan calls for four directors elected by public stockholders, four by all the employees, three by British Airways, and four more directors chosen jointly by the unions and British Airways.

"The framework of the proposal leads to the inescapable conclusion that, in return for a minority investment, ALPA is seeking not only effective control over the governance of the company but also dominant influence in the running of the business," the airline said.

A spokesman for USAir's division of the Air Line Pilots Association could not be reached for comment yesterday.

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