Pilot pact eludes USAir

Airline fails to win key agreement over move to smaller jets

March 12, 2002|By Paul Adams | Paul Adams,SUN STAFF

Time is running out for financially strapped US Airways Group Inc. to reach an agreement with its pilots union to replace much of its fleet with small regional jets - a linchpin of the airline's sweeping restructuring plan, analysts said yesterday.

Talks between the union and airline ended over the weekend after a week of intense negotiations that stretched into several evenings.

The two sides have been negotiating a plan to replace a portion of the airline's mainline jet fleet with hundreds of smaller, regional jets that are cheaper to operate.

"They probably can't survive long term without it," said Ray Neidl, an analyst with ABN AMRO Inc. The airline lost $1.9 billion last year and has been drastically scaling back its operations at Baltimore-Washington International Airport.

Neidl said the airline could use up to 500 of the small jets as it strives to lower costs in the face of intense competition from Southwest Airlines, based in Dallas, and other low-cost carriers.

The introduction of more regional jets would result in lower salaries for the pilots who fly them, which is one of the reasons the pilots' current contract restricts their use.

The union wants an agreement on regional jets to include certain job guarantees, particularly a promise not to furlough 278 senior pilots targeted by the airline as part of a cost-cutting plan implemented after the Sept. 11 terrorist attacks.

In all 1,350 US Airways pilots out of about 6,000 are in the process of being furloughed.

The union also wants laid-off pilots to be offered the jobs of pilots who retire or leave the company. The provision would help ensure that the number of US Airways pilots doesn't shrink below current numbers.

Another provision would require the airline to hire laid-off pilots to fly the regional jets - something the two sides were reportedly close to agreement on.

US Airways' officials have said in recent months that the two sides were near a final agreement on regional jets. But a union spokesman said yesterday that US Airways negotiators were not authorized to finish an agreement and the two sides remain far apart on job protection provisions.

"I guess we were further apart than we thought because we found out at the 11th hour that management negotiators were not authorized to resolve our core issues," said Roy Freundlich, a spokesman for the Air Line Pilots Association.

No further talks are scheduled, Freundlich said.

"US Airways' need for more regional jets is well-known," a spokesman for the airline said in a prepared statement yesterday. "We are disappointed in these results."

The latest snag came less than a week after US Airways hired David N. Siegel, former chief executive of Avis Rent A Car, to be its new president and chief executive. He replaced Chairman Stephen M. Wolf, who stepped in as CEO after Rakesh Gangwal resigned in November. Gangwal was part of the executive team that came up with the plan to introduce more regional jets.

Neidl, the airline analyst, said Siegel would likely revive the talks once he settles into the job, but time is running out on the airline. It must find ways to cut costs drastically before it runs out of cash.

Jon F. Ash, a Washington aviation consultant, agreed, but said the cost-cutting has to extend beyond regional jets. "They need to come up with an agreement on the regional jets and they also need to come up with an agreement with pilots on the basic mainline airline labor costs because unless those two issues are resolved satisfactorily, US Airways is going to continue to operate at a tremendous competitive disadvantage."

Shares of US Airways lost 50 cents yesterday to close at $6.90.

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