US Air and pilots strive for accord

Two sides reportedly closing gap on how much fliers would be giving up

July 03, 2002|By Paul Adams | Paul Adams,SUN STAFF

While a government board pondered crucial loan guarantees for US Airways Group Inc., the airline's management and pilots returned to the negotiating table yesterday in a final push to reach an agreement that could prevent bankruptcy for the nation's seventh-largest carrier.

The Arlington, Va.-based airline, which has twice deferred payments to lessors as it struggles to conserve cash, is asking pilots to give up $595 million worth of wages and benefits annually as part of its restructuring plan.

Pilot concessions are considered the cornerstone of a $1.3 billion package of wage and debt savings the airline is seeking in order to win approval from the Air Transportation Stabilization Board for a $900 million government loan guarantee. Without it, the airline, which lost $2 billion last year, would likely have to declare bankruptcy, industry analysts said.

"My guess is they've got a 50-50 shot of pulling it off," said William Rochelle, whose New York law firm has been involved in several major airline bankruptcy and restructuring cases. "They've been making the right moves and achieving some significant success pretty quickly."

Pilot negotiations temporarily broke down over the weekend after a misunderstanding concerning a tentative agreement on the use of regional jets. The issue was resolved yesterday, resulting in a new round of talks at union headquarters in Washington. Barring another snag, an agreement on wage concessions could come as early as today or tomorrow, sources close to the negotiations said.

"We're doing everything we can to help them avoid bankruptcy," said Roy Freundlich, a spokesman for the US Airways unit of the Air Line Pilots Association.

The pilots union said it has offered concessions averaging about $410 million in annual savings. A spokesman for the airline said the two sides are getting close.

If approved by the union's membership, a deal reached over the weekend will allow the airline to add up to 465 regional jets to its fleet. The small planes, which are cheaper to operate on short-haul routes, are another key component of the airline's new business plan.

"They have got to move quickly on the smaller planes to get them into the system," said James Corridore, an airline analyst with Standard & Poor's.

The airline is making progress in talks with its other unions as well.

US Airways' flight attendants tentatively agreed Sunday to provide the airline with $77 million in annual cost savings through 2008. The airline was seeking $90 million from the flight attendants. In an effort to keep the sacrifice equitable among employee groups, the flight attendants said they may reduce the amount of their concessions if the pilots don't agree to give the airline at least 85 percent of what management is asking for.

The International Association of Machinists and Aerospace Workers said it is pondering management's request for $265 million in savings from its 13,000 members. No formal talks are scheduled.

"We do feel they are overstating the need for our participation ... but we do have an open dialogue with the company and we do wish to avoid any type of bankruptcy," said Joe Tiberi, a spokesman for the machinists.

Even if US Airways wins all of the concessions it is seeking, the airline could buckle under the weight of its enormous debt, analysts said.

"It will take a long time to sort out and even if they get all of this, they still might not survive," Corridore said.

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