Airline and pilots near deal on wages

US Airways seeking pay concessions

Other issues still on table

July 06, 2002|By Paul Adams | Paul Adams,SUN STAFF

US Airways pilots reported progress in negotiations yesterday over pay concessions deemed critical to the airline's effort to restructure and avoid bankruptcy.

A spokesman for the pilots said the two sides are close to an agreement on pay but continue to hammer out the final details on that and other issues. Still on the table are matters of job security and potential financial compensation for pilots, such as an equity stake in the company.

Management has made $595 million in pilot concessions the cornerstone of a $1.3 billion package of wage and debt savings needed to help the airline secure $1 billion in loans. Without the loans, the Arlington, Va.-based airline has said it might have to file for bankruptcy protection.

"Significant progress was made on Wednesday, and we expect more to be made today," said Roy Freundlich of the Air Line Pilots Association. "We have mostly agreed on the pay concessions, but it's not finalized. There are still open issues there."

Freundlich declined to provide further details but said the two sides would continue to talk through the weekend.

US Airways spokesman David Castelveter said the talks have been "productive and cordial." The company offered no other details.

Airline analysts said wage reductions by pilots and other employee groups would give US Airways a fair shot at returning to profitability after a record $2 billion loss last year.

"I think it's a remarkable achievement on their part to have come this far down the road," said Jon Ash, a Washington-based aviation consultant. "I would not have expected it, but clearly they've done a great job of communicating to employees how bad the situation really is."

US Airways is in a race to convince the federal Air Transportation Stabilization Board that it deserves a $900 million government loan guarantee. The board, which was set up to help struggling carriers after the Sept. 11 terrorist attacks, is expected to demand deep concessions as a condition of approval.

US Airways has lined up an unnamed lender to provide an additional $100 million in financing that would not be backed by the government. The carrier is the second-busiest airline at Baltimore-Washington International Airport, where it was once the dominant carrier and a major employer.

The airline's restructuring plan includes eliminating unprofitable routes, flying more small regional jets and forming an alliance with another major carrier.

Continental Airlines announced Wednesday that it has ceased negotiations with US Airways about forming an alliance, which would have allowed passengers to book flights and earn frequent flier miles on both airlines. Continental officials made the decision after determining that an agreement "would not be reached in the near future."

US Airways is still negotiating with other carriers, including UAL's United Airlines.

Outside of an alliance, employee givebacks make up the bulk of the savings US Airways expects to gain from its new business plan.

In addition to wage and benefit concessions, US Airways pilots agreed to allow the airline to fly an additional 465 regional jets, which are less expensive to operate on short-haul flights. Such flights make up a significant portion of US Airways' East Coast route system.

The airline's flight attendants tentatively agreed last week to provide $77 million in annual wage and benefit savings through 2008. If approved, the deal will give management 85 percent of the $90 million it had requested from the union. The agreement is contingent on the pilots' accepting wage cuts in proportion to that of the flight attendants.

In another deal, the airline reached an agreement this week with 160 dispatchers and assistant dispatchers represented by the Transport Workers Union of America.

The International Association of Machinists and Aerospace Workers is evaluating management's request for $265 million in savings from its 13,000 members. They represent the largest employee group that has yet to reach an agreement with management.

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