US Airways, pilots at standstill over latest concession package

Union negotiators fail to allow 3,200 members to vote on cutbacks plan

September 08, 2004|By Meredith Cohn | Meredith Cohn,SUN STAFF

US Airways said yesterday that it has failed to squeeze millions of dollars' worth of concessions from its pilots and other workers aimed at staving off a second bankruptcy filing that ultimately could cost thousands of workers their jobs and travelers their convenience.

The Arlington, Va.-based airline still ranks among the nation's largest, but in recent years it and other major carriers have had to weather a fear of flying after the terrorist attacks of Sept. 11, 2001, a recession and the pervasiveness of cheap seats offered by low-fare airlines in a growing number of cities.

US Airways already has pulled back from some of its hubs, including Baltimore-Washington International Airport, where it once provided more than half the flights, and more recently Pittsburgh International Airport.

Negotiators for the pilots did not say yesterday why a negotiating committee declined Monday night to allow a vote by all 3,200 pilots on a concession package.

But the airline, which has 1,879 pilots already on furlough, is asking working pilots to agree to $295 million in wage and benefit cuts to help it reach $800 million in savings from its work force of 28,000. Other savings are being sought from non-union managers and other actions such as a redeployment of airplanes and more online bookings.

Yesterday, US Airways said it would start charging a $5 or $10 fee for most tickets not booked online.

US Airways acknowledges it has a tight deadline to win concessions from pilots, as well as machinists, flight attendants and others. The airline owes $110 million in pension payments by Sept. 15. It also must meet terms of a $1 billion federally backed loan that requires cost cutting, increased cash on hand and, possibly, repayment by Sept. 30.

"We're maintaining open communications with the pilots, a dialogue, but have no formal negotiations planned," said David Castelveter, an airline spokesman. "We're profoundly disappointed."

While analysts say other unions are likely to follow the lead of the pilots union, the Air Line Pilots Association, the Machinists insist they will give no more. No formal negotiations are planned with the International Association of Machinists and Aerospace Workers.

The union, which said it already has agreed to $1.5 billion in concessions over a six-year period, met with the airline last month and presented a plan it said could save US Airways $115 million a year on non-labor cuts.

Among the ideas, which the carrier said were not viable, were: using existing workers rather than outside vendors for cleaning facilities and eliminating supervisors and using crew chiefs for such things as scheduling.

"We've done more than our share. What needs to be done is correct non-labor costs of the airline. It successfully lowered labor costs in the last bankruptcy and now needs to focus on non-labor costs, and we'd like to work with them," said Joe Tiberi, a spokesman for the union, which represents 9,100 workers who fix, clean and load US Airways airplanes.

Some analysts say the stalemate with the unions means the airline will again file for Chapter 11 bankruptcy reorganization. The company emerged from its last bankruptcy in March 2003.

Company officials said if it came to bankruptcy, it would seek to reorganize, but that ultimately could lead to liquidation of its assets.

"Everybody right now is positioning himself," said Darryl Jenkins, a visiting professor at Embry Riddle Aeronautical University and a Washington-based airline consultant.

"It seems like all the union is doing is negotiating cuts, and at a certain point it's hard on the union to justify more cuts to membership. It will be easier for it to negotiate in Chapter 11."

Jenkins said other major carriers will join United Airlines in bankruptcy, but he believes US Airways will survive and is already on its way to significant change. He noted, for example, movement of planes from Pennsylvania, where the airline competed with itself somewhat by having hubs in both Pittsburgh and Philadelphia.

US Airways maintains hubs in those two cities, as well as in Boston; Charlotte, N.C.; New York and Washington at Ronald Reagan Washington National Airport.

The carrier and its shuttles and affiliates operate nearly 3,400 flights daily from 37 states, Washington and more than three dozen international destinations. That's an important collection of cities for the airline as it competes with low-fare carriers that now control more than a quarter of the domestic market but do not typically fly overseas.

Another analyst, Robert Mann, president of R.W. Mann & Co. Inc., said the situation for US Airways is more dire than it was during its last bankruptcy.

If it makes its pension payments, it will have no cash to hand over to lenders as needed collateral during reorganization. Also, with demand higher for airplanes, which are leased, the carrier could find itself without a crucial asset, he said.

"The company is running out of time and money," he said.

David S. Stempler, president of the Air Travelers Association, a Washington-based consumer group, said some of his members fear their frequent flier miles will be lost in a US Airways bankruptcy.

The frequent flier miles program, which creates needed loyalty among travelers, would not likely be honored by another airline if US Airways folds, he said. If it merges with another airline, an unlikely scenario according to analysts, then some miles and some tickets might be honored.

"US Airways folding," Stempler said, "is good for no one."

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