USAir presses for concessions in talks with 2 unions

Bankruptcy judge sets Oct. 7 hearing on pay cuts

September 28, 2004|By BLOOMBERG NEWS

ARLINGTON, Va. - US Airways Group Inc. met with two unions yesterday to try to agree on concessions before an Oct. 7 hearing at which a bankruptcy judge might let the carrier temporarily reduce pay 23 percent to help avoid "potential liquidation."

The talks were confirmed by the company, the Airline Pilots Association and the Communications Workers of America, which represents the 5,800 customer-service and reservations agents.

In a court filing Friday, US Airways said it needed immediate cost cuts of $38 million a month from those unions and three others as the No. 7 U.S. carrier nears the slow winter travel season.

"We hope in bargaining to be able to offset the devastating wage cuts US Airways is seeking," said Candice Johnson, spokeswoman for the Communications Workers of America.

In another development yesterday, U.S. Bankruptcy Judge Stephen S. Mitchell of Alexandria, Va. set the Oct. 7 hearing on the airline's request for worker concessions.

US Airways filed for bankruptcy protection Sept. 12 after failing to reach agreement with unions on an earlier request for $800 million in annual reductions. The carrier said it must accrue $200 million in the next five months to finance daily operations or face "potential liquidation by mid-February."

The Air Line Pilots Association, which represents about 3,000 US Airways employees, said it would fight any attempt to impose the 23 percent pay cut if an agreement can't be reached. A union spokesman declined to comment on yesterday's talks.

The Communications Workers union plans to press US Airways to detail plans for cost savings from management and administrative workers, said Johnson, the union spokeswoman. The airline said Friday that it would soon announce steps, including nonlabor and management cost reductions, to save an additional $5 million a month. It declined to comment further.

The unions say the airline also wants to stop pension-plan contributions or end 401(k) matches for some workers, use outside companies for some mechanics' work, require flight attendants and pilots to work longer hours if needed and remove a January 2003 agreement on the minimum number of planes US Airways must fly.

The airline has obtained concessions from units of the Transport Workers Union representing 65 flight crew training instructors and 151 flight dispatchers. Both accords are subject to approval by union members and the bankruptcy court.

US Airways, under bankruptcy protection for the second time in two years, is relying on cash and daily revenue to finance operations during bankruptcy. The airline couldn't secure an outside lender because almost all of its assets are being used as collateral for loans.

The airline is trying to reduce expenses to compete with low-cost rivals such as Southwest Airlines Co. US Airways and other major carriers also have been hurt as fuel prices have almost doubled in the past year and as competition has held down fares.

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