US Airways pilots might OK concessions

Union close to agreeing to wage, benefit cuts

October 01, 2004|By BLOOMBERG NEWS

ARLINGTON, Va. - US Airways Group Inc., operating under bankruptcy court protection, might reach an agreement with its pilots as soon as today on $300 million in wage and benefit cuts, the head of the Air Line Pilots Association said. It would be the first concession agreement between the airline and a major work group.

The union, which rejected concessions six days before the seventh-biggest carrier filed for bankruptcy protection, is near agreement to cut pay 17.5 percent, said pilots' Chairman Bill Pollock. The accord might prompt other unions to follow, he said.

"We are really just a couple of items away from closing out an agreement," Pollock said. "I think the pilots will see this as a fair proposal that addresses the situation our company finds itself in."

Union negotiators were able to "bring the company back from some of the more onerous provisions" that would have been part of court-imposed concessions, he said. The airline had sought $295 million in yearly concessions from the pilots before the bankruptcy filing.

An agreement, if it's adopted by other labor groups, might let US Airways withdraw a request to the court for temporary concessions of $38 million a month, including 23 percent pay cuts. Without cash in the slow winter travel months, US Airways said Sept. 24, it might be forced out of business by mid-February.

"It's always important to get the pilots on board first," said Jon Ash, managing director of Washington-based Global Aviation Associates. "They tend to represent a very large chunk of your labor bill, usually in the range of about one-third. They're essential to bring on board."

A court hearing is scheduled for Thursday on the airline's request to impose the temporary concessions. Chief executive Bruce Lakefield is seeking the power to cut pay after the airline was unable to quickly reach agreements for $950 million in annual worker concessions, which it says are required to lower operating costs and compete with low-fare rivals.

Separately, the company said yesterday that its flight dispatchers, represented by the Transport Workers Union, voted 85 percent in favor of a new contract that will provide the airline with $4.5 million in savings. The contract, which the union said would lower wages for its 151 US Airways members, will take effect today, pending bankruptcy court approval.

The seventh-largest carrier confirmed that negotiations with the pilots union are continuing without characterizing the talks. The airline's 3,200 pilots make up about 12 percent of its work force. The pending proposal also includes a reduced contribution to the pilots' retirement plan.

A US Airways captain with 10 years experience flying a Boeing 737 has base pay of $12,019 a month, according to Atlanta-based AIR Inc., which monitors pilot pay. Base pay for a senior captain flying an Airbus SAS A330 is $15,685 a month. Although pay can vary, the average equals $144,228 a year for the 737 pilot and $188,200 for an Airbus pilot.

US Airways sought bankruptcy protection Sept. 12, its second filing in two years, after failing to secure $800 million in concessions requested earlier from several unions. The company and pilot negotiators never had an agreement, and a split among union leaders blocked sending US Airways' final proposal to members for a vote Sept 6. It's not known whether the same split among union leaders would block a union-wide ballot this time.

"My guess is they're going to say, `Let's let the pilots agree to this hosing, and it won't be all on our shoulders,'" said George Hopkins, a Western Illinois University history professor and author of The Airline Pilots: A Study in Elite Unionization. "If they don't agree, the judge is going to impose cuts anyway."

United Airlines has been in bankruptcy court for 21 months. Delta Air Lines Inc. and Northwest Airlines Corp. also are seeking concessions from pilots and other workers to lower costs.

Delta, the No. 3 U.S. carrier, is in talks with its pilots for $1 billion in yearly concessions and has said a bankruptcy filing is possible.

US Airways will announce details of $40 million in yearly management concessions once plans are final, the airline said.

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