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US Airways, two unions meet on proposed $38 million cost cuts

By Mary Schlangenstein
Bloomberg News

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US Airways met with two unions yesterday to try to agree on concessions before an Oct. 7 hearing at which a bankruptcy judge may let the carrier temporarily reduce pay 23 percent to help avoid potential liquidation.

The company and unions for pilots and for customer-service and reservations agents held talks yesterday, the two sides said. US Airways in a court filing Friday said it needed immediate cost cuts totaling $38 million a month from those unions and three others as the 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, which represents the 5,800 customer-service and reservations agents.

U.S. Bankruptcy Judge Stephen Mitchell yesterday 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 in a court filing said it must accrue $200 million in the next five months to fund 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 planned cost savings from management and administrative workers, Johnson said. The airline said Friday that it would soon announce steps, including non-labor and management cost reductions, to save another $5 million a month.

US Airways declined to comment further.

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, according to the unions.

The airline has reached concession agreements with units of the Transport Workers Union representing 65 flight-crew training instructors and 151 flight dispatchers. Union members and the bankruptcy court still must approve both accords.
 
US Airways, under bankruptcy protection for the second time in two years, is relying on cash and daily revenue to fund operations during bankruptcy.

The airline couldn't secure an outside lender because almost all its assets are being used as collateral for existing loans.