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CLT Council
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CLT E-LINE SEPTEMBER 19, 2004 BANKRUPTCY UPDATE
US Airways presented the bankruptcy court with a Supplemental Brief in support of initial motions filed before the Court on Monday, September 13. Motions filed this week included those necessary to allow the Company to continue providing pay and benefits for the employees, introduction of attorneys for US Airways and its creditors, both secured and unsecured, and other motions necessary for the continuation of day-to-day operations. US Airways has established a web site to provide updates to its customers and creditors. The link is:
http://www.transformingusairways.com/html/index.html
The Company is providing information to employees through theHub. The MEC is providing updates via the Hotline and the web site. The below link is a Bankruptcy Q and A provided by the MEC. Please read this Q and A.
http://www.afausairways.org/Restructure/bank_qa9_04.htm
In its Supplemental First Brief filed on Monday, US Airways laid out the reasons for the bankruptcy filing and presented its Transformation plan to the Court. The Company states that high fuel prices and lower than expected revenue led to the filing. Because of its financial condition the Company was only able to hedge approximately 30% of its fuel requirements for 2004. Coupled with the rise in oil prices, that fact has left US Airways at a competitive disadvantage. The Company states that revenue is down because of the pricing advantage of the Low Cost Carriers (LCCs). The Company maintains that US Airways is unable to charge a premium price for its product due to increased low cost competition. As LCCs expand and legacy carriers shrink this competition increases. Apparently the line from a former CEO that you “cannot shrink to profitability” is true. Although the brief states why a bankruptcy filing was necessary, the Company says the solution is to lower costs. The brief states that US Airways must lower all its costs, but most significantly its labor costs. That brings us to our current situation. While the brief outlines steps to increase revenue, the cost discussion is focused almost exclusively on labor. Comparisons between America West and Jet Blue are made throughout the brief. While the Company points out that US Airways is not like either carrier, our labor costs must match theirs. The brief states that US Airways justifies these comparison based on the models they have created. The brief also notes the Company feels justified in the magnitude of the concessions, because if US Airways failed we would not be able to earn even that amount somewhere else. Their basic premise is that nothing can be done to move forward until all labor costs are drastically reduced. I encourage you to read the entire brief via the link below:
http://www.transformingusairways.com/html/pdf/legal/SupplementalFirstDayBrief.pdf
The Company continues to say it hopes to reach consensual agreements with labor but will seek court solutions if necessary. They say they have pursued new labor agreements with “diligence and vigor”. AFA takes exception to that statement. As noted by the MEC, the Company was slow to offer an initial proposal, at times has been unavailable to meet and slow to produce cost figures associated with its proposals. Their initial target “ask” of $116 million has been hard to assess. That target also appears to be moving. With each Company proposal getting worse, their numbers have continued to change. As noted in previous E-Lines true comparisons to America West and Jet Blue are not evident. Pay rates proposed by the Company are much lower than America West. The Company continues to hang their hat on this comparison yet their proposals do not reflect that.
It is clear that US Airways must change in order to survive. We are committed to that change and have expressed that to the Company. We have proposed MAJOR changes to our contract that will provide US Airways with direct cost savings, increased scheduling flexibility and efficiency. The Company continues to move away from not only OUR proposals but THEIR proposals as well. Consensual means the participation of all parties and the existence of mutual consent. It is becoming clear to me the Company’s definition is that we simply agree to their terms. I do not believe they have been working toward a consensual agreement. They will have to prove as much to the court.
The MEC will meet with the negotiating committee this week to continue the development of yet another counter proposal. It is our goal to try and reach an agreement with the Company that is acceptable to the members.
This is a difficult time for all of us. I ask you to remember the following:
I appreciate all of your comments and concerns. Please continue to fly safely and professionally.
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527-0325 office |
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© Copyright 2004. Council 89 CLT AFA -CWA US Airways - Council89@afausairways.org |
