Dear Council 70 Flying Partners,
FYI: Please read the important news releases below.
Take Care and Fly Safe,
Mollie
70
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US Airways And ATSB Reach Pact That Provides Operating Cash Through June 30
DOW JONES NEWSWIRES
January 13, 2005 8:08 a.m.
ARLINGTON, Va. -- US Airways Group Inc. (UAIRQ) reached an agreement with the Air Transportation Stabilization Board that extends the carrier's use of cash proceeds from its federally guaranteed loan through June 30.
In a press release Thursday, the airline said this agreement will allow it to continue operations while it completes its restructuring and planned emergence from Chapter 11 this summer.
The company has been operating with the use of ATSB cash collateral since its Chapter 11 filing last September. An initial agreement was extended until Jan. 15, and the new extension will be presented to the U.S. Bankruptcy Court for the eastern district of Virginia for approval at a hearing Thursday.
US Airways filed its second Chapter 11 petition in as many years last September, saying it planned to transform into a low-cost carrier focused on the East Coast and the Caribbean.
The airline will file details of the agreement with the court. The provisions are consistent with the prior agreement with the ATSB as well as the company's agreement with the General Electric Capital Aviation Services, that it maintain minimum weekly cash balances and sufficient liquidity.
"While we still have much work to do, I think our most difficult period is behind us," President and Chief Executive Bruce R. Lakefield said in the release.
Company Web site: http://www.usairways.com
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US Airways enhances offer to machinists
http://www.charlotte.com/mld/charlotte/business/10623262.htm
Posted Wed, Jan 12, 2005
TONY MECIA AND STAN CHOE
Staff Writers
US Airways is sweetening its offer to its machinists union, in a move that could persuade more of the union's members to ratify an agreement that would lead to more than 2,000 job cuts.
The offer, contained in letters obtained by the Observer on Tuesday, includes additional health benefits, a partial buyback of sick leave and lifetime travel perks for employees whose jobs are cut. The letters, dated Tuesday, are to International Association of Machinists leaders Randy Canale and William O'Driscoll from Allen Hemenway, US Airways' vice president of labor relations.
The letters describe the changes as "enhancements and/or clarifications" to the company's final offer last week. Union members, who maintain planes and load bags, began seeing terms of that proposal Monday and will begin voting on it in the coming days.
The new details come as US Airways is in the middle of a crucial week. On Thursday, the company is scheduled to head to court to seek permission to continue tapping its cash reserves to operate. By Friday, it must find $100 million in new investment or cost cuts to fulfill terms of a key financing agreement with a major creditor.
If it fails at either of those tasks, it could start shutting down. If it gets both deals, it probably buys at least a few more months to continue reorganizing. But around the company's Arlington, Va., headquarters on Tuesday, there seemed to be a sense of optimism about the future, said US Airways board member Bill Pollock, leader of the pilots' union.
Although the company faces urgent financial deadlines, Pollock said he met Tuesday with CEO Bruce Lakefield and three other senior officers to discuss improving the scheduling of flight crews -- changes that might not take effect until March or April.
"I do get the sense they see us as being close to being able to do it, to beat the odds and overcome the pundits who have been pretty quick to write us off, and to succeed and provide jobs," he said. "I am encouraged by the sense of optimism and determination to see this company succeed."
Some industry observers are pessimistic about the airline's chances, noting high fuel costs, travelers wary of its future and a demoralized work force.
US Airways, Charlotte's dominant carrier, is in bankruptcy court for the second time in two years as it tries to reinvent itself as a low-cost, low-fare airline. It has largely succeeded in cutting $1 billion a year in labor costs but has said it needs other cost savings to attract investors and leave bankruptcy protection. Announcements of those changes could come soon.
About 5,700 of the company's 27,000 employees are based in Charlotte, although the airline is poised to chop hundreds of those jobs here. The most recent offer to the IAM would cut more than 2,000 of the union's 8,500 jobs. It also calls for pay cuts, decreases in vacation and holiday time as well as restrictions on sick time. The airline estimates the proposal would save about $270 million a year.
Last week, the union left talks with several questions about the proposals. The letters sent Tuesday were to answer those questions, as well as to offer some enhancements, said IAM spokesman Joseph Tiberi.
The union will tack on the letters to the end of the proposals that IAM members began receiving Monday ahead of their votes. Voting will occur on different days at different cities around US Airways' system, but the IAM hopes to count all votes by Jan. 21.
At the same time they vote on the new proposal, IAM members will be asked whether to give their leaders authorization to call a strike. Union leaders have not said whether they would strike, a move that could be fatal to the airline.
Tuesday's letters seek to draw a sharp distinction between what would happen to workers if they approve the contract as opposed to voting it down.
If they accept the contract, the company says, laid-off employees will receive three additional months of health benefits, can sell accrued sick leave up to $5,000 and be entitled to lifetime travel privileges if they have 15 or more years of service. If they reject it, the company will "implement terms and conditions as it considers appropriate" and might lack the money to pay any severance benefits, the letter says.
Company spokesman David Castelveter said the airline will continue working with the union but declined further comment.
Important Dates
• US Airways workers who belong to the IAM are evaluating a new, lower-wage contract proposal from the airline. The union expects to have members' votes on the proposal counted by Jan. 21.
• By Friday, the airline needs a $100 million additional investment or cost savings to move forward with a critical financing deal. With that deal, the airline likely buys a few more months to get out of bankruptcy court. Without the deal, it's uncertain whether it can keep flying.
• Also by Friday, the airline needs a new agreement with the federal agency that guarantees a major loan. The Air Transportation Stabilization Board said Monday it is close to a deal that would allow the company to keep using its cash. The cash is collateral for the loan, giving the ATSB effective veto power over whether the company can use its cash.