US Airways accord may set the tone for others

Saturday, December 04, 2004
By Jim McKay, Pittsburgh Post-Gazette

A concessionary agreement struck late Thursday with a union representing nearly 6,000 US Airways customer service workers appears far less onerous than what the airline had been seeking -- and could pave the way for an accord with flight attendants.

The Communications Workers of America, which settled with the company as the U.S. Bankruptcy Court began hearing arguments from the airline to abrogate contracts of holdout unions, said the pact would reduce wages an average 12.9 percent the first two years.

US Airways initially had asked for wage cuts as high as 34 percent, which would have lowered the top pay rate of $20.05 an hour by about $7 to $13.10. The 12.9 percent cut represents a cut of about $3, to $17, and in two years, wages would begin rising again over the remaining six years of the eight-year contract.

The airline also agreed to provide buyouts of up to $20,000 for call-center workers and up to $15,000 for airport employees, based on seniority, plus health care and other benefits, as a way to shrink the work force. And it backed off a plan to outsource much of the reservations work, now done in call centers in Pittsburgh and North Carolina.

Instead, the airline would contract out only those reservations positions made vacant through normal attrition or by employee participation in buyouts, with the understanding that outsourced work eventually would return to the union's jurisdiction, said Chris Fox, a CWA local president and member of the union's bargaining committee.

The sacrifices, while significant, were not as severe as the airline's original demands.

During a break yesterday in the second day of bankruptcy court hearings in Alexandria, Va. -- at which the airline is seeking to cancel the contracts of holdout machinists and flight attendant unions representing 14,000 workers -- US Airways Chief Executive Officer Bruce Lakefield expressed hope the new CWA accord would encourage the others to settle.

"I hope so. Every deal helps," Lakefield said.

Asked if settlements were near with the two unions, the Association of Flight Attendants (AFA) and the International Association of Machinists (IAM), which represents mechanics and baggage handlers, he added: "We always think we're close. But there are a lot of tough issues. We've got a lot of wood to chop."

Talks continued yesterday with the AFA, and the IAM told its members the union is reviewing management proposals and would resume formal discussions next week.

As if to drive home the point that the two sides remain wary as they struggle for compromise, the airline yesterday signaled it will soon ask U.S. Bankruptcy Judge Stephen Mitchell to hear arguments on its request to bar strikes by the two unions.

The IAM has not said it will strike, but the AFA's members are voting now on whether to authorize a strike if their contract is thrown out by the court. The CWA's members had voted for such a move, but that point appeared to be moot now that a tentative accord is in hand.

Airline union contracts are governed by the Railway Labor Act, which bans strikes until a lengthy process of bargaining and mediation occurs, and the airline contends a strike would be illegal.

In a filing made with the court this week, the Arlington, Va.-based carrier said it "marvels at the self-destructive impulse" of the unions' public discussion of a strike. "If a strike were to occur, the debtor would almost certainly be doomed from the first moment of the walkout."

US Airways, striving to cut spending so it can emerge from its second bankruptcy in two years, told the court on Thursday that it may go out of business by mid-January if it cannot obtain $1 billion in concessions it is seeking in its third round of concession bargaining.

It had reached a $300 million deal with the pilots and settled concessions with some smaller employee groups prior to the start of the court hearings, which are expected to continue through Dec. 17.

Last month, the judge imposed emergency pay cuts of 21 percent on the airline's unions for four months with the exception of the pilots and those unions that had reached agreements.

At yesterday's hearing, much of the day was spent on testimony by Mark Dungan, an actuary at the Philadelphia offices of Towers Perrin, a human resources consulting services firm. Dungan was queried about the effects on pension and benefit plans for union employees at US Airways.

Several former employees also attended the hearing, trying to keep up with what could happen to their retirement benefits. Shirley Delmenhorst traveled from Louisville, Ky., and sat in the courtroom with her former boss, Eugene Ferguson, who now lives in northern Virginia.

"We're concerned that what the airline is trying to do will leave us with nothing," said Ferguson.

The airline also acknowledged yesterday that it is stripping former executives and board members of their ability to travel free in first class.

The move, which affects about 200 people, will not end travel benefits. The former executives and directors will still be able to fly free in coach, when space is available. But they will have to give up seats if a flight is oversold.