US Airways pushes unions for concessions
By JOHN CRAWLEY
Reuters
WASHINGTON - Bankrupt US Airways Group Inc. (UAWGQ.PK) on Friday postponed plans to try to void the contracts of two big labor unions next week, after its ticket and reservation agents tentatively agreed to concessions and its mechanics said they would vote again on a giveback plan.
The announcements by the company and the International Association of Machinists and the Communications Workers of America ended months of talks. It also capped a scramble this week by US Airways to nail down concessions from all its unions as part of its drive to reorganize its finances under Chapter 11 and secure a $900 million federal loan guarantee.
US Airways has already won ratified concession packages worth more than $500 million from its pilots and flight attendants. The company wants to cut overall costs by $1.3 billion annually. The federal loan guarantee has been approved on the condition that it slash labor costs.
US Airways had planned to ask a federal bankruptcy judge in Alexandria, Virginia, next Tuesday to throw out the contracts of unions that had not negotiated concessions. By Friday, the IAM, which represents 6,800 mechanics and related workers and the CWA, which represents 8,000 employees, were the only two groups that had not done that.
Neither side would disclose terms of the company's proposal with the CWA, but the union's leadership recommended that members accept it. The company had been seeking a reported $70 million in concessions from that group.
The machinists rejected a $150 million in concessions last week but union leaders agreed to hold another vote, citing possible confusion about the consequences of opposing the proposal.
Both the IAM and CWA votes will be completed on Sept. 17, union officials said.
"What we're trying to do is make sure they have a full understanding of the facts before they vote," said Joseph Tiberi, a spokesman for the machinists union.
Tiberi said many members were confused over the consequences of rejecting the initial proposal. Some thought US Airways might come back with a better offer, while others thought the bankruptcy court could only modify their contract, not reject it entirely as the company planned to seek.
Separately, the company backed off plans to toughen conditions on nonrefundable tickets after criticism from business travelers.
US Airways said in August it was slashing frequent flyer benefits and standby flights to budget travelers.
But the revised policy will now permit travelers with nonrefundable tickets, which are generally cheaper and do not allow for travel flexibility, to fly standby for a $100 fee. The change, set to start on Jan. 1, matches a policy set by rival American Airlines, a unit of AMR Corp. (AMR.N)
US Airways also said customers with nonrefundable tickets will again be able to count miles flown with those tickets toward premium levels in their frequent flier accounts.
"We heard from many customers about our changes, and we are responding in a way that should please most of them," said B. Ben Baldanza, US Airways senior vice president of marketing and planning.
Depressed travel demand and shrinking corporate travel budgets since Sept. 11 have contributed to the industry's staggering financial crisis. Leading carriers are slashing costs to offset revenue shortfalls, cutting everything from extra utensils to wages.