Appeals Court Blocks Us Airways Outsourcing

wts54

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Sep 16, 2002
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www.usaviation.com
Wednesday November 5, 8:39 pm ET
By John Crawley


(Updates with quarterly loss; southwest plans at US Air hub)
WASHINGTON, Nov 5 (Reuters) - A federal appeals court refused on Wednesday to overturn a judge's order that blocked US Airways Group Inc.'s (NasdaqNM:UAIR - News) plans to outsource some of its aircraft maintenance.

The 3rd U.S. Circuit Court of Appeals in Philadelphia upheld a district court injunction that temporarily prevents the airline from subcontracting scheduled heavy maintenance on up to 10 of its Airbus A319 aircraft. Airbus is a unit of EADS (XETRA:EAD.DE - News; Paris:EAD.PA - News).

Money-losing US Airways continues to struggle after emerging from bankruptcy in March. It sought to contract out the Airbus work to an Alabama firm to save cash.

The appeals court decision represented yet another piece of bad news in recent weeks for US Airways. The company announced $90 million quarterly loss and then low-cost powerhouse Southwest Airlines (NYSE:LUV - News) said it was launching service in Philadelphia, one of US Airway's main hubs.

The appeals court also agreed to an expedited schedule for hearing a dispute between management and the mechanics union over whether outsourcing that maintenance work to an Alabama firm would violate labor agreements.

No hearing date was scheduled.

Last month, U.S. District Judge Robert Cindrich permitted a private contractor, ST Mobile Aerospace Engineering Inc., to finish work on one of the planes that had already been started. But he blocked the airline's plans to complete servicing of up to nine other narrowbody planes by the end of the year.

The appeals court order upheld that decision until the contract dispute is resolved.

If the appeals court finds for the International Association of Machinists and Aerospace Workers (News - Websites) , then the company and the union would have to negotiate changes to the contract. If the court favors the airline, then the dispute would be settled in arbitration.

The type of maintenance covered by the dispute is performed every five years and involves disassembling most key parts, checking the aircraft for major structural weaknesses, and putting it back together.

"We appreciate the Third Circuit's careful consideration and the decision to expedite the appeals hearing," US Airways spokesman David Castelveter said. "They clearly recognize the importance of this issue and we look forward to presenting our case."

While the union said it was gratified by the appeals court decision, it remained upset that the company still wants to cut in-house maintenance.

"The preliminary injunction ordering US Airways to stop violating the (contract) was issued 15 days ago, yet the airline has not taken any steps to perform the maintenance with US Airways employees," said Robert Roach, a union vice president.

A source close to the dispute said No. 7 US Airways could pull planes off poorly performing routes, change schedules or delay non-safety work on other aircraft rather than let union mechanics do the heavy maintenance on the Airbus jets.