US Airways to ask court to order cuts in wages - Machinists union says no to concessions; gate, ticket agents resisting
STAN CHOE AND TED REED, Staff Writers
US Airways is preparing to force wage-and-benefit cuts on two hold-out unions in U.S. Bankruptcy Court in two weeks.
The nation's seventh-largest airline stalled early Thursday in its quest to strip $840 million in annual labor costs, when mechanics in the International Association of Machinists rejected their share of the cuts by a 57 percent margin.
The airline also has yet to persuade gate and reservations agents, members of the Communications Workers of America, to vote on a concessionary deal.
If US Airways doesn't extract savings from the unions, it could lose about $1 billion in financing it needs to restructure.
To force the two unions into agreements, the airline plans to ask a bankruptcy judge on Sept. 10 to dissolve their labor contracts and write new ones for them.
US Airways would ask the judge for even more concessions than the rejected mechanics' contract and the pending CWA contract. But the airline said it still hopes to strike an agreement with both unions outside of court before Sept. 10.
Other companies have also been trying to rework labor contracts as the airline industry flounders. The IAM is locked in negotiations with Boeing and United Airlines, too.
Arlington, Va.-based US Airways, which carries more than 90 percent of Charlotte's passengers, has been bleeding cash for more than a year.
The airline has continued to fly since filing for Chapter 11 bankruptcy protection on Aug. 11, but expects to announce route cuts and layoffs soon. US Airways employs about 7,115 in Charlotte.
The airline is already about three-fourths of the way to its goal of $840 million in total annual savings through 2008, after pilots, flight attendants and IAM fleet service workers agreed to concessionary deals.
Management has also scheduled negotiating meetings with the CWA in the coming days.
But the IAM's mechanics say they likely won't talk to management again until they meet in court on Sept. 10. "No meetings are scheduled," said IAM spokesman Joe Tiberi. "Our members have made their voice known."
The contract the mechanics rejected Thursday would have saved the airline $152 million annually, cutting wages 6.8 percent. "We are extremely disappointed by the vote of our mechanics," airline Chief Executive David Siegel said.
Many machinists felt uneasy about how quickly the negotiating process has been racing, said Bill Wise, president of IAM Local 1725, which represents 1,771 US Airways mechanics in Charlotte.
Such negotiations often take between two and seven years, Wise said, and this one has taken only a few months. "You can't expect membership that's been beaten up for the past 10 years to make a decision in 10 days," he said.
Some machinists felt they could get a better deal from a Bankruptcy Court judge than from US Airways management. "Let the judge figure it out," said a Charlotte-based mechanic who voted against the contract.
The mechanic, who asked not to be named, said he expected to lose his job under the contract, so there was no reason to support it.
Getting labor concessions is crucial to US Airways because they trigger access to $425 million in cash.
When US Airways filed for bankruptcy protection, several lenders, including Charlotte's Bank of America, agreed to lend the airline $500 million in four installments to help it operate. The lenders set milestones to trigger each installment.
The airline received the first installment of $75 million on its first day of court. The second, $175 million, comes with IAM concessions. The third and fourth come after agreements with the CWA and other unions.
Similarly, the airline needs signed labor concessions to help finalize a conditional $900 million loan guarantee from the federal government.
While mechanics rejected their deal, fleet-service workers, also represented by the IAM, approved one early Thursday morning.
Their contract, which cuts wages by 8 percent, will save the airline $66 million annually.
"It was the lesser of two evils," said John Carr, who was on the negotiating team for the fleet-services team, in Charlotte. US Airways employs 991 fleet-service workers in Charlotte.
The fleet-service workers had too little leverage through negotiations, Carr said. The threat of going to court and watching their labor contract be dissolved was too great a threat, he said.
Meanwhile, CWA negotiators expect to remain in Washington through the weekend as they work to have a ratified deal in place by Sept. 10.
The negotiators are trying to meet company demands for $70 million in annual savings, said James Root, president of Charlotte CWA Local 3641, which represents 527 US Airways agents in Charlotte.
"We're looking at different pieces of the puzzle and trying to cut more," Root said. "We're getting very close, but we're not there yet."
The airline is unlikely to back down on the amount it's asking from the remaining labor groups.
So far, it has gotten 85 percent of its initial request from each union that's agreed to concessions -- its pilots, flight attendants and fleet-service workers.
For the CWA or mechanics to receive a better deal than 85 percent would ruin morale among US Airways employees, management said in a filing with the bankruptcy court.
Such a scenario would also send a dangerous message to unions, telling them brinkmanship will better their negotiating positions, management said.
STAN CHOE AND TED REED, Staff Writers
US Airways is preparing to force wage-and-benefit cuts on two hold-out unions in U.S. Bankruptcy Court in two weeks.
The nation's seventh-largest airline stalled early Thursday in its quest to strip $840 million in annual labor costs, when mechanics in the International Association of Machinists rejected their share of the cuts by a 57 percent margin.
The airline also has yet to persuade gate and reservations agents, members of the Communications Workers of America, to vote on a concessionary deal.
If US Airways doesn't extract savings from the unions, it could lose about $1 billion in financing it needs to restructure.
To force the two unions into agreements, the airline plans to ask a bankruptcy judge on Sept. 10 to dissolve their labor contracts and write new ones for them.
US Airways would ask the judge for even more concessions than the rejected mechanics' contract and the pending CWA contract. But the airline said it still hopes to strike an agreement with both unions outside of court before Sept. 10.
Other companies have also been trying to rework labor contracts as the airline industry flounders. The IAM is locked in negotiations with Boeing and United Airlines, too.
Arlington, Va.-based US Airways, which carries more than 90 percent of Charlotte's passengers, has been bleeding cash for more than a year.
The airline has continued to fly since filing for Chapter 11 bankruptcy protection on Aug. 11, but expects to announce route cuts and layoffs soon. US Airways employs about 7,115 in Charlotte.
The airline is already about three-fourths of the way to its goal of $840 million in total annual savings through 2008, after pilots, flight attendants and IAM fleet service workers agreed to concessionary deals.
Management has also scheduled negotiating meetings with the CWA in the coming days.
But the IAM's mechanics say they likely won't talk to management again until they meet in court on Sept. 10. "No meetings are scheduled," said IAM spokesman Joe Tiberi. "Our members have made their voice known."
The contract the mechanics rejected Thursday would have saved the airline $152 million annually, cutting wages 6.8 percent. "We are extremely disappointed by the vote of our mechanics," airline Chief Executive David Siegel said.
Many machinists felt uneasy about how quickly the negotiating process has been racing, said Bill Wise, president of IAM Local 1725, which represents 1,771 US Airways mechanics in Charlotte.
Such negotiations often take between two and seven years, Wise said, and this one has taken only a few months. "You can't expect membership that's been beaten up for the past 10 years to make a decision in 10 days," he said.
Some machinists felt they could get a better deal from a Bankruptcy Court judge than from US Airways management. "Let the judge figure it out," said a Charlotte-based mechanic who voted against the contract.
The mechanic, who asked not to be named, said he expected to lose his job under the contract, so there was no reason to support it.
Getting labor concessions is crucial to US Airways because they trigger access to $425 million in cash.
When US Airways filed for bankruptcy protection, several lenders, including Charlotte's Bank of America, agreed to lend the airline $500 million in four installments to help it operate. The lenders set milestones to trigger each installment.
The airline received the first installment of $75 million on its first day of court. The second, $175 million, comes with IAM concessions. The third and fourth come after agreements with the CWA and other unions.
Similarly, the airline needs signed labor concessions to help finalize a conditional $900 million loan guarantee from the federal government.
While mechanics rejected their deal, fleet-service workers, also represented by the IAM, approved one early Thursday morning.
Their contract, which cuts wages by 8 percent, will save the airline $66 million annually.
"It was the lesser of two evils," said John Carr, who was on the negotiating team for the fleet-services team, in Charlotte. US Airways employs 991 fleet-service workers in Charlotte.
The fleet-service workers had too little leverage through negotiations, Carr said. The threat of going to court and watching their labor contract be dissolved was too great a threat, he said.
Meanwhile, CWA negotiators expect to remain in Washington through the weekend as they work to have a ratified deal in place by Sept. 10.
The negotiators are trying to meet company demands for $70 million in annual savings, said James Root, president of Charlotte CWA Local 3641, which represents 527 US Airways agents in Charlotte.
"We're looking at different pieces of the puzzle and trying to cut more," Root said. "We're getting very close, but we're not there yet."
The airline is unlikely to back down on the amount it's asking from the remaining labor groups.
So far, it has gotten 85 percent of its initial request from each union that's agreed to concessions -- its pilots, flight attendants and fleet-service workers.
For the CWA or mechanics to receive a better deal than 85 percent would ruin morale among US Airways employees, management said in a filing with the bankruptcy court.
Such a scenario would also send a dangerous message to unions, telling them brinkmanship will better their negotiating positions, management said.
(] [:knockout:] [
