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US Airways Says Union Talks Are Making Progress - Concessions Crucial to Reorganization
WASHINGTON (Washington Post) - US Airways yesterday reported progress in securing wage and benefit concessions from its two remaining holdout unions, a necessary step toward reorganizing and obtaining $900 million in federal loan guarantees.
The Arlington-based airline, which has filed for bankruptcy protection from its creditors, reached a tentative agreement with the Communications Workers of America, which represents about 8,000 ticket counter and reservation agents. The union's leadership has endorsed the airline's latest proposal, which seeks as much as $70 million a year in wage cuts. The workers are scheduled to complete their vote by Sept. 17.
In addition, the 6,800 US Airways mechanics represented by the International Association of Machinists agreed yesterday to hold another vote on the airline's request for $160 million a year in concessions for six years. On Aug. 28, 57 percent of the members voted against making the concessions. But after a meeting with US Airways executives yesterday, Scotty Ford, president of the US Airways mechanics local, said the union agreed to vote again because many mechanics were confused about the ramifications of rejecting the proposal. That vote is also set for Sept. 17.
To reduce tensions, in light of the progress made with both groups, US Airways asked a bankruptcy court judge to temporarily delay a Sept. 10 hearing at which the airline planned to ask the court to nullify contracts of employee groups that have not agreed to concessions. The nation's seventh-largest carrier has obtained more than $550 millions in cuts from its pilots, flight attendants, flight dispatchers and simulator engineers.
Separately, US Airways yesterday retreated from its plan to stop giving passengers flying on cheap, nonrefundable tickets the option of flying standby after Jan. 1. Yesterday, the airline said those passengers could fly standby, but for a $100 fee.
Reversing another change announced Aug. 27, US Airways also decided to allow mileage points earned on those cheaper tickets to be counted toward the amounts needed to attain elite levels in its frequent-flier program. Higher status leads to more perks such as free upgrades and pre-boarding privileges.
Both changes had angered thousands of frequent fliers. In a live discussion on washingtonpost.com yesterday, B. Ben Baldanza, US Airways senior vice president of planning and marketing, said the airline addressed those travelers' concerns.
Our change to the tier-status qualification, which would have gone into effect next January, was driven principally by the reaction from many frequent fliers who use nonrefundable tickets for a larger part of their travel, Baldanza said.
Most major airlines matched US Airways' move by eliminating travelers' ability to use nonrefundable tickets on another flight within a year, unless they contacted the airline to arrange alternative trips before the scheduled flight departed.
But the other carriers did not match US Airways' move to not credit the frequent-flier points toward elite status or not allow standby travel on nonrefundable tickets. Instead, they created the $100 standby fee. That left US Airways at a competitive disadvantage, said travel expert Terry Trippler, chief executive of Trippler & Associates Inc. in Minneapolis.
This was a case where US Airways officials clearly saw [that their original change] was a bit tight and was not flying very well. Their changes still are not flier friendly, but they're better than they were, he said.
In addition to trying to boost revenue with the new ticketing policies, US Airways is trying to secure about $950 million in wage and benefit concessions from its employees in an effort to emerge from bankruptcy in the first quarter.
The airline's application for a $900 million loan guarantee was approved by the Air Transportation Stabilization Board with several conditions, one of which was that the carrier obtain major concessions from its employees and creditors.
Joe Tiberi, a spokesman for the mechanics, said the union decided to vote again after misunderstanding what could happen if they voted the tentative agreement down. Tiberi said the mechanics thought a bankruptcy judge would force US Airways to modify the proposed agreement or come up with another one. That would not happen. Instead, a judge would either leave the agreement intact or reject it totally.
The mechanics thought the judge could make some changes to the agreement and that they would take their chances with the judge, Tiberi said.
US Airways chief executive David N. Siegel plans to send a letter explaining the ramifications of the vote to mechanics this weekend.
The company's proposal would give the mechanics a voting seat on the airline's board. They would also obtain a yet-to-be determined equity stake in the airline and a profit-sharing plan.
US Airways -- which lost nearly $2 billion last year -- is also trying to obtain about $200 million in concessions from its creditors and aircraft lessors. On Thursday, a federal judge allowed the airline to break leases on 67 planes that it no longer uses or that it plans to phase out of its fleet. US Airways will pay some storage and insurance costs for a short period but stands to be relieved of hundreds of millions of dollars in debt and lease payments.
The airline said it hopes to settle out of court with the lessors and lenders, which include German bank KFW, Dutch bank ABN AMRO, John Hancock Life Insurance and Wachovia Corp. The next creditors' hearing is scheduled for Sept. 26.
 

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Aug 20, 2002
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