Happy Story About The Us Airways


Aug 20, 2002
Remember the Profit Sharing plan you recently ratified in our concession contract. Well, Management is trying to back out of it in Bankruptcy Court...
The ink is hardly dry on the concession contracts with the US Airways employee groups, but management is already heading back to their favorite spot - bankruptcy court - to try to cut the employee profit sharing plan in half. Management was eager to offer what they thought would be a worthless profit sharing plan during negotiations, but now that the merger will likely lead to a profitable airline, they want renege on their profit sharing agreements and contracts with US Airways employees. Their excuse is inaccurate. In management's US Airways Today newsletter dated June 27, VP Jerry Glass states, "We were crystal clear from the beginning that if we were unable to reorganize outside of Chapter 11, we could not guarantee that the profit-sharing plan approved by the board would survive the bankruptcy process." Wrong. The agreement with CWA represented passenger service employees was made after the Chapter 11 Bankruptcy had already been filed. Our ratified contract contains the profit-sharing agreement. Deceptive headline: And why did management put the newsletter headline "Plan of Reorganization Includes Profit-Sharing" on an article that actually says the profit sharing plan will be cut back? The title should have been, "Management Will Try To Cut Employee Profit Sharing in Bankruptcy Court." This is just an old-fashioned shell game - Management uses Bankruptcy to force concessions and offers something in return, like profit sharing. Once they have what they want - concessions - they go to back to Bankruptcy court to get out of their side of the deal. They are doing that now with profit sharing, and they have already done that with the MidAtlantic "Jets for Jobs" agreement. They did the same thing with their $50 Million executive/management "retention" slush fund after they gained over $1.5 billion in employee pay and benefit cuts.
This practice is wrong and unethical. This US Airways management has been immersed in the easy rules of bankruptcy for so long that they feel they can break any deal, slip out of any agreement, go back on any understanding any time they feel like it. We need to find a better way to fight back. Here's what we have done so far: CWA filed in bankruptcy court against the Executive/Management retention slush fund, including the petitions signed by agents and reps across the system, and were able to get it cut back slightly. But the program is still a multi-million dollar scandal in our opinion. We have filed for expedited arbitration to save the "Jets for Jobs" positions that will be lost because of management's decision to sell-off the MDA aircraft. We will fight the attempt to cut the profit-sharing plan in bankruptcy court or any other venue available to us. Something more has to be done. US Airways management feels they can plunder the workforce, and they seem to have a green light from Bankruptcy Court for anything they want to do.
CWA Local Presidents and staff will be meeting at CWA DC headquarters tomorrow for a full legal review of bankruptcy and merger questions and strategy options. We’ll keep you posted on results. Not everybody suffers in bankruptcy court... The Legal Times, a newspaper for lawyers, had a happy story about the US Airways bankruptcy attorneys with the title, High-Flying Fees. The story relates how US Airways General Counsel Elizabeth Lanier happened to hire all the attorneys working the bankruptcy. It seems like they have hit a gold mine in the US Airways bankruptcy case. The paper reports that Bankruptcy Court Judge Stephen Mitchell approved US Airways request for $3.8 Million in payments to the attorneys for the last three months in 2004, and their 2005 payment is running up at the rate of $1.2 million per month. The head attorney, Brian Leitch is making $630 per hour, and his assistants are making $580 per hour and $603 per hour, plus expenses. But that is just one of the firms paid by US Airways. Another firm, O'Melveny & Meyers, was paid $1.4 million in the last three months of 2004, and their head attorney, Bob Siegel, is paid $660 per hour and his assistant is paid $635 per hour plus expenses - the two highest paid guys on the case. Siegel's job, according to the article, was to lead the negotiations reducing employee pensions and benefits. US Airways paid another bankruptcy lawfirm, McGuireWoods, $1.5 Million in the last three months of 2004. Their highest paid guy is only making $425 an hour. The paper goes on to say US Airways General Counsel Elizabeth Lanier also had dinner with Brian Leitch's partner - at McCormick & Schmick's seafood restaurant according to the article - and hired him to be the lawyer for the merger. Bankruptcy can be just fine as long as you are not one of the actual employees of the company.