Storm worsens plight of US Airways - Crowd of pilots expected at Virginia courthouse

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chipmunn

Guest
Storm worsens plight of US Airways - Crowd of pilots expected at Virginia courthouse
CHARLOTTE (Charlotte Observer) - Just when it seemed that conditions could get no worse for US Airways, they did.
A snowstorm caused the airline to cancel 1,500 flights between Sunday and Tuesday, costing millions. An industry effort to raise round-trip fares by $20 due to higher oil prices fell through Monday. But oil prices kept rising, reaching a 29-month high of $37 a barrel on Wednesday.
The bad news rolled in even as US Airways prepares to face a major protest today by its pilots, scores of whom are expected to attend a bankruptcy court hearing in Alexandria, Va. So many pilots are expected the court expects to open a second room to accommodate them, showing the hearing by video.
Pilots will argue that the plan's termination is a contract issue, not an issue to be resolved in the bankruptcy court, said pilot spokesman Roy Freundlich. If the court agrees, the issue could become the subject of a lengthy contract negotiation process that could potentially end in a strike, although Freundlich said the pilots would seek a quicker, more satisfactory resolution.
Pilots have already made $646 million in annual concessions. The company is ignoring our contributions, Freundlich said. It's a slap in the face.
US Airways spokesman David Castelveter said the airline is being forced by financial realities to terminate the plan, and will present supporting information during the hearing.
Both sides acknowledged the airline faces many problems.
The airline's storm cancellations amounted to about 42 percent of its mainline flights for three days. All six of its key airports -- Charlotte, Philadelphia, Pittsburgh, Boston, New York La Guardia and Washington National -- got walloped by the storm. US Airways has its busiest hub in Charlotte.
Airlines owe aircraft lease payments whether or not a flight takes off, said Josh Marks, chief of staff for the Transportation Operations Center at George Washington University. Canceling 40 percent of US Airways flights translates to at least $3 million in lease costs without corresponding revenues.
US Airways faced added costs for passenger refunds, overtime, and de-icing, despite the lost revenues. Castelveter declined to estimate the loss, but said the airline budgets for winter storms. We're still on track to emerge from bankruptcy protection by March 31, he said.
Experts say the storm's impact is secondary to the impacts of expectations for a war with Iraq, which is causing fuel prices to rise while demand falls off.
With a number of airlines already on life support or ready to go on it, the results could be similar to those of a serious influenza outbreak on patients whose defenses have already been weakened, said Dan Kasper, managing director of LECG consultants in Cambridge, Mass.
Remember those $190 round-trip Charlotte-London fares that US Airways put on sale last week?
In a report Thursday, J.P. Morgan analyst Jamie Baker said passenger counts on trans-Atlantic flights fell 4 percent during the first two weeks of February. Travelers are avoiding Europe due to war fears and there appears to be little evidence of non-Europe market substitution, he said.
Baker estimated the airline industry will lose $2.4 billion in the first quarter, up from $2 billion in 2002. He said the best-case scenario could be a shutdown of United Airlines, which would send passengers to other carriers.
Like US Airways, United is operating under bankruptcy court protection. But United has not yet reached cost-cutting agreements with workers or aircraft lessors. The airline says it expects to emerge from bankruptcy protection next year.
Marks said lower revenue and higher fuel costs are forcing a transformation in the industry. He said old-line dinosaur carriers must restructure.
Raising prices won't work, he said. The market won't even support a fuel surcharge. It's evolve or die, and every blizzard brings extinction closer for the dinosaurs.
 
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chipmunn

Guest
Just one more point...ALPA is arguing the company cannot terminate any portion of our CBA per the S.1113 letter and the Company has agreed with this point at the hearing.

Wow!

With the pension a part of the contract - the company must use the mandatory grievance and arbitration procedures, in place, which the contract calls for.

This is getting very interesting.

Regardless, I need to go off-line for a while, but we all should know more later.

Chip
 

usfliboi

Veteran
Aug 20, 2002
2,070
270
This is truly ironic chip. Im curious. This is one of those damned if u do or donts..... What is it you feel the out come could be without losing the company totally????? I still say the votes wouldnt be there. Opening 2 court rooms or more only shows that there may be a few hundred there present at hearing.... this isnt unusual but im curious about why you arent standin on the side of your earlier comments when cwa was going thru sim activities. Im not bashing you at all but the bottom line is the company needs this iun order to qualify for thr remainder rsa funds as well as gov backed loans..... Its almost like a pilot shooting him or herself in the foot to achieve something that in the end will doom the airline, your pension and your paycheck... where is the lodgic?
 
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chipmunn

Guest
Usfliboi:

Today the CLT Observer wrote Pilots will argue that the plan's termination is a contract issue, not an issue to be resolved in the bankruptcy court, said pilot spokesman Roy Freundlich. If the court agrees, the issue could become the subject of a lengthy contract negotiation process that could potentially end in a strike, although Freundlich said the pilots would seek a quicker, more satisfactory resolution, the Observer wrote.

Chip
 

Andy S.

Member
Dec 21, 2002
26
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[blockquote]
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On 2/21/2003 11:53:49 AM ClueByFour wrote:

It's the side letter that they are going to beat ALPA with, not 1113. (my personal prediction is that if this whole thing does not get worked out soon, you will soon see an attempt by a company to set aside the 1113 letter and abrogate the contract, if Bronner does not pull the plug first. but....). And, before anybody responds with what the letter means and what it does not mean, I'd suggest that the only opinion that matters in that case is the judge's.

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[/blockquote]

Even a cursory review of the "side letter" would show that it is not an agreement to modify the CBA. Even if it purported to be such an agreement, it could only be considered an unratified "tentative agreement" or an agreement in principle. Until the MEC or the pilot membership votes to ratify a tentative agreement, then it is just that - tentative. While the BK judge could be forgiven his ignorance of the process, US Airway management certainly knows what is required to turn a tentative agreement into a binding one.

Also, apparently management has stated on the record before the Court that they will not invoke Section 1113.

Without a negotiated agreement to terminate or a successful Section 1113 motion to reject the CBA, the contractual obligation remains. As stated in their brief before the court, the PBGC cannot approve the distress termination of a contractually provide DBP until that contractual obligation has been relieved. That is the law.

The BK judge can certainly make a "bad" ruling, but the motion should fail on its merits.

That does not end the story, of course. However, US Airways will now have greater incentive to negotiate a less draconian solution.

Andy S.
 
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chipmunn

Guest
I do not want to see anybody lose their pension, when present retirement fund market values are due to Equity and Bond Market performance.

However, with all due respect, for those who desire to see ALPA lose its pension, if the pilots win in court, one other option would be for the IAM, AFA, management, and other parties with defined benefit retirement plans to "voluntarily terminate" their pension(s).

This could help provide the savings to permit a 7 percent profit margin going forward, permit the company to obtain final loan guarantee approval, and allow the release of the next DIP payment.

Chip
 

ClueByFour

Veteran
Aug 20, 2002
3,566
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www.usaviation.com
It's the side letter that they are going to beat ALPA with, not 1113. (my personal prediction is that if this whole thing does not get worked out soon, you will soon see an attempt by a company to set aside the 1113 letter and abrogate the contract, if Bronner does not pull the plug first. but....). And, before anybody responds with what the letter means and what it does not mean, I'd suggest that the only opinion that matters in that case is the judge's.

Bear in mind that without 1113 abrogation, there is not right to self help, absent section 6 proceedings, which are not on the horizon.

And, ALPA characterized the pension issue as a "minor dispute" as opposed to a "major" dispute for the purposes of greivence/arbitration purposes. Dumb, dumb, dumb.

Think about two steps ahead, and about how much pension will be picked up by the PBGC when Bronner takes his toys and goes home
 
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chipmunn

Guest
Pilots' Union for US Airways Proceeding With Legal Case

ALEXANDRIA (Dow Jones) - The union representing pilots for US Airways Group Inc. is proceeding with its legal case against the airline carrier's plan to end their pension plan.

US Airways, attempting to emerge from Chapter 11 bankruptcy, asked the bankruptcy court Jan. 30 to allow it to make a distress termination of the pilots' pension plan and replace it with another plan.

In a press release Friday, the Air Line Pilots Association (News - Websites) International said it filed a motion Feb. 14 to deny US Airways' request. The union maintains that the pension plan dispute should be resolved through labor arbitration and not the courts.

A US Airways representative couldn't immediately be reached for comment.
 

oldiebutgoody

Veteran
Aug 23, 2002
2,627
945
www.usaviation.com
[blockquote]
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On 2/21/2003 1:34:37 PM LavMan wrote:

Chip, get off it, your pension cuts will not fund anyother groups pension. How fast you change.
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[/blockquote]
That's for the judge to decide, NOT YOU!
 

N628AU

Veteran
Aug 22, 2002
909
106
www.usaviation.com
[blockquote]
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On 2/21/2003 12:22:14 PM chipmunn wrote:

I do not want to see anybody lose their pension, when present retirement fund market values are due to Equity and Bond Market performance.

However, with all due respect, for those who desire to see ALPA lose its pension, if the pilots win in court, one other option would be for the IAM, AFA, management, and other parties with defined benefit retirement plans to "voluntarily terminate" their pension(s).

This could help provide the savings to permit a 7 percent profit margin going forward, permit the company to obtain final loan guarantee approval, and allow the release of the next DIP payment.

Chip
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[/blockquote]

Nice, I asked Chip to come up with a solution in another thread, and he comes up with for the others to terminate their pensions (where there are no funding issues BTW), so he can get his.
 

LavMan

Veteran
Feb 12, 2003
826
0
Once again, Dave's #1 cheerleader says we should terminate our pensions for them, I think NOT!
 
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chipmunn

Guest
LavMan, 19 percent divided by 6,000 total and 4,000 active pilots, versus 8 percent for management is significantly different. It's the number of shares per individual that count, not the percentage of ownership.

By the way, I agree with your statement of "Chip, get off it, your pension cuts will not fund anyother groups pension" because it will not voluntarily happen.

Chip
 

savyinvestor

Senior
Jan 15, 2003
494
0
www.usaviation.com
Look for the RSA to pull the DIP financing if the pilots win in court. RSA may provide the financing if the pilots win, but further negotiations reduce or freeze their pensions IMHO. Bronner is in a win/win situation and will make money if U is liquidated or successfully emerges as a LOW cost carrier. Savy
 

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