Us Airways' Biggest Union:

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Nov 11, 2003
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US Airways' biggest union: No pay cuts

Airline seeking millions in labor concessions

TED REED

Staff Writer
US Airways' largest union reiterated Monday that it won't negotiate pay cuts or work rule changes, potentially threatening the airline's effort to craft a survival plan that chops $1.5 billion out of its annual costs.

Members of the International Association of Machinists "are not prepared to enter into any negotiation that would result in a reduction of wages (or) benefits," said Robert Roach, the union's general vice president, in a letter to Bruce Lakefield, the airline's chief executive officer.

The union released the letter, dated June 24, on Monday, at a time when the airline's pilots are apparently making progress in talks aimed at reducing their annual costs.

The carrier has said it may file a second time for bankruptcy protection if it can't persuade all of its unions to approve a new round of concessions.

Unions representing US Airways customer service agents and flight attendants have held preliminary talks, but have not yet agreed to formal negotiations. That makes the IAM potentially the most likely holdout as the airline seeks to have new labor agreements in place by late September.

The nation's seventh largest carrier emerged from bankruptcy court protection in 2003 after cutting annual costs by $1.9 billion. But buffeted by low-fare carriers and high fuel costs, it is still losing money, registering net losses in three of the last four quarters.

Under its latest survival plan, US Airways would increase point-to-point flights in key East Coast markets such as New York and Washington, while operating a traditional connecting hub in Charlotte. It wants to cut fares in many markets. But first, the airline says it must cut costs, including $800 million from labor.

Pilots believe the only way the airline can implement the plan and survive is for "everyone to participate," Jack Stephan, spokesman for the airline's chapter of the Air Line Pilots Association, said Monday.

Pilots have already given up $566 million annually as well as a potentially lucrative pension plan. "We're well aware of sacrifices," Stephan said. "But if we do nothing and just coast along as we are, that's not an option."

Roach's letter said that while the IAM won't talk about cuts, the airline could save millions through cost-savings efforts such as improving safety programs and assigning some management tasks to union crew chiefs.

The IAM represents 9,357 of the airline's 28,066 workers. Under the airline's plan, the union's 4,837 mechanics and related workers would provide $174 million in cuts. Its 4,520 fleet service workers, such as baggage handlers, would provide $89 million.

The IAM has already made cuts of $251 million in two rounds of concessions talks. "They have what they said they needed," Roach said in a recent interview.

IAM mechanics have seen their base hourly pay decline to $24.26 from $26.68 in Jan. 2000 (after briefly reaching $27.03 in 2003).

Bill Lech, a 16-year Charlotte mechanic, said he fully expects the airline to revisit the bankruptcy court. "I've had enough cuts," he said. "If it was up to me, I'd say `no,' but I'm just a pebble of sand on the beach."

Negotiations with the IAM have historically been tough. Two years ago, for instance, mechanics initially voted against $152 million in cuts negotiated by union leaders, requiring a second election to approve them. They later approved additional cuts.

US Airways is preparing a response to the IAM's letter but won't disclose what it will be, spokesman David Castelveter said Monday. "We will hopefully sit down with the IAM and talk about how we can get to our cost-cutting objectives."

It's unclear whether the IAM will stick by its refusal to negotiate or is posturing in preparations for talks. If the union won't talk, the airline may decide to file again for bankruptcy protection, where the court can set aside existing labor contracts and force negotiations on new ones.

Bankruptcy court isn't necessarily a good place to resolve a labor dispute, said Susan Freeman, a Phoenix attorney who has represented aircraft lessors in three bankruptcy cases.

"Bankruptcy is risky and expensive, and the likelihood of (US Airways) succeeding a second time is slim," she said. In most airline bankruptcies, she said, competitors bid for the most valuable assets and carriers fail to emerge intact.

Roach has said airline management could easily lose control in bankruptcy court.

"Once you're in bankruptcy, the judge makes the decisions," he said. "That's why it's necessary for this company to come to the table and sit down and learn how to fix their operations."

Ted Reed: (704) 358-5170: [email protected]
 
According to LGA station personnel, last week US Airways vice president of marketing Andrew Nocella briefed station managers on the new business plan. In the Q&A session, Nocella said the company would not let one union stop the restructuring.

Respectfully,

USA320Pilot
 
the court can set aside existing labor contracts and force negotiations on new ones.
force negotiations on new ones.

note-does not say "may impose"
"Bankruptcy is risky and expensive, and the likelihood of (US Airways) succeeding a second time is slim
CAVEAT EMPTOR!
could be a huge monkey wrench in everyones machine....
 
USA320Pilot said:
According to LGA station personnel, last week US Airways vice president of marketing Andrew Nocella briefed station managers on the new business plan. In the Q&A session, Nocella said the company would not let one union stop the restructuring.

Respectfully,

USA320Pilot
Mighty big words for a one eyed fat man!

We gave at the office, and not only that we gave at the bar on the way home from the office!


If ALPA wants to give, GOD BLESS their little souls….



LOVE EM PILOTS


Take a D_E_E_P breath captain, it won't hurt, promise.
 
USA320Pilot said:
According to LGA station personnel, last week US Airways vice president of marketing Andrew Nocella briefed station managers on the new business plan. In the Q&A session, Nocella said the company would not let one union stop the restructuring.

Respectfully,

USA320Pilot
Well gee thanks for that tidbit.

So I take it that means if the IAM holds out the restructuring plan goes forward and IAM keeps what they got.

Hey what about 2 unions holding out?

How about pumping your full mantra again your shortened version not as fun to poke holes in.
 
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From the PHL Inquirer
Posted on Tue, Jun. 29, 2004
Union offers US Airways alternatives

By Tom Belden

Inquirer Staff Writer

The machinists union at US Airways has given the airline's chief executive officer a list of ideas for saving the company money that will not require the hundreds of millions of dollars in wage or benefit concessions the airline says it needs to survive, union officials said yesterday.

The International Association of Machinists and Aerospace Workers, which represents almost 9,400 US Airways mechanics, baggage handlers, and other airport workers, reiterated in a letter sent last week to airline president and chief executive Bruce R. Lakefield that it would not discuss any cuts in wages, benefits or work rules.

The statement from the machinists echoes a position staked out by the union a month ago after Lakefield asked groups representing US Airways' 26,000 unionized workers to open negotiations on givebacks. If neither side budges, a confrontation between the union and the troubled Arlington, Va., carrier appears inevitable.

US Airways spokesman David Castelveter said that the company was working on a response to the letter, but that its position on the need for labor-cost savings to stem steep losses had not changed.

"Every employee in this company is going to play a role in the restoration," he said. "One employee group is not going to subsidize another. We hope the IAM realizes the importance of consensual negotiations."

Fighting an invasion of low-cost competition in its big Philadelphia hub and elsewhere, US Airways has said that to stay alive it needs to cut its operating costs by $1.5 billion a year, with more than half of the savings coming from labor. The workers gave the company almost $1 billion in wage, benefit and work-rule concessions in 2002 and 2003 while the company was in bankruptcy.

In this round of negotiations, US Airways says it needs to cut costs for mechanics and baggage handlers by $263 million. It wants to save $295 million in costs for pilots, $116 million for flight attendants, and $122 million for ticket, gate and reservations agents.

In the letter to Lakefield, IAM General Vice President Robert Roach said US Airways could "save millions of dollars without reopening our collective bargaining agreement. We believe there is significant waste at US Airways that constructive dialogue on these employee-developed proposals would improve operations for the benefit of the company and its employees."

Among the ideas is for US Airways to remove one or more layers of managers who now oversee mechanics and airport workers, replacing them with crew chiefs who are union members. The airline could save money by reducing on-the-job injuries and by using employees' ideas for streamlining aircraft maintenance work, Roach said.

US Airways also could make money using its mechanics to do maintenance work for other airlines, union spokesman Joe Tiberi said.

The IAM represents 9,357 of the airline's 28,066 workers. Under the airline's plan, the union's 4,837 mechanics and related workers would provide $174 million in cuts. Its 4,520 fleet service workers, such as baggage handlers, would provide $89 million.

IAM mechanics have seen their base hourly pay decline to $24.26 from $26.68 in January 2000.

Last week, the Air Line Pilots Association said it gave Lakefield a proposal to take 12.5 percent wage cuts and fly about 10 percent more hours per month as its contribution. Unions representing pilots and mechanics traditionally are the most powerful at an airline since they have the ability to keep planes on the ground if they were to strike.
 
unfortunately all of the legacy carriers have gotten the south beach mentality. That is that Plastic surgery is the cure for everything. You can cut off all the fat you want and install all the silicone you want but in the end you are still older and your health is even more at risk.

You care competing against younger stronger and agile carriers. These guys were brought up on glass cockpits and no NDB's. Computers and technology from kindergarden. The only way you can compete is by going to the gym change your diet and use your age aquired Wisdom to outsmart. Going toe to toe with them is unwise and foolish.

This goes for all the Legacy carriers. What we have is experience not braun and we need to use it wisely. After U's surgery you will certainly look good but how will you feel?
 
One last thing, I hit the button too soon. Think about this
UAL is 80ys old Jetblue is 4yrs old
AA is about the 80 yrs SWA is 30+
DAL is around 75 yrs and Airtran is about 10

Everything was great when Ali fought Frazier but put Ali against Tyson..........

Ali still fighting today is a losing battle but shmehow he is still the Greatest!
 
Is it possible that the "entire" cost savings proposals from the IAM be published for all to see???

I personally would like to see what UAIR is so reluctant to act upon. Obviously if it has anything to do with in-house maintenance........since they are attempting to shed the entire overhaul operations......OH, I mean ONLY 10 AIRBUS <_< !!!

UAIR wants to be WN or B6 but FORGETABOUTIT!!!! It's the management stupid :eek: !!!!!!!!!!!
 
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Grievances were filed and the information was also sent to Arbiter Bloch.
 
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Where have you been?

The whole matter was sent to arbitration by the appellate court, a decision should come by late August, early September.
 
I believe the issue is simple.

The company is preparing a dual track approach to restructure the airline: the "Transformation Plan" with labor participation or the "Transformation Plan" without labor participation.

Each union has been told of that two-track approach and that airline has once again hired John Lutz and the Seabury Group and FTI Consulting to handle financial negotiations. In addition, the company has replaced long time legal advisors from the firm of Skadden & Arps with Arnold and Porter who apparently will be the legal advisors for the second formal reorganization.

Separately, the company is in talks with the ATSB and key lenders to preserve the loan guarantee and the security. Therefore, iof true, DIP financing may not be necessary and RSA could maintain control of the company and its investment through the restructuring. In fact, I understand Bruce Lakefield's financial background, where his top position as the former president of Lehman Brothers - Europe, will be important in this effort.

From a labor perspective, Lakefield has repeatedly said, "no single work group will subsidize another's lack of marketplace competitiveness" where he indicated each labor group must be compared to the LCC contracts.

Thus, if any labor group does not participate in the new business plan and attempts to hold the restructuring hostage, then the company will likely file for bankruptcy, file motions to change the contracts, which could include total outsourcing of a work group.

If any union does not like the new agreement, they are free to seek self-help and the company could use people who cross the picket line to man line positions and outsource all other work. Thus, who wins then?

Nobody likes this situation and the reality of the marketplace, but those are the facts and there is no way out for labor. In my opinion, it's better to have a job while looking for a job than to have the company fail, but unfortunately for all of us. Labor costs will come down or go to zero.

Apparently the ALPA “hardlineâ€￾ MEC understands this because they provided the company with a pay cut proposal larger than what the company suggested. ALPA is preparing itself for the next "judicial restructuring" and I understand a pilot agreement, along with some of the other unions, will be key factors in obtaining ATSB and key lender support during the next bankruptcy reorganization, which could occur shortly while the company's cash position is the highest.

In conclusion, I believe the employee group(s) who hold out are the one's who need to "Take a D_E_E_P breath," because it's going to hurt and be painful. It's clear that the people who #### and moan the most are the one's most upset, probably because they have no other option. If they did, why would they pound their chest on the message board?

Respectfully,

USA320Pilot
 
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