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: treed@charlotteobserver.com
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: treed@charlotteobserver.com
