- Nov 9, 2003
- 16,512
- 5,865
US Airways Sets Talks With Pilots on Further Cuts to Pension Plan
By MICHELINE MAYNARD
Published: September 1, 2004
S Airways and its pilots' union were set to meet last night, amid resistance within the pilots' ranks to the airline's bid to shrink their already diminished pension plan, a casualty of the airline's previous bankruptcy filing.
The airline sought to assure its frequent fliers yesterday that its internal turmoil would not affect customer service or its mileage program.
In an e-mail message, the airline's senior vice president for sales and marketing, B. Ben Baldanza, said the troubles at US Airways were similar to restructurings under way at a number of other airlines.
In US Airways' case, "we plan to get there first," Mr. Baldanza said in the message.
Negotiations were to resume during the evening between negotiators for US Airways and the union, the Air Line Pilots Association. The union was waiting for the company's response to its latest offer, made on Monday.
US Airways is pushing its pilots to grant $295 million in wage and benefit cuts, the largest share of $800 million in concessions it is seeking from its 28,000 employees.
Without the cuts, which are part of an overall $1.5 billion restructuring plan, US Airways has warned that it is likely to file again for bankruptcy protection as soon as the end of this month. To avoid that risk, it wants its unions to reach deals by Sept. 15.
The airline emerged from Chapter 11 in April 2003, only to find that its costs were well above those at low-fare airlines, which are attracting an increasing share of passengers.
An agreement with the pilots is critical to winning concessions from the other unions. But the pilots' leadership, which has been meeting since last week in Arlington, Va., where the airline is based, has been racked by disagreement over whether to grant a third round of cuts to the airline. Employees allowed it to make two rounds of cuts while it was in bankruptcy. The cuts by the pilots in 2002 and 2003 were worth a total of $566 million.
At the heart of the contentious negotiations between US Airways and its pilots is an issue touching nerves at other airlines: the pilots' pension plan.
As at United Airlines, which says it is likely to eliminate all four of its employee plans, and at Delta Air Lines, which wants to replace its pilots' plan, pensions are a particularly thorny subject at US Airways.
Last year, the airline shut its pilots' plan, then replaced it with a less-generous retirement program. Changes to pensions were a condition of US Airways' federal loan guarantee package, which allowed it to restructure. At the time, its pension plan was underfunded by more than $2 billion.
Now, the airline is proposing to reduce even the streamlined pension plan, which combines a traditional defined-benefit pension plan with a 401(k) program to which employees contribute, according to people who have been briefed on both sides' offers.
Already upset at losing their old pension plan, some longtime pilots on the union's 12-member leadership council have vowed to resist any more changes.
As a sweetener, US Airways is offering profit-sharing plans to all its unions, but that benefit could take a long time to reap rewards, given that the airline is warning of losses this year and has pledged only an operating profit next year in its federal loan covenants. The airline is also proposing that pilots fly more hours each month, which would result in fewer jobs.
US Airways met yesterday with leaders of the International Association of Machinists and Aerospace Workers, in the first discussions on the company's bid for cuts. The union is refusing to reopen its contract, but has said it will help US Airways find ways to save money. The airline is also talking with unions representing flight attendants and other employees.
There was also further labor turmoil at United yesterday. Leaders of its flight attendants' union unanimously passed a motion of no-confidence in the management of the airline, which is operating under bankruptcy protection. The Association of Flight Attendants said it would take "all necessary and appropriate legal steps" to replace senior managers, including the chief executive, Glenn F. Tilton.
The machinists' union at United has filed a motion in United States Bankruptcy Court to appoint a trustee to run the airline, in essence unseating Mr. Tilton. A hearing on the move is scheduled for later this month. The flight attendants did not say if they would join the court action.
The pilots union at Continental Airlines, meanwhile, prepared to sign what the airline called "an unprecedented partnership accord" today to reach a new contract.
The agreement was to be witnessed by Continental's chief executive, Gordon Bethune, and its president, Larry Kellner, who is to replace Mr. Bethune at the end of the year. Duane Woerth, national president of the Air Line Pilots Association, will also be on hand.
By MICHELINE MAYNARD
Published: September 1, 2004
S Airways and its pilots' union were set to meet last night, amid resistance within the pilots' ranks to the airline's bid to shrink their already diminished pension plan, a casualty of the airline's previous bankruptcy filing.
The airline sought to assure its frequent fliers yesterday that its internal turmoil would not affect customer service or its mileage program.
In an e-mail message, the airline's senior vice president for sales and marketing, B. Ben Baldanza, said the troubles at US Airways were similar to restructurings under way at a number of other airlines.
In US Airways' case, "we plan to get there first," Mr. Baldanza said in the message.
Negotiations were to resume during the evening between negotiators for US Airways and the union, the Air Line Pilots Association. The union was waiting for the company's response to its latest offer, made on Monday.
US Airways is pushing its pilots to grant $295 million in wage and benefit cuts, the largest share of $800 million in concessions it is seeking from its 28,000 employees.
Without the cuts, which are part of an overall $1.5 billion restructuring plan, US Airways has warned that it is likely to file again for bankruptcy protection as soon as the end of this month. To avoid that risk, it wants its unions to reach deals by Sept. 15.
The airline emerged from Chapter 11 in April 2003, only to find that its costs were well above those at low-fare airlines, which are attracting an increasing share of passengers.
An agreement with the pilots is critical to winning concessions from the other unions. But the pilots' leadership, which has been meeting since last week in Arlington, Va., where the airline is based, has been racked by disagreement over whether to grant a third round of cuts to the airline. Employees allowed it to make two rounds of cuts while it was in bankruptcy. The cuts by the pilots in 2002 and 2003 were worth a total of $566 million.
At the heart of the contentious negotiations between US Airways and its pilots is an issue touching nerves at other airlines: the pilots' pension plan.
As at United Airlines, which says it is likely to eliminate all four of its employee plans, and at Delta Air Lines, which wants to replace its pilots' plan, pensions are a particularly thorny subject at US Airways.
Last year, the airline shut its pilots' plan, then replaced it with a less-generous retirement program. Changes to pensions were a condition of US Airways' federal loan guarantee package, which allowed it to restructure. At the time, its pension plan was underfunded by more than $2 billion.
Now, the airline is proposing to reduce even the streamlined pension plan, which combines a traditional defined-benefit pension plan with a 401(k) program to which employees contribute, according to people who have been briefed on both sides' offers.
Already upset at losing their old pension plan, some longtime pilots on the union's 12-member leadership council have vowed to resist any more changes.
As a sweetener, US Airways is offering profit-sharing plans to all its unions, but that benefit could take a long time to reap rewards, given that the airline is warning of losses this year and has pledged only an operating profit next year in its federal loan covenants. The airline is also proposing that pilots fly more hours each month, which would result in fewer jobs.
US Airways met yesterday with leaders of the International Association of Machinists and Aerospace Workers, in the first discussions on the company's bid for cuts. The union is refusing to reopen its contract, but has said it will help US Airways find ways to save money. The airline is also talking with unions representing flight attendants and other employees.
There was also further labor turmoil at United yesterday. Leaders of its flight attendants' union unanimously passed a motion of no-confidence in the management of the airline, which is operating under bankruptcy protection. The Association of Flight Attendants said it would take "all necessary and appropriate legal steps" to replace senior managers, including the chief executive, Glenn F. Tilton.
The machinists' union at United has filed a motion in United States Bankruptcy Court to appoint a trustee to run the airline, in essence unseating Mr. Tilton. A hearing on the move is scheduled for later this month. The flight attendants did not say if they would join the court action.
The pilots union at Continental Airlines, meanwhile, prepared to sign what the airline called "an unprecedented partnership accord" today to reach a new contract.
The agreement was to be witnessed by Continental's chief executive, Gordon Bethune, and its president, Larry Kellner, who is to replace Mr. Bethune at the end of the year. Duane Woerth, national president of the Air Line Pilots Association, will also be on hand.
