Us Plan To Ask Court For Pay Cuts

USA320Pilot

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May 18, 2003
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US Airways Said to Plan to Ask Court for Pay Cuts

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US Airways may ask court to void labor pacts

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The company and the ATSB know exactly US Airways’ cash position and the government hired Lazard to audit the process. US Airways must provide the auditor constant reports on its cash, including a weekly 13-week cash forecast, showing the sources and uses of cash. The airline, which reported $750 million in unrestricted cash, cannot dip below $600 million next week and $550 million for the week ending Oct. 1.

Separately, US Airways entered Bankruptcy I with about $1 billion and Bankruptcy II with $1.45 billion, although the ATSB is holding a gun to the head of the company.

On September 13 US Airways asked the court for permission to avoid payment on several of its retirement plans. That includes a $110 million pension payment to the IAM & AFA DB pension and about $19 million in contributions to the pilots' DC retirement plan. Judge Mitchell has scheduled a hearing on the issue on October 7.

According to the New York Times, US Airways plans to ask a federal bankruptcy judge on October 7 to impose temporary pay cuts on its workers unless it can reach agreement with its unions before then

This September 15 pension payment default has already provided the company with cash flow relief.

Meanwhile, there are more pension payments due on October 14, which is the day the company’s first Omnibus hearing is scheduled.

Here are some news media reports:

· To meet expenses, including payment of employee wages and benefits, and the continued purchase of goods and services going forward, the Court today also approved interim use of an adequate portion of operating cash. The operating cash represents a portion of the $750 million in cash, which serves as a component of the collateral that supports the Air Transportation Stabilization Board (ATSB) loan. The Court has set a final hearing for final approval on the agreement with the ATSB regarding the use of cash for Oct. 14.

· "The ATSB will continue to work with US Airways as it seeks to restructure and will work with the bankruptcy court to ensure that the taxpayers' interests are protected," the board said in a statement released Sunday. Besides pledging to work with the carrier in bankruptcy court, the ATSB said it "understands the circumstances surrounding today's filing."

· "It's important to realize the creditors really hold the cards," said William Warlick, an airline analyst with Fitch Ratings.

I appears to me the ATSB is running the show and US Airways has the timing of cuts already set in their business plan and plan of reorganization (POR), either consensual or via imposition. It is expected this week the company is going to provide both the IAM and CWA with the 5-point plan: America West wages adjusted for seniority, JetBlue work rules, LTD plan changes, and retirement plan changes. This process was completed on September 10 for ALPA and the AFA.

It appears the company has everything “T†crossed and every “I†dotted and without court approval of a S.1113(e) and then a S.1113 motion the business enterprise will fail. Thus, the company may have just neutered the RC4 and the other unions.

If Judge Mitchell approves the S.1113(e) motion, which does not require negotiation, MEC, or membership approal, US Airways would have financial relief imposed on ALPA and the other unions. Then the unions would have 60 days to negotiate new deals with the airline before the judge could permanently impose the airline's proposed contract terms. The third Omnibus hearing is scheduled for December 16, when the company’s new 5-point employee contracts could permanently be put in place. I believe it’s also important to note that US Airways said as part of the Company’s timetable to emerge from Chapter 11 reorganization, the airline intends to ile its disclosure statement POR by the end of this year. Therefore, early next year the company would hold its 341 meeting, creditors vote on the POR and disclosure statement, and then could emerge from bankruptcy in February.

There is no question there are challenges, but this time US Airways may finally have a plan to compete.

Regards,

USA320Pilot
 
february?? come on... the last time they emerged too soon and if what you say is true it looks like they haven't learned as of yet.....
and don't forget...self help may be on the way.
 
If the cuts are too onerous, ALPA should take a strike vote, the results of which should mirror any vote the RC4 are accused of preventing.

Do you think they would roll call a motion to put out a strike vote? I mean the MEC of course, exclusive of the RC4.
 
I'm not sure ALPA will get the chance. Me thinks CCY will start at the bottom of the pecking order, and either CWA or IAM will get the first shot at the line. Sit back and relax ALPA...you may not get the chance to even go back to the table!
 
It's my understanding the court could prevent a strike and order the parties to work under the new terms. The S.1113 process is "uncharted waters" and has never been tested, the court has significant latitude in determining their orders, Judge Mitchell has a reputation for a "rocket docket", and he has fully supported the company in the past.

If the court orders employees to work under new terms and does not allow "self help", any union or member who does not abide by the ruling could be held in contempt of court and could be fined or put in jail.

Separately, it's my understanding the ALPA by-laws require a strike vote be membership ratified, therefore, the vote cold not be roll called.

There is reason to believe the September 10 ALPA and AFA company proposals and the next proposal to the IAM units, the CWA, and the TWU units, will be the contract terms the company will seek to impose on the unions. In the case of ALPA, the majority of the pilots would accept the more "balanced" concession.

Respectfully,

USA320Pilot
 
Even in good times minus BK and when the IAM was on strike in 92 after U asked, some judge took it upon himself to see to it that we only had a couple people at certain places. In other words they used the legal system to suppress the effects of striking by getting some judge to restrain us by limiting our numbers and locations. At some locations it was a total joke standing there holding signs miles from where U did business. Now take this case of even more extreme circumstances and one can guess how limited the unions would be. So in that respect the captain is correct in his statements here. So much for the power of striking in good times let alone in dire circumstances . Striking will mean ending it all and that is what the judge will surely declare preventing a strike.
 
Cav:

Cav said: "Striking will mean ending it all and that is what the judge will surely declare preventing a strike."

USA320Pilot cooments: Cav, this whole thing "sucks" and nobody likes what is happening to our industry, company, and employees. In my opinion, we have very little leverage and Judge Mitchell is going to do what's in the best interests of the Company and its creditors. The ATSB is clearly calling the shots and they're really our senior management.

ALPA's advisors told the RC4 months ago that if we struck a deal in the summer the pilot's could have had a deal that was 80 to 85% of the ask. Now we are going to get the total ask, probably the September 10 proposal imposed, which is likely for every other union too.

In my opinion, union leadership has failed and the rank-and-file could get deeper cuts than were actually required. Part of the reason is that bankruptcy is expensive with huge advisor and new ATSB fees that have to be paid with money coming from somewhere...like the employees.

When the ATSB and its partner lenders allowed US Airways to continue using its cash in bankruptcy protection, they also extracted tough financial requirements and US Airways must:

• Continue to pay all interest on the loans.

• Pay legal and advisory bills for ATSB and lenders. This includes paying Lazard, a New York investment bank that has advised airlines such as Continental and TWA during their bankruptcy struggles.

US Airways may ask for OK to cut wages

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Unions expect US Airways to try for wage cuts soon - Airline can seek relief in short term or ask judge to void contacts

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Regards,

USA320Pilot
 
USA320Pilot said:
It's my understanding the court could prevent a strike and order the parties to work under the new terms.

According to any number of legal experts (including a very detailed analysis of S1113 law that was linked to on this very forum last week) your understanding is incorrect.
 
ClueByFour said:
According to any number of legal experts (including a very detailed analysis of S1113 law that was linked to on this very forum last week) your understanding is incorrect.
[post="182072"][/post]​
i beleive railway labor act gives self help options
 
cavalier said:
Even in good times minus BK and when the IAM was on strike in 92 after U asked, some judge took it upon himself to see to it that we only had a couple people at certain places. In other words they used the legal system to suppress the effects of striking by getting some judge to restrain us by limiting our numbers and locations. At some locations it was a total joke standing there holding signs miles from where U did business. Now take this case of even more extreme circumstances and one can guess how limited the unions would be. So in that respect the captain is correct in his statements here. So much for the power of striking in good times let alone in dire circumstances . Striking will mean ending it all and that is what the judge will surely declare preventing a strike.
[post="182062"][/post]​
Hey, Cav.....Who cares what the heck you,or 320 have to say.... 700 will be on here, and he will tell you, 320, and me, that we are ALL wrong!!! HE has ALL the answers!!! HE will set us all straight!!! 700, YOU opened a pandoras' box, YOU call it "stalking" I call it your worst NIGHTMARE!!! I will be watching EVERYTHING you post........I have opinions , AND facts, just as you do! Your diatribes will be answered accordingly :angry:
 
ClueByFour said:
According to any number of legal experts (including a very detailed analysis of S1113 law that was linked to on this very forum last week) your understanding is incorrect.
[post="182072"][/post]​


Even if he is incorrect which I have no idea, it's moot regardless and any thinking reasonable person knows this. Striking will only do more damage to an already damaged company to the point of complete and final liquidation. That would be the path of fools and why it's even being discussed is amazing when the facts are right here shining in ones face. But then again, emotions make no sense. But hey, knock yourselves out, literally that is :p
 
NeedForSpeedNFS said:
Hey, Cav.....Who cares what the heck you,or 320 have to say.... 700 will be on here, and he will tell you, 320, and me, that we are ALL wrong!!! HE has ALL the answers!!! HE will set us all straight!!! 700, YOU opened a pandoras' box, YOU call it "stalking" I call it your worst NIGHTMARE!!! I will be watching EVERYTHING you post........I have opinions , AND facts, just as you do! Your diatribes will be answered accordingly :angry:
[post="182075"][/post]​


Please show a little compassion, he is delusional. He believes, HE KNOWS, which is exactly what he told me and for that statement I guess I am to tremble in my boots. I see both sides and this management nor the unions are blameless and until they come together all the hoopla here on these boards pointing and screaming at each other will only assure failure, sure as the sun comes up everyday. FACTS will not save the day, and that is a FACT.
 
Just out of curiosity what is the point of a strike?

I can understand a FORD or a GM strike. The automobile business is reasonably good and employees have a relatively decent option of finding employment at another automaker or of getting concessions from the manufacturer.

But what would happen at USAir?

The company is GONE. Business is not good. Much service is gone forever. You may eventually get another job in the airline business but it could take months for things to settle out if you are lucky but you would be totally at the whim of chance, other airlines, and pure luck.

Why not take the paycheck now and look voluntarily on your own for another job that will pay you and treat you like you want?

I just flat out don't understand you guys.
 
Two points of clarification:

1. If US is granted relief under a 1113(e) motion, labor has no legal right to strike, as the changes are temporary.

2. If the labor contracts are permanently abrogated, then the unions DO have a right to strike, and even the judge cannot rule to the contrary.
 
NFS,

Call the EAS, you need it.

And according to Sharon Levine, esquire, self-help is an option once a contract is abrogated and the Bankruptcy Judge does not have jurisdiction to prevent self-help.


PS. I am honored that NFS and Cav, worry so much about me and can give medical diagnosis over the internet and you two keep hijacking threads and taking off topic. Guess you two have nothing better to do.