"US Airways' Unions Brace to Fight Deep Cuts"

Saturday, September 25, 2004

US Airways' Unions Brace to Fight Deep Cuts
By Sara Kehaulani Goo and Amy Joyce
The Washington (DC) Post


US Airways' 28,000 employees waited last night for the airline to file a
petition with the judge in its bankruptcy proceeding, seeking to void
existing labor contracts and impose a 23 percent pay cut on workers. 

Unions pledged to fight the move in court, saying that pay cuts are being
imposed on them unfairly by executives who have not cut their own pay.
Despite strained relations, some union groups said they planned to meet with
the company over the weekend to see whether the company is still open to
negotiating. Union representatives said they did not expect the court to
hold a hearing for several weeks on the company's proposed pay cuts. 

"All along we've heard a lot of detail about what the union workers have to
give up, but we've not heard what cost savings from management will be,"
said Candice Johnson, a spokeswoman for the Communication Workers of
America. Johnson said the union still plans to meet with the company Monday.
"All those things should be a part of restructuring. All the union workers
are being asked to make extreme levels of sacrifice, but we're not hearing
about management." 

A US Airways official said the company plans to announce major cuts in
management compensation in the next several weeks but declined to discuss
specifics, saying they had not been finalized. The airline eliminated 27
sales jobs several weeks ago and has decided not to fill 30 other sales
jobs, said David Castelveter, a US Airways spokesman. 

US Airways, which filed for Chapter 11 protection on Sept. 12, has said that
it needs $800 million in labor cuts to transform itself into a profitable
low-cost carrier. The Arlington airline faces liquidation if it cannot
emerge quickly from its second bankruptcy filing in two years. 

The airline is under pressure to obtain savings from its labor unions as
soon as possible in order to maintain confidence among its creditors that it
has a viable plan to emerge from bankruptcy. So far, it has reached an
agreement with only one of its five unions, the one that represents 150
flight dispatchers. Pilots and flight attendants also said they would
continue talks with the company; machinists have been the most reluctant to
negotiate. 

US Airways has been unable to reach cost-cutting agreements with its unions
because of a breakdown in faith between workers and top management, labor
experts said. Over the past several years, labor unions have accepted three
pay cuts while top executives have left with multimillion-dollar bonuses in
hand, they said. 

While top executives agreed to pay cuts during the airline's first
bankruptcy filing, former chief executive David N. Siegel walked away with
$5 million, under the terms of his severance package, when he resigned in
April. Before that, former chairman Stephen M. Wolf left with $15 million
when he stepped down as chief executive. His predecessor, Rakesh Gangwal,
also left with $15 million in 2001. 

"How many times can the company expect . . . to reduce compensation before
people start wondering what is the point and where the end is going to be?"
said Paul F. Clark, a professor at the Department of Labor Studies and
Industrial Relations at Pennsylvania State University. "Unions in the
airline industry have taken cut after cut after cut. And, at some point, the
membership wonders where it's going to end, and they kind of draw a line in
the sand." 

But bankruptcy experts said the company's request to impose salary cuts is
fairly common and does not leave workers with many options. The practice is
becoming common, particularly among airlines, said Robert Bruno, professor
of labor and industrial relations at the University of Illinois. 

Congress amended the bankruptcy law decades ago to make it slightly more
difficult for employers to nullify union agreements. The change was designed
to "prevent any employer from simply using a bankruptcy court to bust the
union," Bruno said. But he said it has proved not to be much of an obstacle.
"Employees in airlines are facing looking at having legacy benefits wiped
out," Bruno said. "The union is in no position to defend its contract."


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