US Air Shares Slide, Pilots Reject Offer
Tue Sep 7, 2004 11:21 AM ET
CHICAGO (Reuters) - Shares of US Airways Group Inc. slipped as much as 23 percent in early trading on Tuesday after its pilots union rejected the company's latest contract proposal, a blow to its attempt to avoid a second trip through bankruptcy.
The union's 12-member executive committee rejected a motion late Monday to send the No. 7 U.S. airline's latest proposal to members for ratification, union spokesman Jack Stephan said. He said committee representatives from Philadelphia and Pittsburgh had voted down the motion.
"At this time it is uncertain as to whether or not discussions will continue between ALPA and the company," Stephan said.
US Airways has been scrambling to agree on concessions with its unions, ahead of a possible default at the end of the month on its U.S.-guaranteed loans.
The Arlington, Virginia-based carrier has been seeking $800 million in union givebacks, including $295 million from its pilots union, as part of its drive to cut overall costs by $1.5 billion.
"We are profoundly disappointed that the actions of a few prevent our pilots from making their own decisions," US Airways spokesman David Castelveter said.
"Nevertheless, we remain firmly committed to reaching an agreement that is responsive to our pilots' needs but also meets our required financial target," he said.
Since emerging from Chapter 11 protection in the spring of 2003, US Airways has been hurt by high fuel prices and competition from low-cost carriers such as Southwest Airlines Inc.
Shares of US Airways were off 28 cents, or 11.9 percent, to $2.07 in early trading on Tuesday after hitting $1.81, their lowest level in more than a week. They rose 27 percent last week on investor optimism that the airline was making progress in contract talks.