View Full Version : USAirways Pilots Offer 12% Pay Cut

25th Jun 2004, 21:30
US Airways pilots offer to cut pay by 12.5 pct
Friday June 25

WASHINGTON, June 25 (Reuters) - Pilots at US Airways are offering to take a 12.5 percent pay cut and work more hours through 2008 to help meet fresh cost-cutting targets at the carrier as it struggles to stay viable, the pilots union said on Friday.

The proposal submitted to the company this week by the US Airways negotiating unit of the Air Line Pilots Association is the first significant offer by any union at the carrier, which is seeking to save $1.5 billion, including $800 million from labor.

The Arlington, Virginia-based airline emerged from bankruptcy protection last year and is again overhauling its business plan to counter low-cost competition, especially Southwest Airlines.

The pilots would cut their wages across the board and forego any raises. They would also boost their monthly work schedule from 85 to 90 hours.

"This is important. It involves real dollars and cents," said Jack Stephan, a spokesman for pilots at US Airways. "I'm sure there will be further discussions in other areas, but right now this is where we are."

US Airways is seeking $295 million in concessions from the pilots but Stephan was reluctant to put a dollar figure on the union's proposal since other issues must still be negotiated.

But the airline called the proposal a "very good step" toward reaching its goals.

"It's clear as a result of the pilots' willingness to sit down and talk that they share the same commitment for the survival of the company," said US Airways spokesman David Castelveter.

The airline's new chief executive, Bruce Lakefield, hopes to complete giveback agreements with labor groups in September.

In addition to pilots, the company is seeking $116 million in concessions from flight attendants, $263 million from mechanics and fleet service workers, and $122 million from reservation agents and passenger service and ticket counter employees.

7th Sep 2004, 15:52
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.

7th Sep 2004, 19:53
Yeah well when you try and make paycuts RETROACTIVE to may, you can expect a bit of resistance.

Considering how fast management kept moving the goal posts, there was never any intention of having an agreement, they were just trying to position themselves with ALPA as the badguy.

Its a bad scenario and even if everyone worked for free, it is doubtfull the airline could be saved.


9th Sep 2004, 18:46
"We are profoundly disappointed that the actions of a few [ read the USAir ALPA MEC ] prevent our pilots from making their own decisions," US Airways spokesman David Castelveter said.

I'll bet he's disappointed; not least because of a lost opportunity to break the union.

I just heard Jack Stephan on Bloomberg Radio this morning, very articulate, great to hear a Line Pilot being interviewed by such a prestigious radio show, not many union officials get that opportunity. Well done Jack.

9th Sep 2004, 21:03
Council 94 Letter From John Brookman

September 8, 2004

To the Pilots of Pittsburgh,

I realize that the pilots of the Council are anxious concerning the events
that have taken place over the past 2 weeks. I will try and lay out a
timeline, while at the same time explain the actions and decisions that we
made. Fred and I have heard from the pilots of this council, and we
appreciate those of you who have whole-heartedly supported us, and hope that
those of you who have some doubts will please read the following letter,
stay informed and contact us if you have questions or concerns.

Membership Ratification

Your PIT and PHL representatives have consistently advocated membership
ratification of any Letters of Agreement or changes to the collective
bargaining agreement that affect our pay, job security, working conditions
or retirement. We will never vote for or amend the policy manual to allow
for anything other than membership ratification of tentative agreements.

In the past week the MEC Chairman, Officers and Communication Committee have
been misleading and misrepresenting the facts concerning the Negotiating
Committee and Company proposals. The MEC policy manual clearly states
“….upon the presentation of an acceptable tentative agreement to the MEC by
the Negotiating Committee. Membership ratification shall be mandatory….” The
pilots of this airline will get a vote, if and when the company and the
negotiating committee reach an agreement that is acceptable to the majority
of the members of the MEC. Our manual calls for a three-step process;

1. The Negotiating Committee and Company reach an agreement.
2. The MEC reviews the agreement for a minimum of 7 days, and
a. accepts the agreement
b. rejects the agreement
3. The pilot group only gets to vote on an agreement if the MEC accepts it.

What the Officers and Communications Chairman of this MEC are trying to
convince this pilot group, is that the PIT and PHL representatives are not
allowing you to vote on your future, this is a LIE and they know it.

This is a completely different scenario than what happened during the loss
of the Pilots Defined Benefit Plan. The MEC accepted a tentative agreement
that eliminated the Defined Benefit Plan and then voted (Brookman voted not
to amend) by 2/3rds to override the Policy Manual requirement of membership
ratification and did not send it out for a vote to the pilot group.

If we get an acceptable tentative agreement – you will get to vote. The
pilot group is the last and final authority.

Expense of Special Meeting called on August 25, 2004

The MEC Chairman, Bill Pollock, called a special meeting which began on
Wednesday, August 25, 2004 and adjourned Monday September 6, 2004. The MEC
was in continuous session to the call of the Chairman. However, from Tuesday
August 31, until Monday September 6, no meetings where held, no phone calls
were received, and no negotiating committee reports were given. Bill Pollock
did not even update the members of the MEC as to the dates and times of
negotiations. Your representatives where listening to the code-a-phone just
as you were to receive information. The MEC did absolutely nothing except
rack up huge expenses. Here is a breakdown of expenses incurred during this
MEC meeting.

1. Flight pay loss of 5 hours per day/ per MEC member, officer, invited
committee members - $15,000/day
2. Hotel and meeting rooms - $5,000/day
3. Meals and incidentals - $2,000/day (minimum)

At a very minimum this MEC Chairman spent over $110,000 for 6 days when
absolutely no work was being conducted.

This from an MEC that ALPA National has been rightfully scrutinizing the
expenditures of. We have ongoing, serious financial concerns and, as a
result, have been placed on a flight pay loss matrix, we are currently under
the control of ALPA National.

Company’s proposal of September 6, 2004

After being in recess for 6 days at the call of the MEC Chairman, the MEC
went into session at 3:30 on Monday, September 6. The Negotiating Committee
gave an update of their past weeks worth of work, which took approximately 2
hours. We broke for about an hour while the Company sent over their next
proposal. After the Negotiating Committee reviewed the latest Company
positions, they discussed the provisions with the MEC. First Officer Garland
Jones (BOS) asked for a 5 minute recess while he passed out a resolution
that would send this company proposal out for membership ratification. The
motion was seconded by First Officer Ray Belz (LGA). I then made a point of
order that the resolution was not valid. The US Airways policy manual
clearly states that tentative agreements are sent to the pilot group for
membership ratification, not proposals. Not surprisingly, after much debate
between the advisors and Chairman Pollock, my point of order was overruled.
I then challenged the chair; this would allow the MEC members to vote on the
point of order. However, once again, Chairman Pollock then made the decision
that a challenge of the chair was not in order. Should we be surprised? The
same parliamentary procedures where used by Chris Beebe, as MEC Chairman, to
prevent the MEC from allowing this pilot group the ability to vote when a
Tentative Agreement was reached and the MEC (I voted NO) surrendered of our
Defined Benefit Plan.

After approximately 1 hour of discussion concerning the resolution, we
voted. I immediately called for a roll call. PIT and PHL voted NO,
BOS, LGA, CLT, DCA voted, YES.

Why we voted against sending out a proposal to the pilot group

1. We did not have a tentative agreement, as required by the policy manual,
just a proposal from the Company that did not address any of the financial
needs, returns, and job security of our pilot group.
2. What was stated over and over as the sole reason for this MEC to accept
the Company’s proposal of September 6, 2004 and send it out for membership
ratification was; to obtain Chapter 1113, 1113(E), 1114, 1114(h) protection
if the Company entered bankruptcy. This protection would prevent the company
from asking the judge for further concessions from the pilot group. However,
the one important element that all other representatives, (PIT & PHL
excluded), the MEC Chairman and Communications Committee are failing to tell
the pilot group is: The protection the company was offering dropped dead
after 60 days in bankruptcy. The proposal states “neither the company nor
any affiliated debtor shall, on or before November 12, 2004, file or
otherwise support any motion … seeking rejection of or modification of or
relief or interim relief from, the Pilot Agreement.” Under federal
bankruptcy laws; the Company is required to negotiate with us for 60 days.
Folks, they offered us the sleeves off their vests! It is our opinion that
the Company will be back for MORE, the 60 days gives them the ability to
take advantage of our massive concessions, go after all the other unions,
and then come back after us. Make no mistake, as Arnold say’s “I’ll be
BACK”, history does repeat itself. The ink is never dry before they are
stealing more.
3. None of the provisions that were required by the MEC Charging Resolutions
had been fulfilled. The charging resolutions were passed by unanimous vote
of this MEC. PIT and PHL are the only representatives who are living up to
their commitments to this pilot group.
4. No meaningful returns. The company’s own documents state that any profit
sharing is unlikely to survive a bankruptcy filing.
5. No furlough protection – up to 775 potential furloughs
6. Elimination of retiree medical benefits. This will cost each pilot (in
today’s dollars) approximately $2,000/month. They offered to offset it by a
maximum of $462.50/month, only if you are fortunate enough to have a full
sick bank at retirement.
7. Complete elimination of retiree dental coverage (access and subsidy) – we
can’t even buy it!!
8. Eliminate all medical and dental coverage for all current and future
retirees over age 65.
9. Eliminate all drug coverage for current and future retirees.
10. Elimination of the Pilot Disability Plan – a pilot would only be able to
collect disability for a maximum of 2 years. All pilots would have to pay
for 25% of disability premiums. Ladies and gentlemen, we have reached an all
time low when we attack the old and crippled. The company would not even
indemnify the Association against laws suits that are sure to arise from the
elimination of retirement and insurance benefits.
11. 23% pay cut, 50% reduction in Defined Contributions – ALPA’s first
proposal for a 12 ½ % pay cut, and minor work rule changes = $220 million.
We are very well informed and the numbers just do not add up!! The company
constantly values our contributions well below what they are worth. Our
Negotiating Committee has been chasing a moving target for the past 3
months. Until now, no other MEC has ever held the Company’s feet to the
12. 106 seat jet aircraft at express carriers – correct me if I am wrong, I
think we have those parked in the desert!!

Please read the Company’s proposal dated September 6, 2004. I tried to
outline a dozen items; it is a 30 page document and grows more onerous with
turn of each page.

What is unbelievable to me is that the other 8 members of the MEC could
actually accept this.

Communication Committee

It is the opinion of your Pittsburgh Representatives that the communications
that have been released by the MEC Chairman, Officers and Communication
Committee Chairman, Jack Stephan, have been a concerted effort designed to
create doubt and uncertainty as to the intentions of your elected
representatives. He has intentionally misled and misinformed the pilots of
US Airways. Jack Stephan has acted in a manor which has caused and fostered
a contentious and divisive atmosphere designed to effectuate an outcome
contrary to the best interest of this pilot group. He has actively
encouraged and participated in divisive activities. He has censored
communications between the Negotiating Committee and the pilot group. The
actions of the Communication Committee Chairman have jeopardized the
creditability of the US Airways MEC and the relationship between the elected
representatives and their constituents.

Where do we go from here?

Your representatives will continue to work toward attaining the stated goal
of transforming the airline, and making us competitive with the low cost
carriers. We know we can meet this objective without surrendering our entire
working agreement, and we will fight hard to preserve the benefits for all
pilots on the seniority list and for those pilots who left us this airline
and career in our hands.

The Negotiating Committee is ready to engage the Company, and has a
negotiating charge unanimously passed by the MEC on August 30, 2004.

Please stay informed, question everyone, and call us with your questions and


John M. Brookman
First Officer Representative, Council 94

9th Sep 2004, 21:43
Sounds more like the the Soviet Ministry of Communications rather than an ALPA Communications Committee... What a sorry situation for the guys at USAir... my deepest sympathies.

I would have to point out though that FO Rep J.Brookman doesn't offer too much in the way of factual evidence or instance examples to back his claims against the Comms committee Chairman, (and no - I'm not J.Stephans spin doctor).

9th Sep 2004, 21:58
USAir management wont be happy until every mainline job is outsourced.
The execs at Southwest must be thrilled at there good fortune.

10th Sep 2004, 01:31



Once again, the ALPA spin machine is running full tilt. The actions of the MEC at the recently concluded two-week long special MEC meeting in Washington need a lot of truthful explanation, something that has been sorely lacking.

After suffering for another three full months of “negotiations” with the company on what began a long, long time ago as the development of a supposed “transformation plan” to return US Airways to profitability, we discovered that, in fact, we were well past where we needed to be. You might rightfully ask, “How did we get here?”

In December 2003, Dave Siegel (you remember him, don’t you? He was the person who wasn’t going to, “take my money and run,” yet that is precisely what he did) first began revisiting the Company’s supposedly good Plan of Reorganization. He first floated talk of additional concessions from employees. Remember the carrot of 60 brand-new Airbuses that evaporated as quickly as Siegel’s promise “not to take my money and run” when ALPA publicly announced that we were not interested in receiving any additional plans from Siegel involving more pilot concessions. Although Siegel was not invited to share any of his “plans,” Jerry Glass was eventually invited to do so by the MEC Chairman. This latest management proposal was to reduce CASM by an incredible 4 cents, with 2 of those cents coming from the employees.

This “Going-Forward” plan, as it was next dubbed, was pitched by none other than Mr. Bronner at a meeting in Charlotte that was held last February. Bronner made several statements at that meeting such as, “Those that give the most will share the most in the returns,” and, “We have only 15 to 45 days to execute this plan.” After that meeting the MEC passed a unanimous resolution directing the Negotiating Committee to “participate in developing a plan to return US Airways to profitability.”

Even though we were told we didn’t have much time, things suddenly quieted down about the “plan” for the entire spring while the dust swirled around the passage of LOA 91 and Siegel’s decision to take the money and run. Once these issues were placed on the back burner, the bulldozer of transformation was once again started and shifted into high gear.

Just days after the votes on LOA 91 were tallied, and almost a full 90 days after Bronner and Lakefield met with the MEC in Charlotte, the Company finally unveiled their “Going Forward”, now “Transformation Plan.” This was their strategy to cut costs at the airline by $1.5 billion; $800 million coming from the employees and the other $700 million from newfound efficiencies in the operation. The pilot’s share of their “pie” was announced as being $295 million.

Within the Company’s presentation were the targets the Company was seeking. Wage rates equal to America West, and productivity equal to JetBlue.

Once the Negotiating Committee began initial discussions with the Company during mid-May, NC Chairman Doug Mowery reported to the MEC in an update that “there’s no rush, we have the time to make sure we do this right,” indicating the Company had a target for completion of these negotiations as the end of September.

Yet, the very next day, MEC Chairman Bill Pollock arranged a special MEC conference call, telling us he had invited members of senior management to address the MEC to discuss the “urgency of the situation.” On this conference call, we were told that we needed to have a deal by the end of June.

For the next few weeks, the NC and Company engaged in preliminary informational exchange discussions. In fact, during this time period there were many times when the Company negotiators were either unavailable to meet or unprepared for discussing specifics at many meetings.

Once the NC made their first offer—an offer for a 12.5% pay rate reduction and forgoing of all raises for the duration of the agreement, there was virtually no acknowledgement by the Company of the value of this very significant move, and this then became the new “starting point” of negotiations—we could only go south from this opening position. They were interested only in what additional concessions we might offer; in other words, it was “business as usual” for them. It took several weeks for the Company to even begin working on a valuation of our proposal. Needless to say, they ultimately and incorrectly valued it at a significantly lower number than we did.

At that point in time, a discernable pattern also began to develop. Each new ALPA proposal was valued significantly lower by the Company than ALPA and our advisors had valued it. As the summer dragged on, each time Doug and the NC would move one step closer, the Company’s position would be to move one step back. The valuation would always drop, resulting in the now familiar, “We want more,” refrain from the Company.

In one negotiating meeting a bit of truth did slip out. When asked about the time frame for the Company’s $700 million share of the Transformation Plan’s cost cuts, Bruce Ashby and Dave Davis both stated that they would not get the $700M until the end of 2007. They then added that our ever-increasing share ($295M+) was needed right now.

ALPA’s proposal had now moved south from the original giveback to 16.25% pay-cuts, 10% lower DC contributions, and 10% lower vacation accrual. Management’s answer was, “Still not enough.”

Finally, after a long summer of abuse at the hands of Ashby and others, as one deadline after another fell by the wayside, Doug Mowery declared on August 22, that the ability to reach an agreement with Management was not possible. At the time, MEC Chairman Pollock and all the advisors agreed. Doug informed the MEC in a telling metaphor that we had moved well past the 50-yard line, all the way to the Company’s 20-yard line, but they did not meet us there, they had backed into the end zone. Little did he know, they would soon continue backward—into the locker room, and then out to the parking lot.

In what was described as an attempt to move us from a deadlock, the MEC Chairman called yet another special MEC meeting in Washington, D.C. on August 25. The first order of business was a report from the NC. When the discussion began about the fact that the monetary figure the Company wanted was still increasing, several ALPA reps began a discussion about how we could make up more, thereby making excuses for the Company’s inexcusable behavior.

We then moved on to a re-charging of the Negotiating Committee. Your Philadelphia reps along with the Pittsburgh reps put forth a resolution attempting to limit the NC’s movements towards the Company’s ever more expensive positions. We felt that to do otherwise would only further whet the Company’s appetite for ever-increasing contractual concessions.

Once the debate began around the table, we were astounded to listen as the representatives from the other bases put forth an amendment to this resolution that would have directed the Negotiating Committee to, if unable to achieve a deal within those parameters, to simply obtain the best deal they could get. This action is tantamount to announcing publicly, “We will accept anything.” You wouldn’t get far if you approached even a car dealer with these words. This amendment was defeated by a roll call vote.

It was not a coincidence that the MEC Chairman called this meeting at a location in Washington that put us within a stone’s throw from Crystal City. The “Negotiations One” handbook states that it is a mistake to locate yourself in close proximity to your opponent. We should have been somewhere else, but there we were at the Key Bridge Marriott at a conservatively estimated cost of $15,000+ per day—a pretty high cost for an MEC that is allegedly broke. The meeting was finally recessed after the seventh day to the call of the chair, meaning until Pollock called us back into session. As a result, for the next six days, the entire MEC sat on a short leash in Washington awaiting the call to return to session. We had no idea that it would eventually turn into a thirteen-day siege.

As the Negotiating Committee continued, the Company’s proposals became even more draconian, 20% pay and 20% DC, then 21% pay and 40% DC. But, each time, the gap between ALPA and the Company would not close. No amount of money, pilot productivity, or contractual protections could possibly be shoveled into Ashby’s ever-changing bottomless pit. We were finally informed that the gap between the parties had decreased to “only” $30M. Yet, after Doug began shoveling even more into this gap, he was told the gap had now increased to $40M!

The last numbers that the Company put across the table were a 23% pay reduction, a 50% reduction in the DC percentage, onerous work rules and dependability programs, 50% pay for deadhead, 85/90/95 hour caps by position, no increase in the reserve guarantees, ad nausea. Several members of the MEC then offered a resolution to take this unacceptable proposal and send it out to the membership for a vote. Remember, the Negotiating Committee would not approve this proposal, and to bypass the MEC and put a proposal (not something the NC and MEC agreed with) out to the membership would effectively neutralize what little bargaining power your union demonstrated. In other words, we would be enabling the Company to bypass their bargaining agent and begin negotiations directly with the pilots themselves. “Separate the membership from their union representatives,” would become their rallying cry, a basic tenet of union busting, right out of the Lorenzo handbook.

If the foregoing isn’t enough, the content of this latest proposal was so far beyond what was originally proposed by the Company back in February (the America West wages and JetBlue block hours) that it played out, plain and simple, like a “land grab.” Please look this document over on the Pilot’s Only section of the ALPA website.

Keeping the interests of the Philadelphia pilots in mind, we could not sign off on this agreement. However, some MEC Officers and members are now attempting to paint these actions as an attempt to deny the membership a vote. THIS IS AN OUTRIGHT LIE!

What would have transpired under the foregoing scenario was a situation where the MEC could “wash their hands” of all responsibility and pass that on to the membership. “You signed on to it, not me,” and “You should have voted for/against it,” would become the buzzwords in defense of this indefensible action. We would not and will not be party to abrogation of our responsibilities as elected representatives. We felt it was the worst possible situation for the pilots, and voted that way.



Along the way, in order to keep the pilots informed, the MEC authorized the release of all confidential documents. Unfortunately, the only document to be released was the Glanzer Report. The Negotiating Committee notes from the negotiations were to be released also. These notes paint a very different, inside picture of what transpired behind the closed doors. Why just a partial release of information? This is a question for Chairman Pollock.


Along the way, the divide between the sides on the MEC became even more delineated. The MEC Chairman, using his bully pulpit and the Communications Chairman as his willing accomplice, have taken to using official communications such as the code-a-phone and press releases to misinform the pilots and the public of the intentions and actions of your representatives. To foster an atmosphere of such divisiveness at this time can only serve to weaken the position of the pilots as a group. You must ask these individuals why this is being done, for only they know the answer to that question.

Unfortunately, Mr. Lakefield has now stepped up to the plate to bash the PHL and PIT representatives. We are confident that MEC Chairman Bill Pollock will be asking the Department of Labor to have a look at what certainly appears to be management interference in the internal workings of our union. Please feel free to call Bill and ask him how and when he will be proceeding with this.


John Crocker, Chairman

10th Sep 2004, 02:35
Based on personal past experience, this bickering and finger pointing will continue for years after US Air has ceased operation.

We woulda, shoulda, coulda...

Ignition Override
10th Sep 2004, 05:14
Ruger 9mm. Oh, come on now. Having so many regional jets has clearly saved those and the other US majors as well. The regionals, especially those "enhanced' series with 44 seats are clearly the cure for the industry (never mind our truly efficient hub and spoke networks). These airlines are making tons of money as we sit and punch on the keyboard! Isn't the solution so obvious to everyone out there? ;)

Good luck USAirways staff. I worked with some of you years ago in Camden Arkansas. May your careers be intact many years from now, as airport "authorities" such as at Philly, kowtow and prostrate themselves, licking the boots of Southwest and JetBlue.

What a 'class act' for an airport. More t-shirt, torn blue jean mobs. :} Also check out St. Louis Airport. There are now so many tickets at "bus-fare" prices thru both PHL amd STL that the Jerry Springer show could be broadcast from either of those terminals-especially St. Louis. Probably even Chicago Midway (MDW). What a nice future for airlines: such a prestigious way to travel:= -:= .

10th Sep 2004, 12:00
September 10, 2004

US Airways Seen as Likely to Declare Bankruptcy


Barring a last-minute change of heart by its recalcitrant unions, US Airways appears all but certain to seek bankruptcy protection on Sunday, people briefed on the situation said yesterday.

In that event, the airline is considering a bankruptcy filing without debtor-in-possession financing, a standard feature of most Chapter 11 cases. Instead, it would rely on cash on hand to finance its operations and would explore whether it needed additional financing in the future, these people said.

Christopher L. Chiames, the airline's senior vice president for corporate affairs, declined to say yesterday whether a bankruptcy filing, which would be the airline's second in two years, was imminent. "All along in this process, we've acknowledged that a bankruptcy filing might be necessary, but no decisions have been made," he said.

The final say is up to the US Airways board, which has not met to discuss the issue, he said. But the board can meet by telephone and could do so on short notice.

The airline sought Chapter 11 protection in August 2002, a filing that also took place on a Sunday. It emerged in April 2003, backed by a $900 million package of federal loan guarantees, the largest awarded by the Air Transportation Stabilization Board.

The airline's lead investor was the Retirement Systems of Alabama, which took a 36.5 percent stake in the airline and eight of 15 seats on its board in return for a $240 million investment. The pension fund's chief executive, David G. Bronner, became US Airways' chairman.

Last month, Mr. Bronner said a second bankruptcy filing could turn into a Chapter 7 liquidation because the crippled airline would not be able to attract new investors.

Yesterday, Mr. Bronner said liquidation was still a possibility but that a Chapter 11 filing would be more likely if any action occurred. He did not say what the timetable would be. "We absolutely still have hopes" of avoiding a bankruptcy filing, Mr. Bronner said in an interview with The Associated Press.

Any such hope rests with unions representing pilots, flight attendants, mechanics and other workers, from which the airline has been trying to win $800 million in wage and benefit cuts. Workers granted two rounds of concessions worth $1.9 billion while US Airways was in bankruptcy but have resisted further cuts.

The chances of obtaining the cuts dimmed late Monday when pilots opposed to further concessions blocked leaders of the Air Line Pilots Association from allowing members to vote on the company's latest proposal for $295 million in cuts. Backing from the pilots is critical if the airline is to win support from other labor groups.

The leadership group is meeting today in Pittsburgh, home base to two of the four rebel pilots whose efforts prevented the offer from reaching the pilots.

Yesterday, one of those pilots, Fred Freshwater, said he had not changed his stand against the proposal. He said speculation about a filing "may or may not be true" and accused the airline of trying to play on pilots' fears to coerce a vote.

US Airways has exchanged proposals with its flight attendants, but those talks are far from concluding. The International Association of Machinists, meanwhile, has refused to reopen its contract with the airline. A spokesman, Joseph Tiberi, said yesterday that no discussions had been held.

US Airways ended the second quarter with $925 million in cash, about $200 million more than it is required to have on hand under the terms of its federally backed loans and more than it had when it filed for bankruptcy protection last time.

But that floor will quickly loom if US Airways makes a $110 million contribution to its employee pension funds, due Wednesday, a move that seems unlikely because that would leave it with little surplus cash.

It cannot seek outside financing because its collateral is pledged to secure its remaining $700 million in federally backed loans. In fact, US Airways pledged assets worth $1.4 billion, or two times the value of the guarantees. The stabilization board also received a 10 percent stake in the airline. So in the event it defaults on its loan package, the board would essentially have the right to claim US Airways' cash, as well as aircraft, gates, routes and other assets.

People involved in the discussions said the board would watch any actions that the airline took in bankruptcy and determine its next steps.

US Airways sought the union concessions as part of a $1.5 billion revitalization plan, which Mr. Chiames has described as an "extreme makeover" meant to transform US Airways from a traditional airline into a rival to low-fare airlines.

The airline is planning to dismantle its Pittsburgh hub, eliminate service to some of the 34 small cities where it is the only airline and concentrate more on direct flights.

Some industry analysts say US Airways could be seen as the first victim of its low-fare rivals, including JetBlue, which battles with the airline for East Coast passengers, and Southwest, which invaded US Airways' Philadelphia hub in May, forcing it to lower fares.

But Robert W. Mann, a consultant based in Port Washington, N.Y., said US Airways' problems stemmed from its strategy in the 1990's of relying on mergers to expand operations without streamlining its costs.

"They're not a victim of low-fare competition," he said. "They're a victim of a decade of not getting around to solve their problems."


11th Sep 2004, 20:13
US Airways Pilots Return
To the Negotiating Table


September 11, 2004 9:25 a.m.

NEW YORK -- The union representing pilots flying for US Airways Group Inc. agreed late Friday to reopen contract negotiations after managers presented a new proposal, giving the airline a chance to avoid another bankruptcy filing.

While the union leaders met on Friday to consider the previous proposal, which failed to gain enough support to be put to a ratification vote, the union received the new one. The Arlington, Va.-based airline also sent a new proposal to the flight attendants union.

The pilot negotiators could begin meeting with airline managers again Saturday.

"We are prepared to respond quickly to the company's latest proposal and look forward to continuing our commitment to reaching an agreement that not only meets the challenges of the transformation plan but also addresses the needs of our membership," the pilots said in a statement.

A spokesman for the flight attendants said the union had received the proposal and may be ready to respond on Monday. A quick response is imperative to prevent another bankruptcy filing by the airline, US Airways Chief Executive Bruce Lakefield has said.

This month, several debt payments and reviews take place that hinge on the airline cutting cheaper labor contracts with its five unions. US Airways has said it wants to cut $800 million from labor costs. Already on Wednesday a $110 million pension payment comes due that could drain necessary cash for operating in the weak winter months.

The new proposals would keep salaries close to current levels, but increase the number of hours employees work and shift other work rules to put the airline's employees on more equal footing with workers at low-cost carriers, the airline said.

Mr. Lakefield said he has received hundreds of e-mails in the past week from pilots that would prefer cost cuts that balance salary, benefit and work-rule concessions, rather than tipping disproportionately toward one of those areas.

12th Sep 2004, 02:37
Day of Reckoning Near for Some Airlines
AP Business Writer

WASHINGTON - Several long-suffering airlines appear to have reached a breaking point, with fuel prices unrelentingly high, cash reserves dwindling and customers addicted to cheap fares. US Airways may file for bankruptcy court protection a second time and could be forced to liquidate, Delta is on the precipice of bankruptcy and United is battling an employee revolt as it aims to scrap its pension plans.
The frantic restructuring under way at these carriers and others means more anguish for workers and shareholders, although fliers in most markets should continue to see an abundance of low fares. While not every carrier is guaranteed to survive, analysts say the imminent upheaval could augur a brighter long-term future for the industry.

"This is the beginning of the recognition that surgery is necessary for the legacy carriers," said Michael E. Levine, a former airline executive who teaches law at Yale University. "And while it's painful, and not all of the surgery will be successful, it's the only way they're going to get healthy."

What ails carriers such as Delta Air Lines Inc. and US Airways Group Inc. more than anything else is the disproportionately high cost of their operations.

This makes it nearly impossible for them to compete with efficient, well-financed and fast-growing carriers such as Southwest Airlines Co. and JetBlue Airways Corp., whose cheap fares have become the standard by which budget-conscious fliers comparison shop. In fact, their larger competitors - whose costs per available seat mile in some cases are more than 30 percent higher than those of Southwest - have slashed ticket prices to unprofitable levels on many routes just to keep their customer bases from shrinking further.

"Pricing power has moved from the airlines to the consumer," said Phil Roberts, managing partner of the transportation consultancy Unisys R2A in Oakland, Calif. "And so what it comes down to, in the end, is the large carriers needing to create a cost base where they can be profitable at these price levels."

With cash reserves shrinking rapidly and earlier efforts to slash expenses proving inadequate, some of the nation's largest airlines are now moving ahead with dramatic transformation plans.

_ Delta sketched plans this week to eliminate up to 7,000 jobs, cut employee wages and shed its Dallas hub as part of a $5 billion cost-saving program. The Atlanta-based airline has warned that it could be forced into bankruptcy soon if it cannot stem a recent surge in early retirements among older pilots, who are taking big lump-sum pension payments for fear that their retirement accounts could be wiped out as part of the airline's makeover.

_ US Airways made a last-ditch offer to its divided pilots' union Friday for a new labor contract. It says it needs $800 million in labor concessions in order to avoid its second Chapter 11 filing in less than two years, and possibly a liquidation. The day of reckoning for the Arlington, Va., carrier could come as early as this weekend. Among other strategic changes, US Airways plans to simplify its fare structure and tweak it's hub-and-spoke route network to more closely emulate the point-to-point networks that have been successful for low-fare carriers.

_ United parent UAL Corp., which has been operating under Chapter 11 since December 2002, is putting together its third turnaround proposal to a bankruptcy judge. As part of that process, United has threatened to terminate its pension plans in order to attract additional financing. United CEO Glenn Tilton recently said in a recorded message to employees that the airline could save $625 million a year through new call center, maintenance, airport station and commuter-carrier agreements, though he did not detail how the savings would be achieved.

_ Alaska Air Group Inc. on Thursday increased the number of employees it plans to lay off by 750, bringing the total to about 900, as part of a broader plan to save $35 million a year.

Duane Woerth, president of the Air Line Pilots Association, said he is optimistic that the latest moves will be more effective than the post-Sept. 11, 2001 strategy of laying off tens of thousands of workers and getting the remainder to accept lower wages and benefits.

While job and pay cuts remain in the mix this time around, the troubled airlines also appear intent on reshaping their operations from head to toe, he said.

This means retrenching from certain markets - Delta from Dallas, US Airways from Pittsburgh - in order to sharpen their focus in fewer, select cities where they stand the best chance of growing. And it means utilizing aircraft and employees more efficiently, so that they have less idle time in which expenses are incurred but no revenue comes in.

"It's easier to go to our membership (to vote on proposed concessions) if we see changes that we believe are going to help the business," Woerth said.

Of course, while it's Delta and US Airways making headlines these days, Woerth said it could be just a matter of time before carriers such as Northwest Airlines Corp. and Continental Airlines Inc. unveil their own turnaround plans. "We're going to remain busy," he said.

A key factor exacerbating the major carriers' problems in recent months has been the stubbornly high cost of oil, which makes jet fuel more expensive too. Because fliers are so price sensitive, carriers have been largely unsuccessful at raising fares to pass along the higher fuel costs, magnifying their losses.

Merrill Lynch estimates that the nine largest U.S. carriers will lose some $700 million during the July-September quarter, which is traditionally the industry's strongest due to summer travel. Had fuel prices held steady at last year's levels, those same carriers would have turned a profit of about $500 million, the investment bank said in a report.

The flurry of restructuring now under way will hit airline employees the hardest, analysts said, though there are also financial risks ahead for travelers, aircraft manufacturers, small companies that provide airport-support services such as catering and cleaning - and even rival carriers.

If US Airways liquidates, for example, it would send shockwaves through UAL, which takes in roughly $300 million a year through a code-sharing agreement with the carrier, Port Washington, N.Y.-based airline consultant Robert Mann said.

For aircraft makers such as Boeing Co. and Airbus S.A.S, the threats are mainly limited to their finance units, which have significant exposure to Delta and US Airways, respectively.

Fliers, meanwhile, risk losing any accrued frequent-flier benefits in the event of a liquidation, not to mention reduced service and potentially higher fares, although analysts believe any competitive vacuum would be quickly filled.

Low-fare leaders Southwest and JetBlue have little to worry about near-term, experts said, as it will take several years for the cost-cutting programs at Delta, US Airways and other carriers to reach their maximum potential.

"Clearly, the problems that the legacy carriers are having will continue to create opportunities for the low-cost carriers for quite a while," said Daniel Kasper, who runs the transportation practice for the consulting firm LECG in Cambridge, Mass.

"But if you look farther out," he added, "and if the companies and their employees can successfully make these transitions, they are going to be much more competitive."

12th Sep 2004, 17:20
what do US Air pilots get for retirement? 50% cash and 50% annuity? How about those that are already retired? What do they get after another Ch. 11?

Can someone from the majors in the US tell us what their pension plans are like?

12th Sep 2004, 17:23
Nothing now, and US airways never had a lump sum, it was always an anuity.

That Anuity has been removed even for those who have been retired already. How nice, retire 5 years ago, wake up one day and find out your pension is gone.


12th Sep 2004, 18:09
On a more positive note.
Many thanks to the US Airways Crews over many years for giving me a jumpseat from LGA to my home in CHS.
Being an ex-pat and working abroad this airline really made things better for us.
I wish you the best and hope all turns out well.

12th Sep 2004, 18:27
Learn to play poker.
It will help with your union negotiating skills and it will provide an excellent source of supplemental income.


PS Do not learn to play poker by watching TV or just heading to a casino. Read some books on the subject first...

12th Sep 2004, 21:18
Not rumour, but actual news:


US Airways files for bankruptcy for second time
Sun Sep 12, 2004 04:39 PM ET
ALEXANDRIA, Va., Sept 12 (Reuters) - US Airways Group Inc. squeezed severely by low-cost rivals and soaring fuel prices and failing in its drive for new labor concessions, entered Chapter 11 bankruptcy protection on Sunday for the second time in two years.
The airline sought protection from its creditors in the U.S. Bankruptcy Court for the Eastern District of Virginia, 18 months after emerging from Chapter 11 as a leaner carrier with new financing and a fresh focus on regional jet operations.

12th Sep 2004, 21:47
The carrier's corrupt, incompetent, unprofessional management has already squandered $900 Million of taxpayers' post 9-11 loans. It's time for the top dogs at U.S. Air to be going to jail.

12th Sep 2004, 22:02
actually, I think that money is still safe. The cash on hand is about 900 million or so.... But I expect some people will think about calling that loan, and it is secured with some assets...


Big Tudor
12th Sep 2004, 22:43
Forgive my naivety (I don't claim to be an expert on US legislation or Chapter 11) but the rest of the aviation community must look at US Chapter 11 with a certain amount of envy. I can't help but wonder which US carriers would still be in existence if it weren't for the protection that Chapter 11 seems to offer.

13th Sep 2004, 00:22
Very few carriers actually survive Chapt 11. Most the enter die.
Before you get so jealous, compare the deaths of Pan Am, Eastern, Braniff, Midway, with the number of National Carriers that have disappeared from the European scene (these are all of similar size) literaly 100s of second tier carriers (comparable to say Emerald, Thomoas Cooke) have also disappeared as well.

It is not the safe haven you think it is.


13th Sep 2004, 00:51
Yep the aviation world is heading for a shootout at the O.K. corral. We have USAir re-entered in chapter 11, UA already there and probably to be joined by Delta in the near future. Jetblue is having a poor quarter due to the hurricanes down in Florida whose effect could last all winter. The experts are telling us of a potential blood letting among the EU LCC’s. Adding to the woes is the high cost of fuel coupled with the high cost and uncertainty of security, too many empty seats chasing too few bums and we have the recipe for a perfect winter storm..

Have a nice day..

Ignition Override
13th Sep 2004, 04:18
One or two days ago, there were some interesting points made in "Yahoo Airline News" by somebody who might be with a bankruptcy consulting firm, or such. The man stated that many airlines declare bankruptcy and then fairly quickly emerge from it. But in a very fast-paced industry, that is no time to throw down your shield and try to fight off the enemy with just a sword in hand, when you are already injured. He stated that remaining under the Chap 11 "protection" for about three years can allow the airline to adjust to many changes, some of which are very difficult to anticipate.

Which US industry is probably the ONLY US private industry to pay huge sums of money to the US government, to subsidize (in reverse order!) a government service? This extra, gigantic burden (in addition to the normal ticket taxes) on the airlines is quite strange for a government which is not usually considered socialist. Why can't Congress adjust other spending?:mad:

14th Sep 2004, 23:25
5:03 PM EDT Tuesday

Senator faults 4 pilots for US Airways bankruptcy

Christopher Davis

Following a meeting Tuesday with US Airways Group Inc. president and CEO Bruce Lakefield, U.S. Sen. Rick Santorum laid blame for the airline's second bankruptcy filing on four pilots' union representatives from Pennsylvania and said the airline could liquidate by January "if everything continues to go poorly."

US Airways filed Sunday for Chapter 11 bankruptcy protection -- its second time in two years -- after failing to reach new labor agreements with the Air Line Pilots Association and its other labor unions. The airline was seeking $295 million in concessions from the pilots, as part of an overall labor concessions package of $800 million.

However, four members of ALPA's Master Executive Council -- the union's governing body -- voted last week to block a proposal from being submitted for consideration by rank-and-file members. The MEC members who voted against forwarding the new proposal represent pilots at US Airways' hub in Philadelphia and at Pittsburgh International Airport, where the carrier dominates.

Mr. Santorum, the Pennsylvania Republican and chairman of the Senate Republican Conference, spoke during an afternoon conference call with the media and U.S. Sen. Arlen Specter, a fellow Republican who also met with Mr. Lakefield Tuesday.

"The fact that there was no pilot contract led to this bankruptcy. That's a fact," Mr. Santorum said. "Those four individuals decided they were going to take this airline down and they did."

Mr. Santorum said his conclusion was based on "the information I gathered and the questions I asked."

An ALPA spokesman was not immediately available for comment. A US Airways spokesman said the airline would not comment on "private discussions" between the senators and the company.

US Airways, the nation's seventh-largest airline, emerged from bankruptcy protection in March 2003, but has struggled in the face of escalating competition from low-cost, low-fare carriers and rising jet-fuel prices. The company has been attempting to restructure to bring down expenses and rework its route network.

Mr. Santorum said Mr. Lakefield indicated during the meeting that time was running out for US Airways and that a decision regarding whether the Arlington, Va.-based company would liquidate could come by the beginning of next year.

"I said, 'How much time do you have to work this out?'" Mr. Santorum said. "I think he said several months."

"It was a sobering meeting," Mr. Santorum continued. "Things are not looking good. There are a lot of linchpins that are out there; any one of which could basically sink the airline. They're losing a million dollars a day, I think is what Mr. Lakefield said, and their contracts are just very out of whack with what they have to compete with."

Mr. Specter, who also represents Pennsylvania in Washington, expressed faith in Mr. Lakefield's ability to lead US Airways out of its current restructuring.

"If the airline can still be saved ... I think (Mr. Lakefield) is the man who can do it," Mr. Specter said. "It is apparent that Mr. Lakefield and the others do not intend to give up without exhausting every feasible alternative."


3rd Oct 2004, 00:17
Pilots Union Undecided on US Airways Deal

Leaders of Pilots Union at Bankrupt US Airways Undecided on Sending Deal on Pay Cut to Members

The Associated Press

CHARLOTTE, N.C. Oct. 2, 2004 — Leaders of the pilots union at bankrupt US Airways are taking their time to decide whether to forward a proposed contract to their members that would cut average pay by 18 percent.

A spokesman for the Air Line Pilots Association valued the concessions at $1.8 billion through five years the third concession that pilots have made to the company since 2002.

Union negotiators met Friday and Saturday with the union's management executive council and up to 80 pilots at a hotel in Charlotte, where US Airways has its largest hub. ALPA represents the airline's 3,000 pilots.

The meeting was adjourned Saturday afternoon with the conferees still undecided on whether to recommend that union members approve the tentative contract. The group will resume meeting Tuesday in Pittsburgh, union spokesman Jack Stephan said.

"Certain members have requested they have more time to review the documents and ask more questions of our advisers," he said. "After giving up as much as we have, coming to terms with this tentative agreement is difficult, to say the least."

The airline said the tentative agreement would save the struggling carrier $300 million annually nearly one-third of the cuts that US Airways says it needs to remain viable.

According to Stephan, salaries for captains now range from $120,000 to $150,000 per year, while first officers make between $75,000 and $100,000.

Bruce R. Lakefield, president of US Airways, praised the tentative agreement that was reached early Friday.

"This is a major step forward for our company, its employees, customers and all other stakeholders," Lakefield said.

Airline officials have said US Airways needs a cost-cutting agreement with pilots if it is to continue operating while in bankruptcy.

In a bankruptcy court filing Sept. 24, US Airways warned it could be forced to liquidate by February if the court did not impose a temporary 23 percent pay cut on union workers. An Oct. 7 hearing is scheduled on the issue.

US Airways employs 34,000 workers, most of whom are covered by union labor agreements.

According to the airline, dispatchers have already ratified a cost-saving deal, and the company has tentative agreements with flight crew training instructors and flight simulator engineers. Still in negotiations are US Airways' flight attendants, machinists and members of the Communications Workers of America.

3rd Oct 2004, 03:36
The guys at US Air had better wake up and smell the coffee...before the end comes with a thud...as in finished.

Some never learn...and not likely to start now.
Why am I not surprised.
ALPO...down the yellow brick road to the end.:sad: :sad: :E :E

4th Oct 2004, 00:35
What's the point of giving concession after concession if the airline can't be saved anyway? I badly managed airline can have its planes flown for free by the cockpit and the cabin and still lose a shitload of money. USair is that badly managed an airline.

Employee concessions are not going to save this airline. Furthermore, No union ever killed an airline. MANAGEMENT kills the airline.


4th Oct 2004, 01:53
I would disagree, Wino.

EAL was done in by the IAM...with others following suit.

CO was saved by the management in place at the time.
Yes, I know, pilots, and many others would like to 'blame' 'ole Frank Lorenzo, but the fact remains that CO was the weak sister of trunk airlines years ago, and would have died on the vine eventually, were it not for the agressive management that they received.

With US Air, I would certainly agree that the mismanagement that they have received in the recent past might do 'em in if they don't get their act together.

4th Oct 2004, 18:21
Presented, without comment...