US Airways to Ask Court to Impose Pay Cut on Unions

MATTHEW BARAKAT / AP 25sep04

ARLINGTON, VA — US Airways chief executive Bruce Lakefield (at right) said Friday the airline would, as expected, ask a bankruptcy judge to impose temporary pay cuts on its union workers to conserve cash during the slow fall travel season.

The filing had not occurred as of late Friday afternoon, but Lakefield told employees in a recorded message that the filing would be made Friday. Bankruptcy courts typically allow parties to file motions electronically after hours.

The company is seeking 23 percent pay cuts from all its union workers, according to union leaders who received the request. The airline has refused to discuss the details of its request.

Lakefield told employees that "I truly regret that the company's financial position has put us in this position," but said the company desperately needs to conserve cash in the coming months, when airline travel typically slows.

If US Airways' cash balance falls below certain levels in September and October, the company could lose the financing that has allowed it to operate during bankruptcy.

The bankruptcy court has the power to impose pay cuts and set aside the unions' labor deals with the airline. A hearing will be scheduled on the issue, possibly on an expedited basis. The pilots' union has already said it will oppose the company's effort.

Lakefield said Friday that the airline plans to continue negotiations with the unions on temporary concessions as well as permanent agreements. Talks are scheduled Monday with the Air Line Pilots Association and the Communications Workers of America, which represents reservations agents and other passenger service employees.

About 84 percent of US Airways employees are covered under labor agreements, according to the company's annual report. The company employs 28,000 in its mainline operations and 34,000 overall.

The company filed for bankruptcy Sept. 12, its second filing in two years, after it failed to extract $800 million in annual concessions from the unions that it said it needed to stay afloat.

US Airways Asks Court To Cut Workers' Pay

AP 25sep04

ARLINGTON, VA — US Airways Group has asked a bankruptcy judge to impose temporary pay cuts on union workers to conserve cash flow during the slow fall travel season, the company said Saturday.

The nation's seventh-largest airline is seeking 23% pay cuts from union workers, including pilots and flight attendants, according to union leaders who received a copy of the request. The company didn't release details of Friday's filing. About 84% of its workers are unionized.

"We need to build cash and we need to do it quickly," US Airways spokesman David Castelveter said in a statement.

The company filed for bankruptcy Sept. 12 -- its second filing in two years -- after it failed to extract $800 million in annual concessions from the unions that it said it needed to stay afloat.

The bankruptcy court has the power to impose pay cuts and set aside the unions' labor deals with the airline. A hearing will be scheduled on Friday's filing.

The pilots' union has said it will oppose the request, although spokesman Jack Stephan said members understand the need to further cut costs. "If we didn't think some of these concessions were needed, we wouldn't be at the table in the first place," he said.

US Airways Chief Executive Bruce Lakefield has said that if US Airways' cash balance falls below certain levels in September and October, the company could lose financing that has allowed it to operate during bankruptcy.

Mr. Lakefield said the airline would continue negotiating with the unions on both temporary concessions and permanent agreements. Talks were scheduled Monday with the Air Line Pilots Association and the Communications Workers of America, which represents reservations agents and other passenger-service employees.