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Pilots spat endangers US Airway's recovery
Hard-liners replace two on union bargaining team
Tuesday, April 13, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette
A tug of war within the pilots union is threatening to derail US Airways' detente with its most influential workers group and is endangering the airline's recovery plan.
"It's bad," New York airline analyst Ray Neidl, who covers US Airways, said yesterday. "I think the pilots have moved one step closer to being unemployed."
An angry faction of pilots ousted two members of the union's bargaining team Friday and replaced them with negotiators willing to take a tougher bargaining stance with the company.
The change was made by four union leaders from Pittsburgh and Philadelphia who have been arguing that rank-and-file pilots want "change" and that union negotiators have been in power too long and have made too many concessions to US Airways.
The new chairman of the negotiating committee, Doug Mowery, is a former union leader from Philadelphia who tried unsuccessfully last month to replace union chairman Bill Pollock.
The change comes only weeks before the company is expected to approach the pilots about wide-ranging concessionary talks.
US Airways Chief Executive Officer David Siegel, who has said he needs to cut $1.5 billion from the carrier's expenses this year if US Airways is to survive, wants labor negotiations to begin this month and new labor agreements in place this summer.
Analysts said yesterday that the pilots might have made a bad decision. The airline needs "flexibility" and "cost cuts," Neidl said. "They don't have a lot of time. They have got to get cost structure down pretty quickly."
The pilots thus far are the only group that has agreed to discuss its contract with management, so their internal struggles represent a "setback," said local airline observer Bill Lauer. "I can see lots of things beginning to unravel if something can't be done with the unions in a reasonable amount of time."
The resistance of some union members appeared to stiffen Friday following reports that put Siegel's 2003 compensation in the $8 million to $9 million range and even higher.
But the vast majority of that amount represented stock options that have no value because of the stock's low price -- it closed yesterday at $3.89, almost half the level necessary to trigger the stock options -- and restricted stock that won't start vesting until January.
Siegel's cash compensation for 2003 was $698,890, including a base salary of $600,000.
In an open letter to US Airways employees yesterday, Chairman David Bronner argued that Siegel's pay package was less than what many airline CEOs made last year and less than what Siegel was originally offered to work at US Airways in 2002.
Defending Siegel, Bronner pointed out that the unions have four seats on US Airways' board and thus share responsibility for approving Siegel's pay package. What's more, Bronner argued, is that Siegel had "preserved almost 30,000 jobs" since spring 2002 and defied the experts predicting US Airways' demise.
"We are still here, and we don't have any intention of going away. But we must deal with the changing economics of the airline industry," Bronner said.
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(Dan Fitzpatrick can be reached at [email protected] or 412-263-1752
Hard-liners replace two on union bargaining team
Tuesday, April 13, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette
A tug of war within the pilots union is threatening to derail US Airways' detente with its most influential workers group and is endangering the airline's recovery plan.
"It's bad," New York airline analyst Ray Neidl, who covers US Airways, said yesterday. "I think the pilots have moved one step closer to being unemployed."
An angry faction of pilots ousted two members of the union's bargaining team Friday and replaced them with negotiators willing to take a tougher bargaining stance with the company.
The change was made by four union leaders from Pittsburgh and Philadelphia who have been arguing that rank-and-file pilots want "change" and that union negotiators have been in power too long and have made too many concessions to US Airways.
The new chairman of the negotiating committee, Doug Mowery, is a former union leader from Philadelphia who tried unsuccessfully last month to replace union chairman Bill Pollock.
The change comes only weeks before the company is expected to approach the pilots about wide-ranging concessionary talks.
US Airways Chief Executive Officer David Siegel, who has said he needs to cut $1.5 billion from the carrier's expenses this year if US Airways is to survive, wants labor negotiations to begin this month and new labor agreements in place this summer.
Analysts said yesterday that the pilots might have made a bad decision. The airline needs "flexibility" and "cost cuts," Neidl said. "They don't have a lot of time. They have got to get cost structure down pretty quickly."
The pilots thus far are the only group that has agreed to discuss its contract with management, so their internal struggles represent a "setback," said local airline observer Bill Lauer. "I can see lots of things beginning to unravel if something can't be done with the unions in a reasonable amount of time."
The resistance of some union members appeared to stiffen Friday following reports that put Siegel's 2003 compensation in the $8 million to $9 million range and even higher.
But the vast majority of that amount represented stock options that have no value because of the stock's low price -- it closed yesterday at $3.89, almost half the level necessary to trigger the stock options -- and restricted stock that won't start vesting until January.
Siegel's cash compensation for 2003 was $698,890, including a base salary of $600,000.
In an open letter to US Airways employees yesterday, Chairman David Bronner argued that Siegel's pay package was less than what many airline CEOs made last year and less than what Siegel was originally offered to work at US Airways in 2002.
Defending Siegel, Bronner pointed out that the unions have four seats on US Airways' board and thus share responsibility for approving Siegel's pay package. What's more, Bronner argued, is that Siegel had "preserved almost 30,000 jobs" since spring 2002 and defied the experts predicting US Airways' demise.
"We are still here, and we don't have any intention of going away. But we must deal with the changing economics of the airline industry," Bronner said.
--------------------------------------------------------------------------------
(Dan Fitzpatrick can be reached at [email protected] or 412-263-1752
