US Airways judge to toss out contract

[Sy-bill]

Easier to read.


Reuters
Judge to Let U.S. Airways Toss Contract
Thursday January 6, 11:20 am ET

ALEXANDRIA, Va. (Reuters) - A bankruptcy judge on Thursday approved a bid by US Airways to throw out the contract covering machinists if the group fails to approve a package of concessions now up for a vote.


Judge Stephen Mitchell also permitted the airline to terminate pension plans covering the machinists and flight attendants to save more money at the No. 7 U.S. airline.

The twin rulings will help ensure the company's plan to save nearly $1 billion in labor costs it says it must have immediately to survive past mid-January.

But Mitchell said there were "grave questions" whether US Airways could successfully emerge from its second trip through Chapter 11 bankruptcy protection in two years, even with the savings from labor groups.

After the hearing, US Airways Chief Executive Officer Bruce Lakefield told reporters "the judge accurately described what we're going through" and Lakefield pledged to move forward on reorganization.

Angry machinists confronted Lakefield outside the courthouse, demanding to know what pay cut the CEO would take.

US Airways announced prior to Mitchell's ruling that the machinists' union would send the company's last offer to its membership for a vote, and that tally would likely be completed within two weeks.

The company's proposal would total more than $300 million in pay and pension givebacks as part of its drive for nearly $1 billion in savings from all labor groups. The airline says it needs the cuts immediately to avoid liquidation within weeks.

Acceptance of the plan would supersede Mitchell's order.

Mitchell said US Airways met the test to terminate collective bargaining agreements because the unions had presented no evidence that the savings proposed were not necessary.

The company has also wanted to impose outsourcing provisions that could cost the mechanics roughly half their jobs.

"Which is worse, half the mechanics lose their jobs or all of the mechanics lose their jobs," Mitchell said.

 

[Sy-bill]

Turn off the lights, the parties over.

Very, very sad indeed.

 

[On Your Six]

With SWA entering PIT and AirTran potentially entering CLT, lowering the bar on salaries/benefits will not help an already sinking USAirways and instead be detrimental to the industry as a whole... Let's see if the machinists have the ball$ they claim to have...

 

[dlredline]

Turn off the lights, the parties over.

Very, very sad indeed.

Maybe, but not quite yet. The judge made his ruling pending the outcome of the IAM vote (2 weeks). USAirways is having IAM vote on it's last table offer as a new contract. If IAM votes in favor of this "last offer", then that's their contract, the judge nullifies his ruling, and USAirways moves on to it's next crisis. If they vote it down, USAirways can impose any contract language they deem necessary (pending court approval), and then the legal manuevers begin (RLA implications, strike legality, etc). Questions to ask:

1. Will the ATSB and GE allow USAirways the additional time necessary for IAM to complete it's "last offer" vote (Jan. 15th deadline)?
2. What recommendation will the IAM MEC give to its membership regarding this "last offer"?
3. How peeved will IAM be regarding today's other ruling, namely the termination of their pension (along with AFAs)?
4. And the biggy: If the IAM votes the "last offer" down, and has a contract imposed upon its membership, what reaction (strike, walkout, slowdown, etc) will it choose, even if its legality is challenged in court.

The next 2 weeks will be defining for the future of USAirways.

Red

 

[-9Capt]

AirTran potentially entering CLT,...

6,
Where did you hear this?

 

[Heavy Set]

Yeah, where did you hear that? What about Airtran going to DFW? Who will take those gates? I doubt SW, since they will be busy with PHL, MDW, and now PIT. Who has the ballz to go to DFW and take on AA?

 

[Joe Peeoznotz]

6,
Where did you hear this?

AirTran will go where ever the holdup money is the highest.

 

[Bill Nelson]

AirTran potentially entering CLT

They will be standing behind SWA for the gates. Money talks and SWA will get the gates they want. Unfortunate for AirTran but that is how the game is played.

AirTran made a hugh mistake in my opinion over the Midway deal. When you are playing poker, you never give your hand away. AirTran showed its hand by letting SWA know that they weren't afraid of going head to head. This could prove fatal because SWA will do everything in its power to not let AirTran get a foothold in any major markets that SWA serves. (which in 2005 pretty much includes the entire US) AirTran is going to have to take less than desirable airports for its expansion (DFW etc). They may can pick up a few gates here and there, but they won't get a major operation up and going at any place SWA has an eye on. Mark my words on that. That has been shown recently at MDW.

SWA is only 17% leveraged on its assets and has $2.5B cash on hand to cherry pick the entire countrys airports and assets in BK court. It will use the next 2 years or so to grow 30% and will dominate for the next 30 years or so based on its growth the next two.

 

[TexaSWA]

Who has the ballz to go to DFW and take on AA?

The unnamed LCC has publicly admitted that it is SWA (unrestricted by Wright) that they are afraid to take on, even though they would be competing from different airports.

This is what has the DFW board so upset.

 

[Weasil]

posted on thehub.usairways.com today.

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]US Airways announced today that the International Association of Machinists and Aerospace Workers (IAM) has agreed to put out for separate ratification votes revised company proposals on new labor agreements for the mechanic and related, fleet service, and maintenance training specialist workgroups. The IAM has agreed to complete the ratification votes by Friday, Jan. 21, 2005.[/font] [font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Earlier today, Judge Stephen S. Mitchell of the U.S. Bankruptcy Court for the eastern district of Virginia ruled in favor of the company’s request to reject the IAM’s current collective bargaining agreements and to permit termination of the company’s three mainline defined benefit plans.
US Airways will delay implementation of the court ruling as applied to the IAM collective bargaining agreements until after the ratification process has been completed, in the hope that all proposals will be ratified. The company will, however, proceed with respect to the court’s granted relief that involves termination of the three mainline defined benefit pension plans, and will start working with the Pension Benefit Guarantee Corp. to begin the orderly transfer of the plans.[/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]The company had pending before the court a motion for permanent relief from the existing labor agreements with the IAM, as well as for relief with respect to retiree medical benefits and termination of the mainline defined benefit plans. All other US Airways workgroups – the Air Line Pilots Association (ALPA), the Association of Flight Attendants (AFA), the Communications Workers of America (CWA), and three units of the Transport Workers Union (TWU) – had ratified new labor agreements and were no longer included in the company’s request. In addition, the company reached settlements with current retirees and the IAM concerning the relief it had sought for retiree medical benefits.[/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]The company said that it was hopeful of ratification of all three IAM proposals. “We have worked very hard to craft alternative proposals that still meet the company’s cost savings targets, but preserve jobs and pay as much as possible,” said Jerry Glass, senior vice president - employee relations. “Regrettably, we cannot save every job and every function, and these employees, like all other workgroups, must share in the changes that the company needs to make. But we are quite hopeful that our employees will see these proposals as viable alternatives, and they will quickly be ratified.”

Glass said that the IAM will be providing its members a detailed analysis of the proposals, but among the key provisions:

Mechanics & Related workgroup:[/font]

• [font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Pay rates for mechanics would be significantly better than the current pay that reflects a 21 percent temporary cut[/font]
• [font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Heavy maintenance on Airbus narrowbody aircraft will be brought in-house and certain Boeing 737 work will continue to be done in-house. Widebody heavy maintenance and other work to be specified, including some Boeing 737 inspection activity, will be done using outside maintenance vendors[/font]
• [font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Base maintenance will continue to be performed in Charlotte, N.C., and Pittsburgh[/font]
• [font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Line maintenance positions will increase with anticipated schedule changes in 2005[/font]
• [font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Utility classification and certain utility positions will be preserved at base maintenance facilities only, with other utility and cleaning services to be outsourced[/font]
• [font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]IAM employees displaced by outsourcing will be offered existing and future fleet service positions[/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Fleet Service workgroup:[/font]

• [font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Pay rates for fleet service employees at hubs and major stations would be significantly better than the current pay that reflects a 21 percent temporary pay reduction[/font]
• [font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Most existing fleet service work will be preserved[/font]
• [font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]A majority of scope provisions will remain unchanged except the right to outsource fleet work at the smaller cities and a second-tier pay scale for medium-sized cities[/font]
• [font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Continuation in the pre-existing IAM multi-employer national pension plan at unreduced levels[/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]Overall, these three workgroups include approximately 8,500 employees. If the agreements are ratified and implemented, the company said that the majority of IAM jobs will be preserved.
“We need the support and participation of our employees to complete our transformation into a competitive airline,” said Glass. “The announcements by other airlines this week further underscore the rapid changes that are taking place. I believe our employees understand the gravity of the situation, and will support these proposals as the best way to send a message to our customers and the financial community that we are united in our efforts to be successful.”[/font]

[font=Arial,Helvetica,Geneva,Swiss,SunSans-Regular]

​

[/font]

 

[SWA/FO]

Bill,

I agree 100% on your above post. SWA is watching AirTran closely.

 

[350DRIVER]

As bad as it sounds I think the end may be getting that much closer.. One cannot keep accepting cut after cut and benefit loss after benefit loss, soon I think the majority may say enough is enough. I wish all the Airways folks much luck and good fortune during these very trying times.

3 5 0

 

[Lear70]

As bad as it sounds I think the end may be getting that much closer.. One cannot keep accepting cut after cut and benefit loss after benefit loss, soon I think the majority may say enough is enough.

Doubtful.

Let's say that you're right, and the machinists say "no", then their contract is scrapped altogether anyway. Then let's say they further say "no", and proceed to wildcat strike. The court orders them back to work within 24 hours and they STILL say no. Well, then that's the end of US and 8,500 workers now have no job (not to mention having been found in criminal contempt of a court order on their record).

WHERE ARE THEY GOING TO GO? ALL 8,500 OF THEM?

Put yourself in that position, with a wife and a child or two (or three or four...) to support, with the highest unemployment rate in the aviation industry in the history of the world, United about to do the same thing, Delta looking green at the gills (still), and CAL starting to cry "concessions" as well, and where would YOU be thinking you could land with a job to pay the mortgage, feed the kids, and keep the whole thing together?

My betting money is on them taking the agreement, controlling their fate, and hoping for the best; in an economy where they would be absorbed by other airlines I'd agree with you, but I simply don't believe that's the case here.

I agree, the next two weeks will be "interesting", and not in a good way. Remember the ancient Chinese blessing/curse, "May you live in INTERESTING times."