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US Airways Mechanics Reject Pay Cut
Baggage Handlers Vote for Wage Reduction
NEW YORK (Aug. 29) - Mechanics at US Airways Group Inc. rejected wage cuts sought by the bankrupt airline to help win full approval of a $900 million government loan guarantee, their union said early Thursday.
But 5,450 baggage handlers, represented by the same union, voted in favor of a separate but similar proposal that includes an 8 percent cut in wages.
US Airways, the sixth-largest airline, said it was extremely disappointed by the mechanics' vote.
''We now regrettably must pursue changes to the mechanics' contract through the bankruptcy court if we are unable to quickly reach a new agreement,'' David Siegel, US Airways chief executive, said in a prepared statement.
Arlington, Virginia-based US Airways has said it needs hefty wage cuts and other sacrifices from its employees to speed its restructuring under bankruptcy and win government-backed financing.
The airline recently stepped up the pressure when it asked a bankruptcy court judge to let it cancel current labor contracts with unions that did not agree to cheaper payouts by a certain date. New contracts that contain concessions, though, would be honored during the bankruptcy.
''I'm not certain what the company's going to do,'' said Joseph Tiberi, a spokesman for the union, the International Association of Machinists and Aerospace Workers (IAM). ''But bankruptcy is a long process and we are prepared to vigorously defend our members in bankruptcy court.''
Industry watchers are closely monitoring US Airways' struggle to secure concessions from its workers and stay financially aloft because UAL Corp.'s United Airlines, the second-biggest U.S. airline, is also sparring with its unions and teetering on the edge of bankruptcy.
LAST-DITCH EFFORTS
The IAM, which represents about 12,000 US Airways mechanics and baggage handlers, said 57 percent of the group of 6,800 mechanics rejected the proposal, which the airline handed to union representatives when it filed for bankruptcy more than two weeks ago.
The proposal called for wage cuts of about 7 percent for workers who earn more than $14.42 an hour, and pay freezes for others. It would have cut back on vacations, sick days and holidays, but could have set aside a seat on US Airways' board for a union representative.
Sixty-two percent of the baggage handlers accepted a separate package, which laid out expense reductions that will save US Airways about $65 million a year, Tiberi said.
Tiberi said the baggage handlers agreed to about 85 percent of the cost cuts US Airways requested from the group earlier this year. That level is similar to what the airline's pilots and flight attendants accepted.
US Airways has reached tentative labor agreements with its pilots, flight attendants and other smaller groups of unionized workers totaling more than $560 million in annual cost savings. Some of those deals were cut before the airline filed for Chapter 11 bankruptcy protection.
But mechanics and related workers, along with about 6,700 unionized communications and ticket counter workers, have taken longer in their negotiations with the company.
Before it filed for bankruptcy, US Airways applied to the federal Air Transportation Stabilization Board (ATSB) for government backing of 90 percent of a $1 billion loan to help save its operations.
The ATSB said its conditional approval of US Airways' application still stands despite the bankruptcy. But it said concessions from all of the airline's labor groups were needed before full approval would be granted.
US Airways also announced new ticketing policies and cut back on amenities on Tuesday, a controversial move it hopes will add tens of millions of dollars in desperately needed revenue.
But many industry experts slammed the decision as one that will alienate the very customers US Airways needs -- business travelers who pay hundreds of dollars extra for perks and travel flexibility.
Baggage Handlers Vote for Wage Reduction
NEW YORK (Aug. 29) - Mechanics at US Airways Group Inc. rejected wage cuts sought by the bankrupt airline to help win full approval of a $900 million government loan guarantee, their union said early Thursday.
But 5,450 baggage handlers, represented by the same union, voted in favor of a separate but similar proposal that includes an 8 percent cut in wages.
US Airways, the sixth-largest airline, said it was extremely disappointed by the mechanics' vote.
''We now regrettably must pursue changes to the mechanics' contract through the bankruptcy court if we are unable to quickly reach a new agreement,'' David Siegel, US Airways chief executive, said in a prepared statement.
Arlington, Virginia-based US Airways has said it needs hefty wage cuts and other sacrifices from its employees to speed its restructuring under bankruptcy and win government-backed financing.
The airline recently stepped up the pressure when it asked a bankruptcy court judge to let it cancel current labor contracts with unions that did not agree to cheaper payouts by a certain date. New contracts that contain concessions, though, would be honored during the bankruptcy.
''I'm not certain what the company's going to do,'' said Joseph Tiberi, a spokesman for the union, the International Association of Machinists and Aerospace Workers (IAM). ''But bankruptcy is a long process and we are prepared to vigorously defend our members in bankruptcy court.''
Industry watchers are closely monitoring US Airways' struggle to secure concessions from its workers and stay financially aloft because UAL Corp.'s United Airlines, the second-biggest U.S. airline, is also sparring with its unions and teetering on the edge of bankruptcy.
LAST-DITCH EFFORTS
The IAM, which represents about 12,000 US Airways mechanics and baggage handlers, said 57 percent of the group of 6,800 mechanics rejected the proposal, which the airline handed to union representatives when it filed for bankruptcy more than two weeks ago.
The proposal called for wage cuts of about 7 percent for workers who earn more than $14.42 an hour, and pay freezes for others. It would have cut back on vacations, sick days and holidays, but could have set aside a seat on US Airways' board for a union representative.
Sixty-two percent of the baggage handlers accepted a separate package, which laid out expense reductions that will save US Airways about $65 million a year, Tiberi said.
Tiberi said the baggage handlers agreed to about 85 percent of the cost cuts US Airways requested from the group earlier this year. That level is similar to what the airline's pilots and flight attendants accepted.
US Airways has reached tentative labor agreements with its pilots, flight attendants and other smaller groups of unionized workers totaling more than $560 million in annual cost savings. Some of those deals were cut before the airline filed for Chapter 11 bankruptcy protection.
But mechanics and related workers, along with about 6,700 unionized communications and ticket counter workers, have taken longer in their negotiations with the company.
Before it filed for bankruptcy, US Airways applied to the federal Air Transportation Stabilization Board (ATSB) for government backing of 90 percent of a $1 billion loan to help save its operations.
The ATSB said its conditional approval of US Airways' application still stands despite the bankruptcy. But it said concessions from all of the airline's labor groups were needed before full approval would be granted.
US Airways also announced new ticketing policies and cut back on amenities on Tuesday, a controversial move it hopes will add tens of millions of dollars in desperately needed revenue.
But many industry experts slammed the decision as one that will alienate the very customers US Airways needs -- business travelers who pay hundreds of dollars extra for perks and travel flexibility.
