GuppyPuppy said:
. . . Where it will get really sticky is with the other unions whose workers are not paid as much. . . .
Here's an interesting response from IAM:
US Airways' Machinists Union Won't Discuss More Givebacks
Thursday August 19, 3:44 PM EDT
CHICAGO (Dow Jones)--The machinists union at US Airways Inc. (UAIR) won't discuss further contract concessions despite comments from the company's chief executive that the airline could be liquidated.
"We will meet with the company on Aug. 31," said Joe Tiberi, of the International Association of Machinists and Aerospace Workers.
The union continues to believe the burden is on management to cut operating costs, he said. "We can show them how to save $80 to $100 million by operating more efficiently," he said, but that won't include cuts in machinists' wages or benefits.
US Airways' Chairman David Bronner said in interviews Wednesday that the financially-strapped airline faces bankruptcy or liquidation if employees don't agree to wage and benefit cuts of $800 million within 30 days. That would include givebacks of $263 million from the machinists.
Four unions, representing 28,000 employees at the nation's sixth-largest airline, made $1 billion in concessions last year. That allowed US Airways, then in Chapter 11 bankruptcy, to reorganize its finances.
The Air Line Pilots Association and the Association of Flight Attendants unions now are in talks with the airline for another round of cuts. But the IAM and the Communications Workers of America, representing other ground workers, have been reluctant to talk about concessions.
"I think there's going to be a lot of saber-rattling before Sept. 30," said Bill Warlick, an airline analyst in Chicago with Fitch Ratings. That's the date when US Airways must pay $720 million in federal loan guarantees.
The airline is seeking to defer about half of a $130 million pension contribution payment due on Sept. 15.
Analyst Ray Neidl at Blaylock & Partners said he now sees a more than 50% chance that US Airways will return to bankruptcy court. "Time is running very short," he said.
Without additional financing, the airline won't be able to make the Sept. 30 payment. Retirement Systems of Alabama, a state pension fund headed by Bronner, took a $240 million controlling stake in US Airways to help it emerge from Chapter 11 in 2003. But Bronner said the fund won't contribute more money now to bail out the airline unless the unions make concessions.
With cost-cutting in place, the airline should be able to attract new investors, Neidl said. But US Airways must show that it can compete with successful low-cost rivals.
Warlick said it is likely that, once the pilots settle on a new contract, the other work groups will follow suit.
But Tiberi, from the machinists' union, said his group isn't concerned with the position of other unions. "We are listening to our members," he said. In fact, the IAM, which has lost members to the Aircraft Mechanics Fraternal Association, a rival union, is flexing its muscles for members, analysts said.
Analyst Warlick said he isn't worried that the airline faces liquidation any time soon. "The company had $975 million in cash and short-term investments at the end of June. That's about 15% of their total revenues," Warlick said, not enough money to avoid bankruptcy, but adequate to support a lengthy stay in Chapter 11.
Analysts said the competitive landscape won't change much if US Airways goes into Chapter 11. "It probably wouldn't have much effect on the market unless US Airways made dramatic cuts in its operations," Neidl said.
A spokesman from US Airways couldn't immediately be reached for comment on this story.
-By Ann Keeton, Dow Jones Newswires; 312-750-4120;
[email protected]
Corrected August 19, 2004 15:53 ET (19:53 GMT)
David Bronner is chairman of US Airways Group Inc. (UAIR).
(In an item timed 3:44 p.m. EDT, Bronner was incorrectly identified as the company's chief executive.)
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