US Airways could go to court to institute pay cuts

By Barbara De Lollis, USA TODAY

Trying to dissipate the skepticism of outsiders about US Airways' future, CEO Bruce Lakefield told employees late Wednesday that he intends to seek court-imposed pay cuts Friday.

Unless unions approve emergency pay cuts Thursday, Lakefield said, the airline will ask the bankruptcy court to allow management to implement them. He didn't specify the amounts. The airline would have to argue its case for emergency relief.

"If we were to do nothing during the traditionally slow fall and winter months, the drain on our cash reserves would jeopardize the company's future and everyone's job," Lakefield said in a letter to employees.

The Arlington, Va.-based carrier is seeking payroll relief from all unions that have not yet reached concessions pacts with it. So far, only one group of about 150 flight dispatchers has reached a tentative agreement.

Lakefield released his letter hours after US Airways' pilot leaders voted unanimously to restart concessions talks with the company. Emergency pay cuts approved by the bankruptcy court wouldn't preclude longer-term negotiated concessions.

The USA's No. 7 airline filed Sept. 12 for reorganization under bankruptcy-court protection, its second such filing in 25 months.

The new filing followed management's failure to secure $800 million in annual pay and benefit cuts and work-rule changes from its labor groups. During the first bankruptcy reorganization, US Airways employees conceded $1.2 billion annually.

Wednesday, the 12-member pilots council voted to drop restrictions on their negotiators that effectively stifled earlier negotiations. Negotiators now have "renewed momentum," pilots spokesman Jack Stephan says.

The about-face, however, may come too late to give pilots much bargaining power with management.

The airline is now seeking cuts of as much as $436 million a year through 2009 instead of the initial goal of $295 million through 2008.

The latest management proposal seeks 19.5% pay cuts and cuts in some pilots' seniority, which would mean less job protection and less preference in scheduling.

The pilots aren't surprised that the company is seeking deeper cuts, Stephan says. Operating in bankruptcy costs more, and the company's turnaround plan had erroneously assumed concessions from all unions would be in place by Sept. 30. Furthermore, the company desperately needs to conserve cash because it can't get fresh financing from outsiders.

In his message, Lakefield said he still prefers to reach consensual agreements with unions. He called the decision a "difficult, but necessary" one crucial to keep customers' business.

"We want to be certain that passengers feel confident continuing to book on us," Lakefield said.



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