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The tentative agreement means 4,800 pilots would take pay cuts of about 26 percent. Pilots will vote on the proposal no later than Aug. 8.
By STEVE HUETTEL, Times Staff Writer
© St. Petersburg Times, published July 15, 2002
US Airways has struck a tentative deal with its pilots union that would reduce annual labor expenses by $465-million, the biggest piece of a cost-cutting plan critical to the struggling airline's future.
The agreement reached late Saturday means 4,800 pilots would take pay cuts of about 26 percent, wiping out two raises since May 2001, said Roy Freundlich, spokesman for the Airline Pilots Association. Pilots will vote on the proposed, 6 1/2-year deal no later than Aug. 8.
US Airways needs a $900-million federal loan guarantee to overhaul operations and buy hundreds of money-saving small jets. The Air Transportation Stabilization Board gave conditional approval last week but said the airline had to nail down concessions from unions before receiving the guarantees.
"This landmark agreement will contribute significantly to the revival of US Airways and will protect the core priorities of the company and of ALPA's rank and file," said Jerry Glass, the airline's senior vice president of employee relations, in a prepared statement.
In return for pay and benefit reductions, the pilots would receive nearly 20 percent of US Airways stock and a seat on the governing board.
One of the last, stickiest issues was removing a no-furlough clause for pilots hired before 1998, Freundlich said.
Because US Airways hired virtually no pilots from 1991 to 1998, hundreds of pilots with 12 years or more at the airline could lose their jobs if executives reduce the size of the fleet, he said. Nearly 1,100 pilots were laid off after the Sept. 11 terrorist attacks.
"We got the best deal we could," Freundlich said. "But no one is happy with the job security position."
Clearly, all labor groups feel the pressure of US Airways' precarious financial position.
The nation's No. 7 carrier and third-largest at Tampa International Airport, US Airways lost nearly $2-billion in 2001 and $286-million for the first three months of this year.
Chief executive David Siegel said in May that the company had to cut nearly $1.3-billion in annual expenses to qualify for the loan guarantees. The lion's share -- $950-million -- was to come from employees. Without the concession, he said, US Airways would likely be forced to reorganize in bankruptcy court.
The pilot deal is the second tentative agreement with a major labor group. The Association of Flight Attendants approved a deal to cut $77-million in annual salaries and benefits, about 85 percent of what the company initially said it needed.
Likewise, the company ended up reducing its original request to the pilots -- $595-million a year over seven years -- by 22 percent.
Unions representing mechanics and related workers, fleet service and customer service employees are still in talks with the airline.
US Airways pilots earn from $36,000 a year for a new first officer flying the smallest planes to as much as $278,868 for the captain of a twin-aisle A-330, according to a salary survey by Air Inc., a pilot career consulting firm in Atlanta.
Mike Sorbie, a 12-year first officer who lives in the East Lake area of Pinellas County, said the pay cut would make him consider selling his house. And his low seniority means he'd be the 23rd pilot laid off without furlough protection.
Still, Sorbie said, the deal is US Airways' only chance to stay out of bankruptcy court. "As (US Airways chairman) Stephen Wolf said, 'We are where we are.' "