Washington Post, August 14, 2004, Saturday

Copyright 2004 The Washington Post

The Washington Post

August 14, 2004 Saturday
Final Edition

SECTION: Financial; E01


HEADLINE: US Airways Management Frustrated With Unions

BYLINE: Sara Kehaulani Goo, Washington Post Staff Writer

BODY:
US Airways Group Inc. chief executive Bruce R. Lakefield blasted labor unions yesterday for "wasting time" in talks to agree to a new round of pay cuts as the company begins a countdown to a second bankruptcy filing and possible liquidation.
One day after a report about the company's dire financial condition became public, Lakefield used the opportunity to express his frustration with the pace of negotiations in a voice mail broadcast to all employees. The company is seeking $1.5 billion in cuts, including $800 million in savings from its labor unions. The airline's pilots said they would accelerate talks to reach their $295 million piece of the cuts, but other unions have not agreed to begin talks with the company.
US Airways shares fell 56 cents, or 22 percent, yesterday to close at $1.98.
"People are trying to tell me that the pace of this negotiation is typical in the airline business and that I shouldn't get frustrated," Lakefield told employees. "As a newcomer to the industry, however, I can tell you I think it's silly we are wasting so much time when we could be working together to fight off the competition."
A report prepared by consultants to the pilots union in July but obtained by news media on Thursday said the company will "fail in the immediately foreseeable future" and predicted 180 to 270 days left of operation if it does not drastically reduce costs. The report, by Glanzer & Co., predicted that US Airways would file for bankruptcy by Sept. 15 without a new labor agreement.
Officials at unions representing the company's pilots, flight attendants, mechanics and gate agents did not return requests for comment yesterday. The Association of Flight Attendants posted its counteroffer to the company on its Web site Thursday evening.
Lakefield's comments left little doubt that the airline and its unions remain far apart. The union representing mechanics will not meet with the company until Aug. 31, he said. After meeting with the pilots union this week, Lakefield said he "remain[s] astounded" that some employees believe he has developed a scheme that will allow the company's biggest investor, the Retirement Systems of Alabama, to benefit financially from a new bankruptcy filing.
He also sounded annoyed by what he said were continuing questions by union leaders and employees about why the company could not guarantee profit-sharing benefits if the company files for Chapter 11. "The answer is pretty simple," he said in his message yesterday. "If we file for Chapter 11 protection, nothing, and I repeat, nothing can be guaranteed -- especially a profit-sharing plan."
The apparent suspicion that labor leaders and employees have toward US Airways' management is typical for the airline industry these days -- particularly for older carriers in financial trouble, said Kate Bronfenbrenner, director of labor education research at Cornell University. Employees at major carriers like American, United and Delta have been asked for numerous pay cuts in the past several years while executives who can't turn around the companies have resigned with multimillion-dollar pay packages.
"This is an employer coming into a situation where workers have been burned over and over again," Bronfenbrenner said. "They have good reason to be leery, to tread carefully and to make sure they don't agree to give concessions. For all they know, the problems are being exaggerated in part."