Union rejects U.S. Airways' motion for relief from labor costs

By Jeff Pines

Washington, Oct. 6 - U.S. Airways Inc.'s official request to the court to cut its labor costs by $38 million per month should be rejected, the International Association of Machinists and Aerospace Workers said.

The union filed its response to the airline's request with the U.S. Bankruptcy Court for the Eastern District of Virginia Tuesday.

Management said it needs the contract cuts now to prevent massive financial turbulence in February. According to the company, aircraft debt and lease payments along with less traffic in the winter months would leave the company cash starved.

IAM's members have already agreed to $1.8 billion in concessions over six years, and U.S. Airways' motion, filed last month, fails to mention that, the union said.

Add the newly requested labor savings onto the $1.8 billion in savings and IAM's members will take a 30% cut, it said.

"Exacerbating the employees' situation is the fact that the debtors are seeking authority (which the IAM vigorously opposes) to default on their legally mandated pension contributions, thereby placing the stability of employees' pensions at risk," the union said.

Management's plan relies on cutting labor costs, hoarding cash and making only token non-labor reductions, the IAM said.

From the union's perspective, the airline's plan ignores the failure of previous plans, which also have relied on lower wages and benefits for workers.

The help the airline wants legally requires it to be essential to the company continuing as a business, but the IAM said U.S. Airways has enough cash to last it until January.

The airline's other proposal to stop making payments to the IAM pension plan and reducing 401(k) contributions should also be denied because management is asking for a permanent reduction and not a temporary change. It said Chapter 11 should not be used to make permanent changes to the collective bargaining agreement.

A hearing is scheduled for Thursday.

U.S. Airways filed for bankruptcy on Sept. 12. Its Chapter 11 case number is 04-13819.

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