US Airways Asks Out Of Labor Contracts
Firm Seeks Bankruptcy Court's Consent

By Keith L. Alexander
Washington Post Staff Writer
Tuesday, August 27, 2002; Page E03

US Airways yesterday asked the bankruptcy court for permission to nullify labor contracts that cover more than 19,000 employees.

The Arlington-based airline sought to be released from contracts with unions that have not agreed to a cost-reduction agreement with the ailing carrier. A U.S. Bankruptcy Court hearing on the matter has been scheduled for Sept. 10 in Alexandria.

US Airways officials have said for weeks that if they can't obtain concessions from unions, they will seek to get out of labor contracts using the bankruptcy process.

US Airways has not reached new cost-reduction agreements with 7,200 reservation and airport ticket-counter agents represented by the Communications Workers of America. The airline is seeking about $70 million a year in wage concessions from those employees. US Airways also hasn't reached agreements with its 12,000 baggage handlers and mechanics, represented by the International Association of Machinists and Aerospace Workers. But members of that union were expected to vote on an airline proposal tomorrow. The airline is seeking $219 million a year in savings from the machinists.

Machinists spokesman Joe Tiberi said US Airways' request to be released from the existing contracts was "expected." He said that if the machinists rejected the agreement, union leaders were "prepared to defend our members and their agreement in court."

US Airways -- which lost nearly $2 billion last year -- is seeking to reduce its annual labor costs by nearly $1 billion in hopes of securing a $900 million federal loan guarantee and emerge from bankruptcy early next year.

Yesterday, the airline announced that it reached a new agreement with its flight dispatchers and simulator engineers, represented by the Transport Workers Union. The nation's seventh-largest carrier has already secured more than $550 million in concessions from its pilots and its flight attendants. And it has also reached a tentative agreement with its flight crew training instructors.

Separately, United Airlines -- the nation's No. 2 carrier -- said it planned to file an amended application by Sept. 16 for $1.8 billion in loan guarantees.

In a message to employees yesterday, United's chief executive, John W. Creighton Jr., said the airline also planned to inform its various union leaders by the end of the week how much the airline is seeking in wage concessions. Unlike US Airways, United has not communicated specific cost-reduction figures to its employees.

United said on Aug. 14 that it might have to file for Chapter 11 bankruptcy protection this fall if it did not reach steep cost-saving agreements within 30 days with its employees, vendors and lessors. United executives have said their original loan guarantee application, filed in June, was likely to be rejected without significant wage concessions.