Pilots union leaders decline to allow vote on US Airways

Matthew Barakat

Tuesday, Sept. 7, 2004 | 9 a.m.

ARLINGTON, Va. -- US Airways Group Inc.'s shares tumbled nearly 9 percent in early trading today after union leaders representing US Airways pilots rejected sending a management contract proposal to members for possible ratification.

US Airways has warned that a bankruptcy filing could be imminent in the coming weeks if it cannot cut new labor deals with its unions.

The Master Executive Council of the Air Line Pilots Association met off and on over the Labor Day weekend to discuss its options. The council adjourned at about 10:30 p.m. Monday after voting against putting the company's proposal to a vote.

"At this time it is uncertain as to whether or not discussions will continue between ALPA and the company," union spokesman Jack Stephan said in an e-mail.

US Airways, which emerged from bankruptcy protection just one year ago, says it needs to cut costs by $1.5 billion a year to avoid a return to bankruptcy and possible liquidation. The company is seeking about $800 million in labor cuts, including $295 million a year from pilots.

US Airways spokesman David Castelveter said today, "We are profoundly disappointed that the actions of a few prevent our pilots from making their own decisions. Nevertheless, we remain firmly committed to reaching an agreement that is responsive to our pilot's needs, but also meets our required financial target."

In early trading on the Nasdaq Stock Market, US Airways shares were down 21 cents at $2.14.

Stephan said representatives from Pittsburgh and Philadelphia combined to defeat the proposal to send a new contract out for vote. While Pittsburgh and Philadelphia representatives are a minority on the union's Master Executive Council, they represent a majority of US Airways pilots and therefore can control any union vote.

The Pittsburgh and Philadelphia representatives have generally taken a tougher stance throughout the negotiations. Pittsburgh representative Fred Freshwater said last week that pilots who have contacted him strongly support a tough negotiating stance.

Negotiations with the union included a proposal by management that would cut pay by as much as 35 percent and contributions to a 401(k)-style retirement plan by as much as 30 percent, according to sources familiar with the discussions.

So far, none of the airline's unions have reached agreement on a new labor deal. While other unions, including flight attendants, are in negotiations, the machinists' union has refused to enter talks on a new labor contract.