US Airways Opens Dialogue With Pilots Union

In what could be a positive sign for both parties, US Airways and its pilots union began negotiations this week over less-restrictive and lower-paying contracts to fly its new regional jets. 
 
However, any cost-reducing concessions garnered from the pilots may not be enough to assist the struggling airline's finances. US Airways, the nation's seventh-largest airline, employs more than 7,300 in Pittsburgh and is the region's dominant carrier.

"It absolutely is a step in the right direction," Michael Boyd, an Evergreen, (CO)-based airline industry analyst told the Associated Press. "But let's remember, these jets are not a panacea."

US Airways views the regional jets as an essential piece of a plan that includes lowering its costs to better compete with discount carriers, such as Southwest Airlines and JetBlue. Those low-cost airlines have been rapidly encroaching on US Airways' key routes along the East Coast.

US Airways has said it expects to receive the first of 85 regional jets it ordered from Brazil-based aircraft manufacturer, Embraer, later this month. The more efficient, 70-seat airplanes will go a long way toward improving US Airways' bottom line, according to the airline, which was scheduled to report its 2003 year-end financial report on Feb. 6.

Mr. Boyd, president of The Boyd Group Inc., said US Airways needs at least another 150 regional jets to make its new business plan effective. In the meantime, ALPA, in a posting on a US Airways pilots' Web site, said its Master Executive Council has agreed to pay rates for pilots that would fly regional jets for MidAtlantic Airways -- US Airways' planned regional airline -- that are comparable to those paid at American Eagle, American Airlines' commuter division.

The union says those rates are significantly lower than those paid to US Airways' mainline pilots and are among the lowest in the regional airline industry. A mainline captain usually makes from $100 to $200 an hour flying US Airways' larger jets. A MidAtlantic captain likely would get from $50 to $60 an hour, according to ALPA spokesman Jack Stephan. In addition, the MEC -- ALPA's governing body -- said it will negotiate contract modifications regarding who will fly the new regional jets, the work rules that will pertain to those pilots and which US Airways' affiliated carriers will be responsible for the bulk of those flights.

Resolving those issues quickly could help ensure the planned launch of MidAtlantic next month. It was unclear how long negotiations might take or when a tentative agreement would be forwarded to union members for ratification.

ALPA's 12-member Master Executive Council said in the Web posting that it decided to open the negotiations "because of serious concerns" regarding regional jet financing "and other financial issues faced by the company." 
 
The decision comes as US Airways is working to meet a number of financial milestones required under the nearly $1 billion in federal loan guarantees it was granted last year by the Air Transportation Stabilization Board to help the airline emerge from Chapter 11 bankruptcy protection last March. It also follows months of tension between the pilots and the airline's top executives. In December, ALPA's leadership called for US Airways president and CEO David Siegel to step down.

ALPA previously agreed to more than $560 million in annual wage and benefit concessions. The International Association of Machinists also agreed to concessions totaling $205 million, while the Association of Flight Attendants agreed to more than $100 million.

US Airways spokesman David Castelveter said the airline will approach other labor unions for help with additional cost reductions, but declined to assign a dollar figure to what the airline will seek.

FMI:   www.usair.com, www.alpa.org