From the July 26, 2002 Charlotte Observer:
UNIONS CAN SINK US AIRWAYS WITHOUT AGREEMENTS FROM ALL ITS UNIONS, AIRLINE'S FUTURE IS BLEAK
In recent days US Airways has made much progress toward ensuring that it will have a future. It has reached tentative contract restructuring agreements with its pilots, flight attendants and the Transport Workers Union, which represents the dispatchers, simulator engineers and flight crew training instructors, and with subsidiary PSA Airlines' pilots and flight attendants.
The International Association of Machinists (IAM) unit representing mechanics is close to a deal, and the IAM Fleet Service negotiators are making good progress.
But that's not enough.
The Communication Workers of America (CWA), which represents customer service and reservation agents, remains far from agreement with the company.
US Airways is on the brink of court-ordered bankruptcy because its situation is "unsustainable." Failure to improve the situation will have devastating effects on employees, customers and companies that depend on US Airways.
The airline has received a "conditional" federal loan guarantee approval, but can't use those funds unless it gets restructuring agreements with all labor groups, in accordance with the business plan submitted to the Air Transportation Stabilization Board (ATSB).
Needed for loan guarantees
Major obstacles remain in the way of a voluntary restructuring.
US Airways may not be able to reach agreements with lenders without tentative agreements with the remaining unions. Unless it has those agreements the company wouldn't get final ATSB loan guarantee approval, government sources believe.
How bad is the situation? The carrier continues to burn cash during what is historically the best-performing time of year. Ten months after Sept. 11, US Airways has not resolved its cost problems, the economy remains sluggish, revenue is off 20 percent and low-cost competitors are aggressively attacking its market share. The industry has not recovered as expected. Domestic fares are at 15-year lows. Shifts in buying patterns and travel options indicate airlines may never get the revenue per available seat mile
they previously enjoyed.
Disturbing reports
US Airways needs restructuring agreements for either a voluntary restructuring or successful bankruptcy reorganization. If the company gets union concessions and qualifies for government financing, then if it's forced into bankruptcy, it probably could get in and out of bankruptcy quickly.
What's disturbing are reports that the CWA leadership is misleading its members. Last Friday, company negotiators asked the union to meet, to try and resolve their differences. The union said its negotiators couldn't meet, but its advisers would be available. However, I'm told that when management tried to schedule a meeting, they were told the advisers had other commitments. Meanwhile, the CWA issued a report telling its members the company met with the advisers last weekend - which management disputes.
Brinkmanship by any union could push the airline into bankruptcy. It's disappointing to see a relatively small group of employees risk the destruction of a viable company, with a devastating effect on 40,000 employees and their families.
No one can be sure what will happen in bankruptcy, but it's certain that if the company reorganizes and successfully comes out of bankruptcy, the labor groups that don't have tentative agreements with the company prior to bankruptcy will lose.
As in other union negotiations, the parties that reach savings targeted in the business plan will get a bankruptcy protection letter, which protects against even deeper salary and benefit cuts if the company enters bankruptcy.
Some may face pay cuts
If the company files for bankruptcy, workers in labor groups without that bankruptcy protection letter may face deep cuts in pay and benefits, loss of unused sick and vacation time, slashed retirement benefits and a crash in the value of common stock in 401(k) accounts. In addition, they'll work for a smaller airline that will hand out layoff notices at once with no severance pay, and will pay members of unprotected unions significantly less.
Each day the company moves nearer bankruptcy. New chief executive officer David Siegel has brought a breath of fresh air to management. US Airways' best chance to survive is for unions and creditors to bet on him and his team. Employees wanting to keep their jobs must impress upon union rank-and-file employees the importance of ordering union leaders back to the bargaining table at once, to reach an agreement that is 85 percent of the targeted concessions.
The choice is simple: Either all stakeholders move past their anger, frustration and denial to obtain and ratify restructuring agreements, or the carrier will almost certainly enter bankruptcy.
History has shown only two major airlines have successfully restructured in bankruptcy - not good odds for this company to continue operation.
Chip Munn is a US Airways captain
