US Airways, Pilots Agree on More Issues, Union Says
US Airways Group Inc. and pilots negotiating a labor contract on Tuesday agreed on additional important issues, the union said, raising the likelihood of a tentative agreement that would enable the airline to confirm a 400-plane order from Airbus Industrie.
Negotiators for the pilots said they and the company agreed on early-retirement packages for 300 pilots based on seniority and that the company agreed to allow 386 pilots furloughed over the last several years to return to their jobs.
Air Line Pilots Assn. negotiators also reached agreement with the company on operation of a new US Airways low-cost, low-fare carrier known as US2, with pilots agreeing to devote 23% of their flying time to US2 for lower pay. In addition, the company agreed to job protection in the case of outsourcing or if the airline is acquired, a pilots union spokesman said.
The two sides were still negotiating late Tuesday on profit-sharing or stock options for pilots, said ALPA spokesman Mike Oakey, who declined to provide details. Pilots were initially looking for $900 million in preferred stock in return for wage concessions, said Vivian Lee, an Alex. Brown analyst.
Whether the 4,800 pilots represented by the union will gain a seat on the company’s board also remains at issue, Oakey said.
Arlington, Va.-based US Airways declined to comment on the tentative agreement or on the status of the talks. The company’s stock closed down $1.56 at $41.13 on the New York Stock Exchange.
Tentative agreement on these sections of the contract will now be reviewed by ALPA’s master executive council, which convened in Washington on Monday. If the union approves an entire contract, it will be sent to members for a vote. Council rules call for a seven-day waiting period unless two-thirds of its members waive its enforcement.
Approval of a full tentative agreement by the master council would be sufficient to allow US Airways to confirm a pending $14-billion Airbus Industrie order for 400 planes, Oakey said, citing a statement by Rakesh Gangwal, US Airways president and chief operating officer. Previously, the company had said it would need final approval of the contract by all union members Tuesday.
The Airbus order has been hanging in the balance as the company and the union inched closer to a deadline Tuesday for confirming the order, which the airline said was contingent on lowering its labor costs. US Airways’ labor costs are the highest in the industry, with pilot costs making up the bulk of those labor expenses, the company says.
If the Airbus order is confirmed, US Airways management has promised employees that the airline will adopt an expansion plan that will allow it to grow over the next five years at a rate at least 20% greater than the industry’s four leading companies.
The Airbus order would include 400 Airbus narrow-body airplanes in the A-320 family of aircraft, which have up to 150 seats each.
The company says the confirmation will secure delivery of 120 planes, though shipping of them won’t begin until 1999 at the earliest, and will firm up the company’s commitment to buy another 120 planes and maintain an option on the remaining 160 aircraft.
US Airways Group lost $2.7 billion from 1990 to 1996 but has improved profits under Stephen Wolf, the company’s chief executive and chairman, who came on board in January 1996.
