- The Washington Times - Friday, August 20, 2004

Pilots for US Airways are continuing to negotiate this weekend over the Arlington airline’s demand for a 16.5 percent pay cut, despite a warning from management that negotiations should have concluded yesterday.

US Airways officials say another bankruptcy is nearly certain by the end of September unless they can substantially reduce labor expenses.

They also told the Air Line Pilots Association it should have reached a deal yesterday in order to give union members time to vote on the new contract.

US Airways faces a Sept. 15 deadline to pay about $130 million to its pension plans. It also must meet financial requirements of a $720 million federal loan guarantee by Sept. 30.

Airline officials said they would not discuss their labor negotiations until an agreement is reached.

“They’re scheduled to continue through the weekend,” spokesman David Castelveter said.

Both sides acknowledge that progress in the talks has been slow.

An agreement with the pilots union would be a significant step in US Airways’ goal of cutting costs by $1.5 billion a year, which would include $800 million in labor savings.

The airline is seeking $295 million over four years in concessions from pilots.

Negotiators for the pilots told their members this week that an agreement is “our last opportunity to control the fate of our airline and our careers.”

The airline also seeks most of the rest of its concessions from its flight attendants and mechanics.

Meanwhile, Standard & Poor’s, a major credit-rating service, yesterday downgraded its credit ratings on US Airways Group Inc. and its US Airways Inc. subsidiary, saying labor negotiations are not likely to be completed in time to avoid default on a federally guaranteed loan.

The corporate credit ratings fell deeper into “junk” status to “CCC” from “CCC-plus.” The rating service gives US Airways a negative outlook, indicating another downgrade is possible.

US Airways’ stock closed at $1.92 per share yesterday on the Nasdaq Composite Index, up 7.87 percent for the day but down by about a quarter of its value in just over a week.

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