- The Washington Times - Thursday, October 21, 2004

US Airways’ pilots voted to approve a new labor agreement yesterday that will reduce their salaries by 18 percent but will save the airline $300 million a year.

The contract gives US Airways many of the concessions it says it needs to survive.

“Our pilots have demonstrated their leadership in working with us as we transform US Airways into a successful and competitive airline,” US Airways said. “We appreciate their thoughtful and careful consideration of the very difficult issues that will soon confront virtually every one of our legacy competitors as well.”

US Airways is following a “transformation plan” to change the airline into a low-cost carrier, which operates with more flexible schedules and routes. Until now, it has operated more like a legacy carrier, which refers to large airlines that operate with hub-and-spoke routing and scheduling systems.

Despite the new agreement with the pilots, industry analysts say US Airways has other obstacles to overcome.

“Labor cuts alone are not going to ensure the long-term survival of this carrier,” said Bill Warlick, airline industry analyst for Fitch Ratings, a credit-rating service. “There are other trends affecting US Airways’ performance, particularly fuel prices.”

He also said the airline needs a bigger “cash cushion” of new financing.

The bankrupt airline still is negotiating with its three other major unions, representing machinists, flight attendants and passenger-service workers.

Arlington-based US Airways says it needs about $950 million in annual cost cuts from its unions to avoid liquidating as early as next year.

Fifty-eight percent, or 1,690 pilots, voted in favor of the contract, while 1,236 voted against it. Eighty-nine percent of the union’s 3,291 eligible members voted.

The failure of the pilots and other unionized employees to agree to US Airways’ proposed salary and benefit reductions was a major contributor to the airline’s Sept. 12 bankruptcy filing, the second in two years.

Dissenting pilots said they already made enough concessions in the previous bankruptcy.

If they had not ratified the new contract yesterday, a bankruptcy judge in Alexandria said last week that he would force a temporary, 21 percent pay cut on them.

“Clearly, this ratification shows that the pilots of US Airways understand why it was necessary to come to a consensual agreement with the company,” said Bill Pollock, chairman of the US Airways chapter of the Air Line Pilots Association.

“This agreement provides us with the means to survive, emerge from bankruptcy as a formidable competitor, and ultimately prosper in even the most challenging of economic environments,” Mr. Pollock said.

Along with the 18 percent pay cut, pilots will be required to fly more hours each month, which is likely to add to the 1,900 US Airways pilots already furloughed in the past three years.

The new contract extends through 2009. It also reduces pension and other benefits for pilots.

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