US Airways Seeks Fast-Paced Talks On Retiree Benefit Cuts
Monday October 25, 3:04 PM EDT
WASHINGTON (Dow Jones)--US Airways Group Inc. (UAIRQ) wants fast-paced talks with retirees on the airline's plan to cut their medical benefits, and asked the bankruptcy court overseeing its Chapter 11 to put together a retiree committee this week with which it can negotiate.
US Airways wants a committee named on Thursday, with the panel's first meeting set for the day after the court enters the appointment order, according to court papers filed with U.S. Bankruptcy Court in Alexandria, Va., made public Friday.
Retiree committee members would then have seven days to consult with advisers about the proposed cuts and then "the debtors anticipate a 10-day period to engage in good-faith negotiations with the retiree committee," court papers said.
Arlington, Va.-based US Airways said it recognized it was offering an " aggressive schedule" for the talks, but noted its lack of cash, which it has said could force it into liquidation.
Medical costs are expected to total $69 million in 2005, rising to $72.6 million in 2006, for US Airways' approximately 10,800 retirees, the company's court papers said. The company also has to pay for life insurance and other benefits for former management employees.
Court papers didn't specify what type of reduction the company would request from the retirees. However, Chief Financial Officer David Davis said in a statement to the court that "a significant part of the necessary reduction in ( US Airways') labor costs is comprised of reductions in costs associated with retiree medical benefits (including, in some cases, dental, disability and death benefits) for existing and future retirees."
US Airways is seeking about $950 million annually in cost savings from its unionized workforce in pay and benefit cuts, company spokesman David Castleveter said Monday. The retiree costs are a part of that figure.
US Airways officials were to meet with representatives from the International Association of Machinists and Aerospace Workers Monday to present their cost-cut proposal to the union, which has fought cuts beyond those it took in US Airways' prior bankruptcy. Talks are also scheduled with the Communications Workers of America this week.
US Airways wants bargaining on retirees' medical costs to follow the same timetable as talks about the long-term changes to union collective bargaining agreements. The company said such agreements are needed for cost cuts so US Airways can compete with discount carriers like Southwest Airlines Co. (LUV).
The bankruptcy court granted 21% pay cuts for all unionized employees until February, saying the company needed the interim cuts to remain solvent while negotiating with labor groups. US Airways will ask the court to reject contracts with unions if the company "cannot reach agreement with the unions by mid- November," the court filing said.
US Airways reached a deal with the Air Line Pilots Association on a new deal through 2009 that cuts pilots pay 18% and allows for more flying time. A hearing on approval of that agreement is scheduled for Tuesday.
That pact doesn't cover costs associated with retired pilots, and ALPA has said it won't represent pilots in the talks on medical costs cuts. ALPA spokesman Jack Stephan said the union hasn't generally represented retired pilots in past negotiations.
ALPA, the Association of Flight Attendants and the CWA gave the company notice they wouldn't represent retirees in the medical cost cut talks, court papers said. US Airways is asking for one committee to represent all retirees, comprised of representatives from ALPA, AFA, CWA, and non-unionized workers.
Naming only one committee will help US Airways save cash and make for efficient negotiations, the company said, noting that "time is of the essence" in its bankruptcy case.
-By Christopher Scinta, Dow Jones Newswires; 202-862-3541; chris.scinta@ dowjones.com