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US Airways Gets Some Breathing Room

December 23, 2004
US Airways, in bankruptcy and fighting for its very survival, has received an early Christmas gift. The airline's passenger service agents approved changes in their contract, cutting pay an average of nearly 13 percent.

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The airline says the deal will help keep the planes flying for a while longer, byt cutting $137 million in annual operating expenses. The revised agreement, covering 5,600 customer service and reservations workers, must be approved by a bankruptcy court.

While the contract concessions are helpful, US Airways has lots more work ahead of it, according to industry analysts. The airline is still in negotiations for similar contract give-backs from the International Association of Machinists mechanics, fleet service workers and maintenance training specialists.

A week ago US Airways reached a deal with its flight attendants after talks had broken down and threatened to turn ugly. Before signing off on $94 million in contract concessions, the union had threatened to stage spot strikes throughout the US Air system during the peak of the holiday travel period.

US Airways executives have a goal of securing $1 billion in labor savings and pension commitments, as part of their deal for new financing arrangements with its major creditors and the U.S. government. Without the sessions, the carrier says it would probably start liquidating in January.

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