The leadership of the pilots' union at US Airways voted late Friday night to hold last-ditch talks with the airline on its bid for wage and benefit cuts. The emergency move came as the company appeared headed for a Chapter 11 filing as early as today, people who had been briefed on the situation said on Friday.
Meanwhile, the federal loan board, which assisted US Airways, paving its way out of its last Chapter 11 filing, met in Washington to discuss the airline's plight.
If US Airways seeks bankruptcy protection, it would be the first airline to default on loan guarantees awarded by the Air Transportation Stabilization Board, which was created after the terrorist attacks on New York and Washington three years ago.
US Airways, which emerged from bankruptcy in April last year, has repeatedly warned it would file for a second time unless it could win US$800 million in wage and benefit concessions from its unions.
But employees, who granted the airline two sets of cuts worth US$1.9 billion while it was under court protection, have balked at granting a third set, stalling the airline's efforts on a US$1.5 billion restructuring plan. That made it virtually certain that the airline, based in Arlington, Virginia, would file for Chapter 11 today, people who were aware of the airline's plans said.
One factor in the decision is that US Airways is required to make a US$110 million contribution to its employee pension plans on Wednesday.
But the airline is unable to arrange debtor-in-possession financing because it has pledged all of its collateral to secure US$700 million in federal loan guarantees, meaning it must rely on cash to run its operations in case of a bankruptcy filing.
US Airways made new proposals to its pilots' and flight attendants' unions on Friday, and met with its machinists union to discuss cost-cutting ideas the union had proposed on Aug. 31.
Bruce Lakefield, the airline's chief executive, said that under its proposals the pilots and flight attendants would earn roughly the same amount as they do now, in return for flying more hours each month.
The average pilot at US Airways was paid US$130,745 last year for working 81.2 hours a month. Flight attendants earned an average of US$39,502 last year for 82.4 hours of work a month, the airline said.
Lakefield disclosed the offer in an employee hotline recording. He said the company was proposing other changes in benefits and work rules that would bring US Airways workers' compensation closer to that of low-fare airlines, but was not more specific.
Leaders of the pilots' union voted to resume negotiations with the carrier Friday night at a meeting in Pittsburgh that had been called to consider the latest offer for US$295 million in cuts. A spokesman for the pilots, Jack Stephan, said that talks could start up again yesterday.
An agreement with the pilots is critical if US Airways is to win concessions from other labor groups. But on Monday, rebel pilot leaders from Pittsburgh and Philadelphia defeated an effort by other union leaders to send the airline's previous offer to members for a vote.
A spokesman for US Airways could not be reached for comment.
The airline's plight was the talk of the industry on Friday, with analysts and executives widely predicting that the airline was headed for a second bankruptcy. David Barger, president of JetBlue Airways, which competes with US Airways for East Coast passengers, said a shakeout among the big carriers was overdue.
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