US Airways union struggle nears
Fears grew that the company will seek bankruptcy protection, perhaps as early as this weekend, after William Pollock, chairman of the pilots' leadership committee, prepared a video warning the rank and file to prepare for a Chapter 11 filing.
Union representatives have said US Airways officials hinted that a potential bankruptcy could occur this weekend if the union rejected the company's proposal -- which it did on Monday.
Industry experts also believe it could happen this weekend. That's because the company is obligated to make $110 million in pension payments on Wednesday. US Airways officials have said previously that making the payments could force a default on more than $700 million in federally guaranteed loans.
A US Airways spokesman, however, declined to say yesterday whether a bankruptcy date had been set.
The financially troubled airline, which is seeking $800 million in labor concessions to stay afloat, has made bankruptcy preparations by hiring a Washington, D.C., law firm and New York investment bank. If it files for bankruptcy this weekend, it is expected to occur in eastern Virginia, the site of its first filing two years ago.
Today's union meeting, at a Pittsburgh International Airport hotel, was called by the four Pennsylvania representatives who blocked the company's offer on Monday. It was ostensibly called to oust the communications chairman of the leadership committee, known as the Master Executive Council.
The larger goal might be to establish who's in control of the union heading into bankruptcy, said Marick Masters, a University of Pittsburgh business professor.
"They're hijacking the union, intending to run the show and pursue their agenda, whatever it may be," said Masters, who is writing an academic paper about US Airways' labor relations.
Pollock agreed.
"This is a raw power struggle driven by the failed negotiating strategy of these guys with intolerable views," he said.
Fred Freshwater, one of the two Master Executive Council representatives from Pittsburgh, said it was likely that the communications chairman, Jack Stephan, would be ousted today. But he denied talk of a power play.
The pilots' union has been engulfed in chaos and recrimination since Monday's vote. Pollock and the eight Master Executive Council members who voted in favor of sending the company's proposal to the rank and file have accused the four Pennsylvania representatives of voting their self-interests.
Freshwater said that he and the Pennsylvania representatives had protected the interests of pilots based at Pittsburgh and Philadelphia. He said many of the Pennsylvania pilots are nearing the mandatory retirement age of 60 and oppose further cuts to pension funds.
The company's last proposal demanded pay cuts of 23 percent and a 50 percent drop in pension contributions.
John Brookman, the second Pittsburgh representative on the Master Executive Council said he vetoed a referral to the rank and file because the company's offer was only a proposal.
"It was not a tentative agreement," he said.
Freshwater complained last week that Pollock and Stephan were using union communiques to whip up a grass-roots backlash against the Pennsylvania delegates.
Wednesday night, he sent an e-mail to Stephan that accused him of turning the communications post into a "bully pulpit" to "vilify the Pittsburgh and Philadelphia reps." Freshwater closed with, "You must be held accountable for these actions."
Freshwater acknowledged it was not an idle threat. He threatened to have Pittsburgh pilot Tim Baker recalled from the Master Executive Council for supporting US Airways' demand to liquidate the pilots' defined pension plan two years ago without letting the rank and file vote.
Freshwater kept his word. Baker, at his urging, was recalled last summer.
"I told him I was going to do it, and I did it," Freshwater said. "I am a man of my word."
Baker, who lives in Coraopolis, said yesterday: "They are trying to shape this union according to their vision, whether it is backed up by fact or not. Their vision is going to lead us to bankruptcy, and God help us all."
Besides having Baker recalled, Freshwater also filed a lawsuit against US Airways and the Air Line Pilots Association over the termination of his defined pension. Almost 50 other US Airways pilots have joined the suit, which seeks repayment of lost pension benefits.
Freshwater denied pilots' accusations that his blocking vote on Monday was an attempt to protect his lawsuit.
"Questioning our motives as nefarious, or trying to place the company into bankruptcy, is preposterous," Freshwater said. "The fate of this company will be determined solely by this management."
Pollock said that Stephan can be recalled if the four Pennsylvania representatives vote together as they did Monday night. That's because their votes are weighted to reflect the fact that they represent 1,892 of the union's 3,300 pilots.
Pollock said that the pilots union has constitutional rules that prevent international leaders from getting involved.
John Mazor, a spokesman for the international, confirmed that claim and downplayed the dissension within the US Airways ranks.
"It is not uncommon to have factions within a pilots group who disagree over strategies and goals," he said.
Today's meeting, Pollock said, was part of the dissidents' "strategy to obfuscate, not negotiate, and blame the other guy."
Also today, US Airways officials are scheduled to meet in Washington, D.C., with representatives of the flight attendants union. Yesterday's meeting with the Communications Workers of America, which represents ramp, gate and reservations agents, was canceled because some union representatives could not reach the meeting on time, said David Castelveter, a US Airways spokesman.
US Airways' 2004 flight path
Important dates and events that have brought US Airways to the brink of bankruptcy:
Jan. 6: Chief Executive Officer David Siegel says the airline's recovery plan is on hold because of union resistance.
April 19: Siegel is forced to resign. He is subsequently replaced by more employee-friendly Bruce Lakefield.
June 1: US Airways initiates concession talks with its pilots' union.
July 21: US Airways announces that it will eliminate more than a third of its daily nonstop flights at Pittsburgh International Airport but will remain the region's dominant carrier, with 240 daily flights to 65 cities.
July 27: US Airways announces its first quarterly profit since the summer of 2000.
Aug. 13: Pilots ramp up talks after receiving a financial report that US Airways could go bankrupt by Sept. 15.
Aug. 31: International Association of Machinists meets with US Airways, the last of four major unions to come to the bargaining table.
Sept. 6: Pilots' union leadership rejects company's $295 million-a-year concession proposal when four Pennsylvania representatives block its referral to rank and file.
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