US Airways moved a step closer to a possible emergence from bankruptcy yesterday after negotiators for its pilots union agreed to $300 million a year in cost savings.
The airline is still a long way from achieving its cost-cutting target of nearly $1 billion, which it says it needs to avoid liquidation, but US Airways executives said they hope the pilots' agreement will persuade other labor groups to follow suit.
"This is a major step forward for our company, its employees, customers and all other stakeholders," Bruce R. Lakefield, US Airways' chief executive, said in a prepared statement.
The tentative agreement has to be reviewed by union leaders before being put to the airline's 3,200 pilots for a vote.
Lakefield urged the pilots to ratify the pact, which he said was "essential to our transformation and would demonstrate their continuing commitment to making our airline stronger and more competitive."
Details of the agreement were not released, but sources familiar with it said the new contract calls for an 18 percent cut in pilots' pay. It also will increase the number of hours pilots work and reduce the amount the airline contributes to the pilots' defined-contribution pension plan.
The pilots' leaders sought an agreement before the Arlington airline goes to court Thursday to ask U.S. Bankruptcy Judge Stephen S. Mitchell to impose a bigger temporary pay cut. US Airways is seeking a court-ordered pay cut of 23 percent for all unions that have not already reached agreements as part of its effort to cut $950 million in employee costs. Before filing for bankruptcy, US Airways was seeking $800 million in savings from its employees.
The pilots and the airline have been involved in on-again, off-again discussions since late spring when US Airways began its cost-cutting program. The pilots union was the first labor group to agree to concessions talks. Because of its size, it was considered the strongest influence over other labor groups.
With next week's hearing looming, the other labor groups are rushing to get their agreements in place to avoid potential court-imposed cuts.
The airline's 150 flight dispatchers Thursday approved their $4.5 million cost-cutting contract. The airline also has tentative agreements with the union that represents its 65 flight-crew training instructors and its 25 flight-simulator engineers.
The airline's flight attendants submitted a counterproposal that would reduce its members' pay by 8.5 percent, or $65 million, nearly half the amount the airline has sought.
US Airways mechanics -- who still have not agreed to pay cuts -- are scheduled to meet Tuesday.
Separately, an arbitration board ruled yesterday that US Airways must cease outsourcing maintenance repair work on its 10 Airbus A319 jets, a small victory for the airline's machinist union.
More than a year ago, the airline sought to have its heavy maintenance work sent to an outside firm in Alabama. US Airways said it was more economical to have the work outsourced to the firm. The airline's machinist union filed suit in a U.S. District Court in Pennsylvania to block the work.
US Airways spokesman David Castelveter yesterday said that with the airline in bankruptcy, it does not have the finances to acquire hangar space and the additional employees needed for the work. Instead, Castelveter said, the airline plans to ask the bankruptcy court for permission to use a "qualified vendor" to perform the maintenance work.