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TheStreet Open House

Federal Court Hears US Airways Pilot Seniority Case

Stocks in this article: AAMRQ.PKLCC

PHOENIX -- ( TheStreet) -- A federal court hearing Tuesday afternoon in Phoenix will mark the latest round in the long unresolved battle over pilot seniority at US Airways (LCC).

At 4 p.m. EDT, Judge Roslyn O. Silver will hear oral arguments in the case, which involves a 2010 filing by US Airways asking for a ruling on whether it must accept arbitrator George Nicolau's controversial 2007 seniority ruling or whether it can negotiate with its pilots union over a contract that doesn't include the ruling.

US Airways merged with America West in 2005. The merger has been generally successful, but for many the divisive split between the two pilot groups, who still work under separate contracts, has tarnished perceptions of whether the two carriers were effectively combined.

In a 2010 letter to pilots, US Airways Executive Vice President Steve Johnson laid out the airline's rationale, writing for filing the case, saying it "requests that the court clarify the company's legal rights and obligations with respect to the seniority dispute and new single contract."

The key questions, Johnson wrote, are: "Must the company insist the Nicolau award be included in the new single agreement? May the company enter into a single agreement that does not include the Nic? If the company enters into a legal agreement that does not include the Nic, would it have legal liability to the west pilots?"

The Nicolau ruling led pilots from the former US Airways, known as "the east," to leave the Air Line Pilots Association after 57 years and create a new union, the U.S. Airline Pilots Association.

The ruling's most controversial component placed a 56-year-old pilot with 17 years at US Airways, who was never laid off, behind a 35-year-old America West pilot with a few months on the job. In hundreds of similar cases, east pilots with 15 or more years at the carrier went behind west pilots with just a few years.

In 2009, another U.S. District Court judge in Phoenix ruled that the ruling must be part of the contract. Then, in 2010, a U.S. Appeals court in San Francisco ruled that the case cannot be considered until a contract agreement has been reached. It ordered the Phoenix court to dismiss. Then US Airways filed its case.

Mark Burman, a spokesman for Leonidas, an association of west pilots, said Monday: "We believe that Judge Silver will step up and say that the company is obligated to honor the Nicolau list going forward." Burman said he doubts the court would have agreed to hear the case again if it were not going to make a decision.

In discussions between the Allied Pilots Association and USAPA over a potential merger with American Airlines (AAMRQ.PK), the premise has been that the seniority issue would be again referred to arbitration under the McCaskill-Bond act, which did not exist at the time of the US Airways/America West merger.

Burman said another round of arbitration, which would ignore existing arbitration, is not acceptable.

"Too many pieces of the puzzle support the case that binding arbitration is binding," he said. "Once there is a merger, there won't be any more USAPA." American pilots would have little interest in supporting the contention that binding arbitration is not binding, he noted.

US Airways spokeswoman Michelle Mohr said Monday: "US Airways has only one interest in the case: Ensuring that the court provide us with the guidance we need to negotiate a collective bargaining agreement with our pilots' union that is consistent with our legal obligations." USAPA spokesman James Ray said he would delay commenting until after the case is heard.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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