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US Airways Labor Unrest Goes Beyond Pilots

Among five major labor groups, only airport and reservations agents have signed a joint contract.
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CHARLOTTE, N.C. -- Two years after the merger of America West with

US Airways

(LCC)

, the combination of the two airlines' work forces is only barely under way.

"What you've got is an airline running a virtual merger, operating as 'US Airways' in name only," says Mike Flores, president of the US Airways chapter of the Association of Flight Attendants. "Two separate and distinct airlines are operating under the US Airways banner, with two separate scheduling systems, two dispatch systems and two maintenance programs."

Among five major labor groups, only the 8,000 airport and reservations agents have signed a joint contract that covers workers from both the "east" and "west" predecessor airlines. The pilots, flight attendants, mechanics and fleet-service workers have not signed the joint contract.

In retrospect, Flores says, US Airways lost its momentum in January, when its failed bid to acquire

Delta

(DAL) - Get Report

fell apart. "That took their eyes off the merger at a critical stage," he says.

Negotiations for 7,300 flight attendants are moving slowly, with the next round scheduled for early October in Charlotte. The airline wants concessions, Flores says. "They don't realize we're not in bankruptcy anymore," he adds.

In the case of the airline's 7,700 fleet service workers, the carrier negotiated a joint contract with the International Association of Machinists in August. The contract included pay raises for both groups.

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But this month, 64% of the union's members rejected it in a vote." There was nothing in the total package to compel a majority to vote yes," says Chicago fleet service agent Tim Nelson.

A key issue was a grievance slated to be dropped under the proposed contract. It involves contract language that provides wage increases in the event of a change of control. The question is whether the 2005 merger qualifies as a "change of control."

If it does, the cost to the airline would be about $627 million, CEO Doug Parker wrote in an April letter to IAM members. "Pay would go back to 2003 levels, and the IAM would have the right to extend the agreements for one to three years with annual 4.5% pay increases," he said.

Parker said the agreement defines "change of control" to mean the sale of the vast majority of the company's stock or assets to a single buyer or group of buyers. In fact, he said, after the stock of the old US Airways was cancelled in bankruptcy, new stock was issued and widely distributed. The IAM says nearly all of the assets were sold, while the stock was sold "to a group of investors acting in concert."

An arbitration hearing took place last week, and a ruling is expected after the two sides submit additional comments by early November. Meanwhile, the IAM continues to negotiate a new contract for fleet service workers from the west. Another set of talks with the IAM, involving 3,000 workers in maintenance and related fields, has broken off.

Meanwhile, negotiations with pilots have gone as badly as they possibly could have.

The 3,200 east pilots are battling a seniority integration ruling, made under Air Line Pilots Association merger policy, that generally favors the 1,800 west pilots. Most east pilots want a rival union to replace ALPA. That union, the U.S. Airline Pilots Association, is collecting signatures so it can petition the National Mediation Board for an election.

East pilots have withdrawn from bargaining until their wages are brought up to west levels. But the airline, national ALPA and America West ALPA may try to get a contract without them. A joint negotiating session, with ALPA as the union representative, is currently scheduled for Sept. 24th, said an airline spokeswoman.

In an August letter to pilots, Parker acknowledged that seniority integration is divisive. He said he is awaiting recommendations from an ALPA committee and noted that a joint contract does not necessarily mean immediate seniority integration.

"I happen to believe that if we could get everyone together at the negotiating table, we could work something out," he wrote.

East pilots were not mollified. Last week, meeting in Charlotte, leaders of the east ALPA chapter voted to limit flying in November to the minimum number of hours available under their contract -- a move could lead to crew shortages during the Thanksgiving holiday period.

"Pilots have been working hard all summer," said pilot spokesman Arnie Gentile. "We are fatigued."