US Airways Flight Attendant Deal Raises Pay, Protects in Merger

CHARLOTTE, N.C. ( TheStreet) -- After five years of talks, US Airways ( LCC) and its flight attendants have reached a tentative agreement on a deal that provides some of the industry's highest hourly rates as well as strong protections in the event of a merger.

Talks had moved slowly in the years following the 2005 merger between US Airways and America West, and flight attendants still work under separate contracts. But "the company decided sometime in the past six months that it was important to finish these negotiations and put the two flight attendant groups together," said Mike Flores, president of the US Airways chapter of the Association of Flight Attendants, in an interview. He said federal mediators strongly encouraged both parties to reach a deal.

Additionally, Flores says, management's desire to pursue a merger with bankrupt AMR ( AAMRQ.PK) ramped up the pressure to get a deal done, especially because a festering dispute over seniority, now winding its way through the courts, has prevented completion of a contract with the two pilot groups. "It's very easy for them to explain in a merger effort why they don't have a deal with pilots," he says. "But there's no explanation for why they don't have with flight attendants, other than they were being cheapskates."

The contract would extend for five years. At the top 15-year scale, which applies to the majority of both groups, hourly pay would immediately go to $46, up from $41.51 today at the "east," or old US Airways, and up from $37.59 at America West. Three scheduled increases would bring the top rate to $48. Pay would be higher than any legacy carrier now pays, with the exception of Continental, where flight attendants work under a contract rich in hourly pay but with less beneficial work rules.

With flight attendants working an average of 85 hours a month, average top-scale salaries would immediately rise to about $47,000 annually. US Airways has about 6,900 flight attendants, including about 4,600 from the east.

Among work rule improvements, flight attendants will be paid an hour's salary for every three and a quarter hours away from their base, compared with an hour's pay for three and a half hours away under the new United ( UAL)contract, the industry leader. Flight attendants will work a maximum of 13 hours a day, compared with 14 hours at most carriers. Deadheading time (when flight attendants return to their bases) will be paid at a 100% rate instead of a 50% rate and will be counted toward the monthly flying total.

In the event of a merger, laid-off flight attendants would be entitled to 60% of their salary for five years, likely ensuring that none would be laid off. That provision was in the existing east contract, but US Airways "desperately wanted to get rid of it, and that became the end point of negotiations," Flores says. "We told the NMB there was no way we would reach a deal if that was watered down. The tentative agreement also has new language that binds any merger partner to honor this protection.

US Airways executives have been saying for two years that the airline is profitable only because it enjoys a labor cost advantage over its peers, which compensates for smaller hubs that cannot produce equivalent unit revenue. "If you look at the history of these negotiations, this company has maintained that to be profitable it needed a 15% labor cost advantage over competitors," Flores says. "This contract erases that notion."

Union leaders are prepared to explain the tentative deal to members at a series of meetings over the next several weeks. A vote is expected to conclude by early April. Some opposition has already emerged. The two groups will merge 18 months after signing, creating a single work group with its own scheduling, which for the east would end a decades-old model in which flight attendant crews have been paired with pilots. Some flight attendants believe the model protects their work rules, although Flores says the work rules are protected in the tentative agreement.

Another change, which benefits the company, means flight attendants will schedule trips two to three weeks in advance, rather than two to three months in advance, enabling the carrier to better match crews with aircraft and passenger loads. Additionally, west flight attendants would lose several vacation days per year.

"This contract improves people's financial lives," says Flores, a 30-year flight attendant whose wife is also a flight attendant. "Anybody can pick through it and find a provision or two they don't like. But in negotiations, as in life, you do not always get everything you want. You get the best you can through the process."

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

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