Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 26, 1995 TAG: 9503290035
SECTION: NATIONAL/INTERNATIONAL PAGE: A-7 EDITION: METRO
SOURCE: The New York Times
DATELINE: NEW YORK LENGTH: Medium
The nation's sixth-largest carrier, based in Alexandria, Va., did not disclose any details of the agreement, nor did its pilots union, the Air Line Pilots Association. The airline's statement suggested, however, that the agreement included wage and work rule concessions from the pilots in exchange for ``financial returns and governance participation,'' most likely referring to stock in the company and representation on USAir's board of directors.
Although the agreement is tentative and conditioned on other labor groups reaching separate deals with the airline, it is nevertheless significant. USAir has been among the most chronically unprofitable U.S. airlines, having lost more than $2.5 billion since the late 1980s. It is trying to cut $1 billion in annual operating costs, and wants half those savings to come from agreements with its labor groups, including unions representing mechanics and flight attendants.
USAir said discussions with those other labor groups were continuing.
The last publicized offer by pilots called for employees to contribute $500 million a year in savings in return for 20 percent of the company and seats on the board.
Kevin C. Murphy, an airline stock analyst at Morgan Stanley, said on Saturday that the pilots and company were probably motivated to end their impasse by the airline's thinning cash reserves.
The airline had about $400 million in cash at the end of 1994, and Murphy said the company had indicated that its reserves had since fallen to about $250 million.
Until details of the agreement are announced, it remains unclear whether investors will be encouraged. One important USAir investor, Warren E. Buffett, recently signaled a no-confidence vote by saying that he no longer wanted to sit on USAir's board.
USAir was among the first airlines to try to cut costs early in the economic downturn that has cost the airline industry more than $13 billion in losses since 1990. But those agreements were temporary and not deep enough, industry analysts have said.
As a result, USAir has been widely perceived as a laggard in the industry, and is now trying to follow other carriers' successful efforts to strike deals with their labor groups.
by CNB