Benefits November 12, 2004

US Airways Files Motion to Reject Collective Bargaining Agreements

November 12, 2004 (PLANSPONSOR.com) - US Airways has filed a comprehensive motion initiating proceedings to rejected collective bargaining agreements with multiple unions, as well as to reduce retiree benefits and terminate the company's defined benefits (DB) plan for mainline employees.

Reported by

Kip McDaniel

According to the company, the filing in the US Bankruptcy Court for the Eastern District of Virginia, seeks relief in three areas. These include, according to a news release:

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A rejection of the collective bargaining agreements with the airline’s flight attendants (the AFA union), airport customer services and registration agents (the CWA union), and machinists and aerospace workers (the IAM union). If the request is accepted by the court, then the company will put in place its most recent offer and both parties will by obligated to continue negotiating an agreement under the Railway Labor Act.
Large reductions or the elimination of company-paid retiree health care benefits for every group in the airline. This will include management.
The termination of company DB plans for the AFA, IAM and related employees. Also, the company would eliminate a DB plan that was frozen early last decade that covered management, administrative workers, and various other sectors. US Airways intends to work with the Pension Benefit Guaranty Corporation (PBGC) to cover benefits. It also plans to offer only defined contribution (DC) plans in the future.

US Airways President and CEO Bruce Lakefield that this move was necessary in order to keep the company’s restructuring on track, as well as to allow for the company to implement cost-cutting measures in a timely fashion.

In October, a judge granted the company emergency relief in the form of pay cuts, pension plan contribution reductions, and a temporary relaxation of other contractual provisions. Before this, the airline had been warning employees that they should not be expecting to receive the entire amount promised to them under the pension system (See US Airways: Employees ‘Shouldn’t Count’ on Pensions ).