USAir, struggling to cut $1 billion in annual costs, will be forced to negotiate with an additional 7,800 employees for concessions as the International Association of Machinists and Aerospace Workers has been chosen to represent the workers.
Spurred by sharp layoffs earlier this year, the fleet service workers, who load and unload airplanes, voted overwhelmingly in May to unionize. Because none of the three unions seeking to represent them received a majority, a runoff election was held between the top vote-getters -- the Machinists and the United Steelworkers of America.
According to mail-in votes counted yesterday by the National Mediation Board in Washington, the Machinists won with 3,353 votes to the Steelworkers' 1,976.
The issue of union representation has grown in importance in recent months as the financially beleaguered carrier tries to develop a cost-cutting plan.
The Arlington, Va.-based airline announced its second-quarter earnings yesterday, showing a glimmer of hope but not nearly enough to affect the company's continuing efforts to secure savings of a billion dollars a year, half of which would come from labor give-backs.
USAir said it earned $13.8 million in the second quarter, a substantial increase over the year-earlier earnings of $5.8 million. But after a first-quarter loss of nearly $200 million -- and overall losses of $2.2 billion since 1989 -- company officials reiterated the need for dramatic cost reductions.
The company's stock closed at $7 a share, up 50 cents on the New York Stock Exchange yesterday.
Last week, USAir gave its three major unions -- representing flight attendants, pilots and machinists -- a list of wage, benefit and work rule concessions.
A spokesman for USAir refused to speculate yesterday about whether the company would seek similar concessions from the newly organized fleet service workers.
"We're just glad this organizing campaign is over," said USAir spokesman Dave Shipley. "We're ready to sit down and negotiate with them."
The newly organized workers, however, could easily complicate USAir's cost-cutting efforts.
"The company won't have the same flexibility in how they treat those workers," said Howell Stack, director of the labor studies center at Wayne State University in Detroit. "If they're unionized, they'll have contractual language that protects them from certain actions, and they'll have a voice in the company."
Efforts to organize the fleet service workers gained momentum last fall when USAir announced plans to lay off 2,500 employees, the majority of whom were nonunionized ground workers.
And in May, shortly after the fleet service workers voted to unionize, USAir announced it would subcontract some of its cargo handling operation to outside companies.
"These people were really worried about their jobs," said Jim West, editor of Labor Notes, a Detroit-based monthly publication that tracks the labor movement. The fleet service workers had previously rejected five attempts to unionize.
During the past five years, the U.S. airline industry has lost more than $13 billion. With competition growing from discount airlines, major carriers have been restructuring and laying off workers.
Earlier this year, the Machinists union helped negotiate substantial cuts at both Northwest and United Airlines in exchange for an ownership stake in the companies.
"It's hard to organize a bunch of employees, and the first thing you do is give concessions," Mr. West said. "But my guess is they will."
It was not clear just when negotiations would get under way between the fleet service workers and USAir, the largest carrier at Baltimore-Washington International Airport. The Machinists already represent more than 3,500 USAir ground workers.
In its earnings report issued yesterday, the airline said its increased revenue in the second quarter stemmed from the strength of its East Coast operation and the increased number of passengers resulting from low fares.
USAir Group Inc. ... ... ... Ticker ... ... ... Yesterday's
... ... ... ... ... ... ... ... Symbol ... ... ... Cls. ... Chg.
... ... ... ... ... ... ... ... U ... ... .. .. .. $7 ... + 1/2
6/30/94 ... ... ... 2nd qtr. ... ... ... Year ago ... ... Chg.
Revenue ... ... ... $1,879,551 .. .. ... $1,815,768 .. .. +3.5%
Net Income .. .. .. $13,813 ... .. .. .. $5,834 ... .. .. +136.8%
Primary EPS ... ... $(0.09)* .. .. .. .. $(0.23)** ... ... --
... ... ... ... ... 6 mos. ... ... ... Year ago ... ... Chg.
Revenue ... ... ... $3,565,452 ... ... $3,532,109 .. .. +0.9%
Net Income .. .. .. $(182,842) ... ... $(98,947)*** ... --
Primary EPS ... ... $(3.72)**** .. ... $(2.64)***** ... --
* After payment of $19.3 million for preferred dividends.
** After payment of $18.4 million for preferred dividends.
*** Includes a $43.7 million charge to earnings for accounting rule change.
**** After payment of $38.6 million for preferred dividends.
***** After payment of $35.3 million for preferred dividends and includes a charge to earnings of 86 cents a share for accounting rule change.
Figures in thousands (except per share data.)