The union of 7,500 mechanics and cleaners at US Airways called off its threatened strike yesterday so members can vote on a tentative employment contract, bringing a possible end to negotiations that have dragged on for nearly four years and cut deeply into the air carrier's profit.
Neither the airline nor the International Association of Machinists and Aerospace Workers would discuss details of the agreement, which still must be approved by the union membership.
But traders on the New York Stock Exchange seemed pleased with the news. The airline's stock, which has lost about 60 percent of its value since January, rose $1.3125 yesterday to close at $25.875.
US Airways, based in Arlington, Va., is struggling to make a profit, and has said that labor troubles are chief among its "difficulties."
"What is that Chinese proverb? A long journey starts with small steps. Well, that's what's happening," said Candace Browning, an analyst with Merrill Lynch Global Securities.
US Airways announced last week that it would not earn a profit in the third quarter, and the protracted contract negotiations have taken a toll on the company's bottom line.
As negotiations intensified, disgruntled mechanics have reportedly become more likely to ground aircraft for repairs, contributing to an increase in flight cancellations. The union had threatened to strike after midnight Sunday, but will work under its existing contract until it votes on the proposed agreement within two weeks.
The tentative settlement is no guarantee that US Airways' labor troubles are over. The last tentative agreement with the Machinists, reached in June, was rejected by three-quarters of the union membership.
And US Airways is involved in tense negotiations with other employee unions.
The 9,000 US Airways members of the Association of Flight Attendants plan a protest Monday to mark the thousandth day of contract negotiations. And the airline's 10,000 gate and ticket agents, who voted in the summer to join the Communication Workers of America, also are seeking an employment contract.
Union leaders would not discuss specifics of the tentative agreement, which came Tuesday night after company President and Chief Executive Officer Rakesh Gangwal joined the talks, but they expected workers to approve it.
Members of the Machinists union have not had a pay raise in four years, and are seeking protection for less-skilled workers who they fear are being converted to part-time employees. "There are significant improvements from the previous tentative agreement, and we're pretty optimistic that the membership will find that it suits their needs," said James Sprang, the union's airline coordinator.
US Airways officials said last week that the operational problems causing their profit to erode will likely continue into the fourth quarter. The airline also has struggled to integrate a new computer system and expand its spinoff airline MetroJet, but its labor negotiations are considered key to its performance.
"I'm not going to put a number on it, but it's a major contributor to their problems," Browning said.
The company issued a statement thanking the National Mediation Board for fostering the agreement with the Machinists but would not comment further yesterday.
US Airways is the second-largest carrier at Baltimore-Washington International Airport and one of its two dominant airlines.
Pub Date: 9/23/99