Union ratifies USAir pact; Struggling firm sees stock rise 7.7% as mechanics vote OK; Airlines


Mechanics at US Airways approved a five-year employment contract yesterday, averting a possible strike and bringing an end to contentious negotiations that the company said led to flight delays and profit losses.

The agreement with the International Association of Machinists and Aerospace Workers includes a 6 percent pay raise, a signing bonus and "no lay-off protection" for 7,500 current employees. The contract was approved by a 3-1 margin.

The airline, based in Arlington, Va., expects to report "a significant loss" for the third quarter, Chief Executive Officer Rakesh Gangwal said yesterday, but resolving negotiations with the mechanics was seen as a big step toward restoring the company's profitability.

"This new agreement is a major milestone on our path toward shedding our non-competitive cost structure," Gangwal said in a statement released yesterday.

Traders on the New York Stock Exchange seemed to agree, running the price of US Airways' shares up $2.125 to close at $29.875, a 7.7 percent gain.

The agreement does not end US Airways' labor troubles. It is still negotiating contracts with 9,000 flight attendants and 10,000 gate and ticket agents.

But talks with the Association of Flight Attendants have reportedly gone well. The gate and ticket agents recently voted to join the Communications Workers of America.

The mechanics union rejected an earlier contract agreement in June by a 3-1 margin, and had threatened to strike within 48 hours if the most recent contract were not approved.

"We're pretty much satisfied. We've had a lot of stumbling blocks over those four years, but we got a contract we can live with," said Ernest Anderson, local chairman of the machinists union's US Airways branch at Baltimore-Washington International Airport.

Anderson rejected claims that the union job actions contributed to US Airways' poor performance by grounding airplanes and increasing delays and cancellations. "We never condoned any kind of slowdown or job action," he said. "That's just people looking for someone to blame."

The contract approved yesterday is designed to keep US Airways competitive. It ties mechanics' salaries to a "parity plus one" formula -- guaranteeing wages 1 percent above the average paid by industry leaders United, Northwest, American and Delta airlines. An experienced US Airways mechanic is paid about $23 an hour.

"This agreement is an example of what the solidarity and determination of our members and the negotiating committee can provide," said Robert Roach Jr., general vice president of the union.

Labor trouble is only one of the "difficulties" cited last month by US Airways executives as a reason the airline won't report a profit for the third quarter of 1999, and perhaps not for the fourth quarter. The company also has struggled to implement a new computer reservations system and to expand MetroJet, its low-fare spinoff.

But the airline seemed to say yesterday that its third-quarter prospects were worse than forecast. Gangwal said the company not only won't make a profit, but also can expect a "significant loss."

US Airways is the second-largest airline at Baltimore-Washington International Airport, after Southwest Airlines.

Pub Date: 10/07/99

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