US Airways gets OK to slash pay

A US Bankruptcy Court judge, in a harsh decision he called critical to US Airways Group's survival, said yesterday the airline could slash pay by 21 percent for its unionized workforce of 25,000.

The pay cuts come on top of wage concessions forced upon airline workers the first time US Airways operated under bankruptcy protection in 2002. They will remain in effect for four months. Labor representatives for the airline's mechanics, fleet-service workers, flight attendants, and ticket agents said the cuts put them at a disadvantage in future negotiations as the airline seeks permanent concessions.

"Basically what we have here is a ticking fiscal time bomb," US Bankruptcy Judge Stephen Mitchell said when he issued yesterday's ruling in Alexandria, Va.

US Airways argued in court that without temporary relief it may not have enough cash to survive into next year. Union leaders denounced the ruling, which they called an end run by the airline around the collective bargaining process. But workers at Logan Airport in Boston were stunned when they heard the judge had granted the bulk of the requested relief. The airline last month asked the court for a 23 percent pay cut.

"Everybody's very depressed right now," said Louis Fabello, a 48-year-old fleet service worker for US Airways, who loads and unloads baggage at Logan. Fabello, who makes about $58,000 a year in base pay plus overtime, estimated the pay cut would mean a loss of about $660 a month in base pay.

Yesterday's ruling reduces average annual wages for US Airways workers from $59,509 to $47,012, placing them between workers at JetBlue and Southwest Airlines, two low-cost competitors that have been major factors in pushing the nation's old-line carriers toward financial trouble. United Airlines also filed for bankruptcy protection and Delta Air Lines has said it is considering filing.

The judge granted the across-the-board pay cut for US Airways workers in the Communications Workers of America, representing customer service agents, the Association of Flight Attendants-CWA, and International Association of Machinists and Aerospace Workers, representing mechanics and fleet service workers.

"My gut level is to say this is completely unprecedented" and indicates "how desperate the situation is," said Tom Juravich, a labor professor at the University of Massachusetts at Amherst.

In addition to wages, the airline will reduce retirement benefits. US Airways' contribution to defined-contribution plans for CWA workers, currently 4 percent to 10 percent of salary, would drop to 3 percent, the court said. Company matches of employees' contributions were suspended entirely. US Airways also will reduce contributions to 401(k) retirement plans and traditional pension plans for various mechanics' groups.

The judge suspended agreements US Airways had with its unions to operate a minimum number of aircraft in its fleet, which one union official speculated could mean more layoffs if the airline downsizes again. "If they have 280 aircraft today, and they go down to 200 they won't use the same amount of people," said the official, who spoke on condition his name be withheld.

US Airways chief executive Bruce Lakefield called the interim relief "regrettable but necessary" in a statement, but he indicated permanent concessions must be negotiated with the company's labor unions. In court, the company argued that hardships imposed by the pay cuts would "pale in comparison" to hardships caused by the company's liquidation.

Interim relief is "not a substitute for permanent relief, and we will continue to make all our resources available to quickly reach consensual agreements" with the unions, Lakefield said.

The Association of Airline Pilots recently reached a separate agreement with US Airways to reduce pay 18 percent and reduce contributions to pilots' retirement plans. Results of a vote by pilots on the new contract, through 2009, will be revealed on Oct. 21. If pilots do not ratify it, they would be subject to the 21 percent pay cut.

US Airways flight attendants denounced the decision as "unfair and excessive." Unions have argued the airline could enact other measures to reduce expenses.

In court, Mitchell acknowledged workers may face hardships or lose their homes, the Association of Flight Attendants said in a statement. US Airways is "sticking our members with an overwhelming burden for its inept management practices," said Perry Hayes, president of the flight attendants' union.

Candice Johnson, CWA's spokeswoman, said a 21 percent pay cut is "devastating" to members. Customer service agents are the lowest paid among the airline's union workers. "US Airways is going to come back looking for excessive cuts from our group. We're going to fight for a fair agreement," she said.

Kimberly Blanton can be reached at blanton@globe.com. Material from Globe wires was used in this report.