=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2002/12= /22/MN209974.DTL ---------------------------------------------------------------------- Sunday, December 22, 2002 (SF Chronicle) Skies clearer for US Airways/Unions agree on new concessions to cut costs a= t bankrupt airline Jonathan Finer, Washington Post US Airways has filed its plan to emerge from Chapter 11 bankruptcy leaner and more efficient, after announcing it had wrapped up a second round of critical labor concessions by reaching tentative agreements with its flight attendants and machinists unions. The reorganization plan filed late Friday with the U.S. Bankruptcy Court in Alexandria, Va., predicts that major cost cutting, a restructuring of the airline's route system and the increased use of smaller regional jets by US Airways Express affiliates will help restore the company to profitability by 2004. The airline, based in Arlington, Va., is also counting on higher revenue from a new marketing agreement with United Airlines, but it noted that the plan could be jeopardized by United's own recent Chapter 11 filing. According to the plan, US Airways' annual operating costs will be reduced by around $1.9 billion through a combination of wage and benefit cuts, changes in its fleet, and various renegotiations of aircraft leases and vendor contracts. Overall, the company said, it will reduce its operating costs per seat mile flown by some 17 percent in 2003 compared with the first quarter of 2002. The company said it will maintain the same number of main-line jets through 2009, the same year it said it will complete repayment of a federally guaranteed loan already conditionally approved by the Air Transportation and Stabilization Board. The reorganized company's board would comprise eight members appointed by the Alabama state pension fund, its primary investor; four members appointed by various unions; its chief executive; and two independent directors to be named at a later date. Unsecured creditors could expect to be repaid no more than 10 cents out = of each dollar owed while shareholders would receive nothing, according to the filing. The plan must be approved by creditors and is subject to renegotiation. Friday's agreements with the unions mean US Airways has completed negotiations with all its major labor groups. The airline negotiated concessions as part of its effort to secure the loan guarantees but in recent weeks said it needed $200 million a year more from workers because revenue projections proved too optimistic. Last week the Alabama pension fund threatened to cut off financing that = it has been supplying to keep US Airways operating if the unions didn't budge. Fund officials could not be reached for comment Friday night. If the union deals "keeps the airline from liquidating, it's a positive development," said Jeff Zack, a spokesman for US Airways flight attendants. US Airways pilots on Dec. 14 approved new pay cuts, and the Communicatio= ns Workers of America, which represents ticket and reservations agents, followed on Wednesday. The Association of Flight Attendants plans a ratification vote Jan. 10, Zack said. The International Association of Machinists' ratification vote will be in early January, but the date has not been set, according to Joe Tiberi, spokesman for the IAM. The machinists' agreement will save US Airways about $59 million a year through productivity enhancements, staffing flexibility and modifications to employee benefits plans, according to a statement released by the IAM. The company previously said it was seeking about $26 million in concessions a year from its flight attendants. Terms of that arrangement will not be released until union members are notified sometime next week, Zack said.=20 ---------------------------------------------------------------------- Copyright 2002 SF Chronicle