PlaneDoctor™ - US Airways mechanics do not expect giveback deal

By Jessica Hall

PHILADELPHIA, Jan 3 (Reuters) - Machinists at US Airways (UAIRQ.OB: Quote, Profile, Research) do not expect to reach a voluntary agreement with the company on new concessions, increasing chances that a bankruptcy judge will throw out the union's contract later this week, a union executive said on Monday.

Randy Canale, president of the International Association of Machinists unit at US Airways, told reporters the group will return to the bargaining table on Tuesday. But Canale said the package of proposed annual savings was not acceptable and he was not optimistic that a tentative agreement could be achieved.

"Our jobs are not for sale," Canale said.

US Airways wants more than $300 million in yearly givebacks from two IAM bargaining units.

The airline still hopes for a deal. "We will continue to try to reach consensual agreements with the IAM, just as we have successfully done with all other work groups," said Chris Chiames, a US Airways senior vice president.

A U.S. bankruptcy judge in Alexandria, Virginia, urged the machinists and the airline last month to reach a consensual agreement on givebacks by Thursday or he would rule on the company's motion to void the union's contract.

Judge Stephen Mitchell, who last October authorized 21 percent cuts for most workers through mid-February, has said previously that he wants the airline to survive.

US Airways says it must secure nearly $1 billion in annual labor costs savings within the coming weeks to stay in business, and the IAM is the only union at the seventh-largest carrier to not negotiate a deal.

Talks on permanent pay and benefit reductions have been slow with the IAM, which represents nearly 9,000 mechanics, fleet service and other maintenance workers at US Airways.

Canale would not say whether the union would strike US Airways if its contract is thrown out but did not rule out some sort of job action.

"Human nature is what it is. What is the incentive to come to work for $7 per hour?" Canale said.

Other unions at US Airways, including flight attendants, had threatened to strike if their contracts were thrown out. They have since negotiated voluntary concessions. A vote by flight attendants on their giveback deal is expected to be completed on Wednesday.

US Airways is in the middle of its second bankruptcy reorganization in two years, and has said it could liquidate early this year if it cannot cut costs enough.

The airline also must meet a series of financial benchmarks in the coming days to secure new financing and continue to draw on government-backed bank loans approved during its last restructuring in 2003.

A major East Coast presence for years, the airline based in Arlington, Virginia, has 27,000 employees. Most are members of four union groups representing pilots, flight attendants, reservation agents and ground workers.

Some analysts and other industry observers predicted US Airways would soon be out of business after hundreds of workers called in sick at the height of the holiday travel period. More than 300 flights were canceled, affecting thousands of passengers.

The airline blamed workers for the disruptions, prompting a federal transportation investigation. But unions said the airline has been poorly managed, especially at its Philadelphia hub.

Flight operations went smoothly over the New Year's weekend with the help of 200 management employees who volunteered to help ground workers in Philadelphia, the airline said.