U.S. Airways Pilots Agree to Resume Talks

Negotiations on $295 million in concessions between US Airways Group Inc. (UAIR) and its pilots union appeared back on track Saturday although time was running short for the company to strike a deal to avoid its second bankruptcy filing in two years.

The US Airways unit of the Air Line Pilots Association (search) said it had agreed to jump start talks with management over givebacks on wages, benefits and work rules after the company made a revised offer Friday, but made no guarantee that an agreement would be reached.

Jack Stephan, a spokesman for the group representing more than 3,000 US Airways pilots, said in a statement the company's last-ditch proposal had been reviewed by the union's executive committee, which then approved a resumption in talks.

US Airways, through a spokesman, said the airline was ready to negotiate. But no new talks had been scheduled.

The proposal on the table now is similar to one the pilots rejected in June, but much different than an offer the group spurned earlier this week.

The No. 7 U.S. airline is facing enormous pressure to reach a deal quickly. Many industry experts agree the carrier's financial pressures are so acute and its options for turning around its fortunes so narrow that a Chapter 11 filing could come within days, followed by a possible liquidation.

Negotiations between the pilots and the airline have been lengthy and turbulent, and divisions within the pilots' union have been sharp over the scope of a giveback package. The offer rejected by the union's executive committee earlier this week triggered concern on financial markets the airline would likely fail to wring the $800 million in concessions from labor it says it must have immediately to remain solvent.

In a recorded message to employees on Friday, US Airways chief executive Bruce Lakefield said the most recent offer was more balanced than the last plan. It seeks to hold down wage cuts by increasing work hours. Previous proposals have sought pay reductions of at least 16 percent for pilots.

A new concession plan, also proposing similar work rules and productivity gains, was presented on Friday to the flight attendants union and is now being reviewed. The company is seeking roughly $116 million in givebacks from attendants.

"We have also proposed other changes to work rules and benefits that are necessary to be competitive with low-cost carriers," Lakefield told employees about the company's turnaround strategy.

Labor concessions represent more than half of a $1.5 billion cost-savings plan being sought by management.

US Airways has said concessions must be hammered out before the end of the month to avoid Chapter 11. But the airline also faces crucial financial hurdles — beginning with a decision whether to make a $110 million pension payment next Wednesday — that could accelerate a decision to seek protection from creditors if labor concessions are not achieved, Wall Street analysts and other industry experts said.

So far, no labor group has agreed to new concessions, but the company has said it hoped an agreement with the pilots, its most powerful union, would spur mechanics, flight attendants and other workers to go along.

The mechanics' union, represented by the International Association of Machinists (search) (IAM), has said it will not consider reopening its contract for new concessions unless the company acts first on its proposal for non-labor cost savings. US Airways is seeking more than $200 million in givebacks from mechanics.

The airline emerged from bankruptcy protection in March 2003 as a leaner company with a new focus on regional jets. But uneven travel demand, record fuel prices and stiff competition from low-cost rivals, especially Southwest Airlines in Philadelphia, have hindered the company's recovery.

US Airways is based in Arlington, Va., and employs 28,000 people.