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Pay cuts at USAir.

Airline pilots at USAir agreed to a 1-year wage cut in exchange for stock option and profit-sharing plans, enhanced job security, and future pay raises.

USAir Group, Inc. and the Air Line Pilots Association signed a 4-year collective bargaining agreement that covers approximately 5,600 pilots. The financially-troubled airline, which has lost nearly $760 million in the past 2 years, has been seeking wage and benefit cuts from union and nonunion employees to help it become more competitive.

The pact calls for 1-year wage cuts of 10 percent for that portion of a pilot's pay between $20,000 and $50,000, 11 percent for earnings between $50,000 and $100,000, and 12.5 percent for earnings exceeding $100,000, which are expected to generate $55 million in savings. Wage increases of 2.5 percent on September 1, 1993, 5.5 percent on July 1, 1994, 2 percent on July 1, 1995, and 1 percent on July 1, 1996, will follow. The pay increases would push the USAir pilots' rates up to those at Delta Air Lines, the industry standard.

Under the stock option plan, pilots can purchase up to 50 shares of stock at $15 a share for each $1,000 their pay was cut; and under the profit-sharing plan they will receive $1 for every $2 cut in pay. To fund the profit-sharing plan, each year the cartier will set aside 25 percent of its first $100 million in pretax profits, 35 percent of the second $100 million, and 40 percent of any excess over $200 million.

The enhanced job security provisions include a prohibition against furloughs through 1997, a guaranteed number of captain positions, extension of the successorship provision to the USAir Group, and employment protection if the cartier ceases operation.

Other terms include a reduction in years of service for lower paid pilots to reach the higher pay rates (from 5 years to 3 years); establishment of a managed health care plan; and a requirement that new hires pay $38 a month for family coverage under the managed health care plan and $107 a month under the current traditional indemnity plan. Provisions call for decreases in guarantees of minimum hours, including reductions in the minimum pay while on duty, but not flying guarantees, from 1 hour's pay for each 2 hours to 1 hour's pay for each 1-3/4 hours; the minimum-day guarantee when flying, from 4-1/2 hours to a variable minimum ranging from 4 hours in uncongested areas to 6 hours in the most congested areas; and the trip guarantee, from 1 hour for every 3 hours to 1 hour for each 3-1/2 hours.

USAir announced last fall it would impose wage and benefit cuts on its nonunion employees after it wins similar concessions from one of the unions that represent its employees--the Pilots, International Association of Machinists, or the Association of Flight Attendants. The carrier is continuing bargaining with the Flight Attendants, which represents about 8,500 flight attendants, and the Machinists, which represents approximately 8,300 mechanics and ground support employees.
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Title Annotation:USAir Group Inc.
Publication:Monthly Labor Review
Date:Aug 1, 1992
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