US Airways Drops Health Coverage Elimination Move

January 7, 2005 ( - Beleaguered US Airways has reversed course in its drive to shave costs and agreed to pick up the tab for some of its retirees' medical benefits.

According to a Washington Post report, details of the retiree health coverage agreement were not made public Thursday. The move had been part of US Airways’ attempt to cut about $1 billion a year in labor-related costs to avoid liquidation.

The pact came ahead of a scheduled Thursday US Bankruptcy Court hearing at which Judge Stephen Mitchell was scheduled to rule on the company’s health coverage elimination request covering more than 11,000 of its retirees.

Mitchell on Thursday also agreed to allow US Airways to terminate three pension plans covering the air carrier’s machinists and flight attendants in what the company insists is a move to save money (See   Bankruptcy Judge Allows US Airways to Drop Pensions ) .Mitchell  also allowed US Airways to throw out a labor contract covering its machinists if the union turns away company requests for a package of concessions,

In its latest court filing, US Airways asked Mitchell to prohibit a walkout by its machinists if he allows the airline to terminate its contract. Under the Railway Labor Act, which covers airlines, employees are barred from walking off the job unless negotiations overseen by the National Mediation Board have their course. The union said the act’s strike prohibition applies as long as a contract is in effect.