US Airways Seeks Benefit Cuts

November 27, 2002 ( - US Airways has asked workers with the International Association of Machinists (IAM) to double their health insurance contributions and accept an elimination of the company's 2% 401(k) match.

The latest proposal is part of a US Airways plan to save an additional $300 million in yearly expenses, in addition to the $1.3 billion in annual wage cuts that are already secured, according to a Reuters report.  

US Airways estimates the reduction in employee benefit costs could save the company $200 million in annual expenses.   Additional cost saving measurers currently being proposed to workers include outsourcing plant and ground equipment maintenance, aircraft catering, mail and cargo and other operations.

Additionally, a US war with Iraq would lead US Airways to seek an immediate wage deferral of 5% for up to a year and a half.

IAM leadership does not believe the latest proposals are acceptable or justified.  

“When IAM members recently ratified modifications to their US Airways agreements, it came with the company’s assurance that the revisions were all US Airways needed to successfully emerge from bankruptcy,” said IAM Presidents and General Chairmen Randy Canale and Scotty Ford in a letter to union members.

In exchange for acceptance of the cost saving proposals, US Airways has said it will keep its current airline fleet at a minimum of 279 planes to protect jobs.

Earlier this week,  US Airways announced a furlough  of 2,500 workers to take place over the next three months, including the immediate shut down of the maintenance facility in Tampa, Florida.   IAM said this move cost 500 people their jobs.