Judge cancels machinists' contract with US Airways

Thursday, January 6th 2005, 7:11 am

By: News On 6

ALEXANDRIA, Va. (AP) _ A bankruptcy judge on Thursday canceled a collective bargaining agreement between US Airways and its machinists union, providing millions of dollars in annual savings that the airline says will prevent the need for a quick liquidation.

The termination of the contract with the International Association of Machinists would result in pay cuts for union workers ranging from 6 percent to 35 percent and the loss of thousands of union jobs.

There still is a chance, however, that the union and the airline _ a subsidiary of US Airways Group Inc. _ will agree on a new deal.

US Airways lawyer Brian Leitch said Thursday that the machinists union had agreed to send the company's best final offer to the union rank and file for a vote. If the union accepts US Airways' offer on Jan. 21, the judge's action canceling the contract would be nullified.

U.S. Bankruptcy Judge Stephen Mitchell said that ``at bottom, it is clear that the debtor's financial position is so precarious that even with the relief being sought, there will still be grave questions as to whether it can survive.''

He acknowledged the heavy job losses anticipated but said, ``Which is worse, that half of the mechanics lose their jobs or that all of the mechanics lose their jobs'' when the company would be forced to shut down.

Mitchell also approved a request to terminate the pension plans for machinists and flight attendants, as well as a frozen pension plan that was still providing benefits to 28,000 retirees.

The distress termination will free U.S. Airways from nearly $1 billion in future pension obligations from 2005 through 2009.