As if migrating to a new reservations system was not enough to cause an airline angst, today the pilots at US Airways filed suit against the airline, claiming that the airline’s move to one reservations system, and one electronic code scheduled to take place this weekend — violates pre-merger agreements to run both airlines separately until new single contracts are in place.
This comes after the Arizona Daily Star reported Wednesday that the International Association of Machinists filed a federal lawsuit Monday, accusing US Airways of using bankruptcy court protection to avoid giving pay raises.
The paper reports arbitration on the matter was scheduled to begin Tuesday, but US Airways filed a complaint in bankruptcy court to block it, prompting the IAM lawsuit. US Airways refused to attend the hearing, according to union representatives.
“US Airways is attempting to use the bankruptcy court to shield itself from its contractual obligations 17 months after exiting bankruptcy,” said IAM General Vice President Robert Roach, Jr. “If companies can get bankruptcy court protection without filing for bankruptcy, no business contract, labor or otherwise, is enforceable. Lessors, vendors, bondholders, stockholders and other creditors are also at risk.”
US Airways spokeswoman Andrea Rader, told the paper the carrier concluded the dispute “was properly a bankruptcy issue.” “The more we looked into it, we realized it shouldn’t be in arbitration,” she said.
The union argues that the 2005 merger of US Airways with America West forced a change of control, which then triggered contractual clauses guaranteeing annual raises.
In other US Airways’ related news, the airline is apparently in talks to refinance its debt.
In a statement today the airline said that it had entered into an agreement with Citigroup Global Markets, Inc. and Morgan Stanley Senior Funding, Inc., as Joint Lead Arrangers, to arrange a debt financing transaction of up to $1.6 billion. The deal would see US Airways to refinancing $1.25 billion of its existing senior secured credit facility, refinancing $325 million of unsecured debt, while raising its incremental liquidity.
Got all that? Okay, good. You’re going to be tested on it in the morning.
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