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Unions drop objections to US Airways reorganization

ALEXANDRIA, Va. — US Airways Group Inc. has cleared two union objections to its reorganization plan and proposed merger with America West Holdings Corp.

A hearing Thursday in U.S. Bankruptcy Court was also expected to address another sticking point: a retention plan for senior management.

The hearing is the final hurdle to the Arlington, Virginia-based air carrier's exit from bankruptcy protection, which it has declared twice in three years. Wednesday, US Airways announced that creditors had approved its Chapter 11 bankruptcy reorganization plan, including the purchase by America West.

The resolutions announced Thursday involved a profit-sharing plan for workers, which US Airways argued must be scaled back to accommodate new investors.

Union leaders had also been seeking a seat on the board of the combined airlines.

The unions have also objected to a plan by US Airways to create a package for about 1,800 management employees to prevent an exodus of managers in advance of the airline's merger with America West.

The acquisition by America West, which that company's shareholders approved Tuesday, is expected to close within weeks.

The goal is to form a stronger airline that would compete better with lower-cost rivals. US Airways has a strong presence on the East Coast and in the Caribbean. America West, based in Tempe, Arizona, operates across the West from hubs in Phoenix and Las Vegas.

Under the merger, the US Airways name will be used when the air carriers are combined to create the nation's sixth-largest airline.