Southwest Flies Into Labor Turbulence

There’s a little less love in the air at Southwest Airlines Co. these days.

The king of low-fare airlines has perhaps the best labor relations in the industry. Employees call the chairman by his first name. They pride themselves on the cheerful, fun-loving esprit de corps highlighted on the unscripted cable-television show “Airline,” filmed at Los Angeles International Airport and Chicago’s Midway Airport.

But these days, Southwest’s 7,300 flight attendants and their union are increasingly unhappy with contract talks that are bogged down, mainly over wages. Workers and management remain deadlocked despite two years of bargaining and a federal mediator’s help.

The flight attendants have held rallies to publicize their frustration, arguing that Southwest’s latest offer would leave their wages 20% to 30% below the industry average. There has even been talk of a possible strike against Dallas-based Southwest if the talks deteriorate further.

A work stoppage would cause a huge disruption in California, where Southwest -- which specializes in frequent, short-haul service -- is the busiest carrier with 577 daily departures. Nearly 2,000 of Southwest’s flight attendants are based in California.

The airline usually reaches long-term contracts with its employee groups with little rancor, giving it sustained labor peace. In fact, Southwest has had only one strike in its history, a three-day walkout by its mechanics 24 years ago.

The flight attendants say they can’t live on pride alone. “We work for the most successful airline in the industry,” said Gwen Dunivent, a 24-year Southwest flight attendant who lives in Garland, Texas. “We’re maybe the most important employee group, because it’s up to us whether people come back. We need a little recognition of that.”

Matters have become so strained that Southwest Chief Executive James Parker last week asked his predecessor as CEO -- the carrier’s legendary co-founder and Chairman Herbert Kelleher -- to take over the airline’s seat at the bargaining table. Before succeeding Kelleher in 2001, Parker had long served as the airline’s chief labor negotiator.

Parker turned to Kelleher after concluding “that we’re spinning our wheels here, and need to take a new tack,” company spokesman Ed Stewart said.

By enlisting Kelleher, Parker tapped what is arguably the airline’s biggest asset. At 73, Kelleher is the wisecracking, chain-smoking executive who created and nurtures the freewheeling, can-do culture, a revered figure at Southwest, where everyone calls him “Herb.”

His new role at the talks points up how the dispute is important not only because it has the potential to disrupt the plans of thousands of travelers, but also because it threatens a state of goodwill between Southwest’s management and workers that is the envy of the airline business, analysts said.

“The fact that they brought Herb in is a sign that Southwest is taking this very seriously,” said Thom Nulty, a partner at the Corporate Solutions Group, a travel advisory firm in Monarch Beach, Calif. “To have the flight attendants unhappy with the company could have a devastating impact for a long time if they can’t get through this.”

Southwest’s flight attendants sing songs and tell jokes in the air, clean each aircraft between every flight and routinely use the adjective “outrageous” in a positive way to tout their service. They, along with pilots and other workers, often pitch in to haul luggage and handle other tasks outside their job descriptions.

Analysts agree that Southwest’s staff is a key reason it’s one of the most efficient airlines flying. The company -- whose stock’s ticker symbol is “LUV” -- is the only U.S. carrier that’s been profitable every year since its maiden flight in 1971. In 2003, when most major airlines suffered massive losses, Southwest earned $442 million on revenue of $5.9 billion.

Stewart said Southwest wasn’t publicly commenting on details of the negotiations. With Kelleher at the table, Stewart said, Southwest has the same goal as before: “To produce a win-win contract for the employees as well as for the company.”

The dispute’s main sticking point is over wages. The flight attendants are represented by Local 556 of the Transport Workers Union, and Local President Thom McDaniel said Southwest’s offer falls short.

“People really do love this company,” McDaniel said. “But we want people to feel appreciated when they come to work, and part of that is paying the same kind of wages made by other people in the industry and the company.”

Southwest’s latest offer proposed a wage hike of about 20% over a 7 1/2-year contract, or slightly less than 3% a year, McDaniel said. But Southwest’s pilots and some other workers at the airline “have gotten an average of 6% to 7% a year, and Jim Parker himself got an 8.4% increase last year,” McDaniel said. “That didn’t sit well with our members.”

Southwest’s Stewart called the airline’s contract “very competitive.”

The flight attendants’ median wage is about $24,000 a year, meaning half earn more and half less, the union said. An entry-level flight attendant earns about $14,000.

A veteran flight attendant can earn more than $45,000 a year, but that’s often achieved by working extra shifts that can leave the employee away from home for five or six days a week, the flight attendants said.

“I haven’t had a real pay increase in six or seven years,” Dunivent said.

They also complain that their wages don’t compensate them for the idle time they spend at airports, waiting for flights to arrive and depart.

“It’s not uncommon for us to put in a 10-hour day but only get paid for six hours of it,” said Deborah Danish, a 27-year Southwest veteran in Dallas.

The flight attendants’ last contract was ratified in late 1997. It became amendable in June 2002, and they’ve been working under its terms until a new agreement is reached. Union bargainers began informal talks with Kelleher last week that are scheduled to continue this week, after which both sides hope to resume formal negotiations, McDaniel said.

“We’d like to get a fair contract and move on,” he said.

If the negotiations fail, the two sides could ask the National Mediation Board to declare an impasse. That would trigger a 30-day “cooling-off” period that could culminate in a strike.

So far the dispute hasn’t appeared to hurt Southwest’s stock, which closed Friday at $14.98 a share, down 20 cents, on the New York Stock Exchange. But if the bargaining turns ugly, it could erode the stock’s value over time on grounds that “the one incumbent airline where investors never worry about labor strife could join the crowd on that issue,” analyst James Higgins of Credit Suisse First Boston said in a recent report.

Danish and other flight attendants are well aware that their labor battle could upset Southwest’s amiable ways.

So far they “have continued to maintain the positive, outrageous service we’ve always given,” Danish said. “But I am very fearful that a large majority of our membership will lose that culture” if a settlement isn’t reached soon, she said.

And she and others said they were prepared to strike if need be. Speaking of Kelleher, she said: “We love Herb. I love Herb. More than anything I don’t want to strike. But this is just business, to give us a fair wage.”