TWA Unions Hang Together Against Lorenzo

Francisco (Frank) Lorenzo’s success at busting Continental Airlines’ unions has brought about a rare spirit of cooperation among unions at Trans World Airlines, which Continental’s parent, Texas Air Corp., is planning to buy for $793.5 million.

When Lorenzo abrogated all union contracts at Continental in October, 1983, after filing for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, he laid off a substantial portion of Continental workers and cut wages of the remaining workers almost in half.

The fear of equally harsh treatment has brought unity to the TWA unions representing pilots, mechanics, flight attendants, clerks and other employees--unions that have had a long history of non-cooperation.

In the recently concluded monthlong strike by pilots against United Airlines, for example, members of the International Assn. of Machinists continued to work even though almost all of that company’s flight attendants respected the picket lines.

In an effort to block Lorenzo’s takeover plans, the unions have hired consultant Brian Freeman and the investment firm of Lazard Freres & Co. to help them plan actions that could range from an employee buy-out to a hurried search for another bidder.


The unions say they plan today to picket the Beverly Hills offices of Drexel Burnham Lambert, which is seeking buyers on behalf of Texas Air for about $550 million in what are called “junk bonds,” or debt securities with less than investment-grade ratings. The proceeds would be used to help finance the TWA purchase.

“We want to tell investors that labor will do everything in its power to stop Lorenzo from taking over TWA,” said Vickie Frankovich, president of the International Federation of Flight Attendants.

David Venz, a TWA spokesman, said the airline is “fully committed to implementing our board of directors’ decision to make TWA a subsidiary of Texas Air” and would, therefore, fight a buy-out by employees.

The TWA unions, all of which are having serious trouble negotiating contracts with TWA’s current management, represent about 20,000 of 28,000 employees.

TWA’s flight attendants voted last week to strike if no new agreement is reached, and several sources say privately that Lorenzo has already been involved behind the scenes in discussing deadlocked negotiations. However, spokesman Venz said he knows of no such contacts between Lorenzo and TWA officials.

He added that it was “particularly unfortunate” that the attendants announced the result of their strike vote last week when TWA was so preoccupied with the terrorist hijacking of TWA Flight 847. Frankovich responded that the unions are “deeply concerned” about the hostages but added that the company is pursuing its business, including a merger discussion, and that that should include negotiations with its unions.

As to the prospect of a takeover, she said, “we believe that our differences with TWA now, even though serious, are minor compared to the treatment we must expect at the hands of Lorenzo, based on his actions at Continental.”

The attendants have been in negotiations for more than a year and have offered to make some concessions--but not enough as far as management is concerned.

TWA wants a three-year wage freeze, work-rule changes aimed at boosting productivity and a two-tier wage structure under which the wages of employees hired after the contract goes into effect would start out lower than those of employees already on the payroll, merging in the seventh year.

The attendants offered to accept a two-tier wage structure, but one that would start new employees at 30% less instead of as much as 68% less, as the company is demanding. The company also wants to make the two-tier structure retroactive to January, 1985, something that the union finds unacceptable.

Meanwhile, the attendants are seeking a job security clause, which they feel would be essential if they fail to stop a takeover by Lorenzo.

“We don’t want to make concessions with no job security protection with Lorenzo hovering in the background,” Frankovich said.

A strike is not expected for at least six weeks. By that time, the machinists would also be in a position to call their own strike. Furthermore, the pilots have started exchanging contract proposals with TWA management.

Adding to the unions’ interest in the proposed Texas Air/TWA deal is the ironic fact that, while Texas Air is pursuing a sizable merger, its Continental subsidiary is continuing to operate while protected from creditors under Chapter 11.

Since Continental filed to reorganize in September, 1983, and let go most of its pilots, the pilots union has been trying to get Texas Air to accept responsibility for its members’ lost income.

“We are going to arbitration and are in the courts with cases that involve in excess of $2 billion in liabilities against Continental and its parent, Texas Air,” said John Mazor, a spokesman for the Air Line Pilots Assn.

Boosting the pilots’ confidence was a ruling by a bankruptcy court in Biloxi, Miss., last week. The judge lifted a stay against a creditors’ lawsuit, basically clearing the way for the creditors to proceed with efforts to have Texas Air made responsible for Continental’s debts. Mazor contends that, once potential investors in the Texas Air takeover of TWA realize that the company might face sizable liabilities, the unions will have better luck stopping the merger.

Officials of Continental and Texas Air would not comment on the lawsuit or the potential effect of the planned takeover of TWA.

Campbell Near Agreement

A unique concept in labor relations may soon prompt a small farm labor union in Ohio to halt a six-year boycott of Campbell Soup products and could serve as a model for other farm labor unions and employers.

The independent Farm Labor Organizing Committee, headed by Baldemar Velasquez, and Camden, N.J.-based Campbell are trying to iron out final details of the plan, which is expected to go into effect next week.

The battle started when the union demanded that Campbell negotiate a contract for workers employed on farms that grow Campbell products. The union said hundreds of workers had signed cards asking for representation by the Farm Labor Organizing Committee.

Campbell refused, and the union began efforts to get support for a national boycott of the company’s products.

Campbell argued that labor problems should be handled by the growers that hired the workers, but the union countered that, as Velasquez put it, “Campbell tells the growers everything, from which fertilizer to use to the time they want harvesting to begin, and they certainly have a tremendous impact on labor issues, since Campbell decides how much it will pay the growers who produce tomatoes and cucumbers exclusively for Campbell.”

The plan has four essential elements:

- It would create a nine-member commission to be headed by former U.S. Secretary of Labor John T. Dunlop, a Harvard University professor, with four representatives each from the union and the growers.

- The commission will set up a system to allow workers to decide whether they want union representation. The system might allow for secret ballot elections, as is the case in California, or a check of cards signed by workers saying they want a union.

- The growers will form an association to deal with the union. If workers vote for union representation, the Dunlop commission could assist in contract negotiations and serve as an arbitration board, if necessary. Such an automatic setup for arbitration is highly unusual.

- Although Campbell will not be directly involved in the negotiations, company spokesman Scott Rombach said it has agreed to “take into consideration” the prices it pays farmers for their products if those prices rise as a result of a union contract.

Among the issues still being negotiated is the union’s insistence that the company promise not to stop buying from a unionized company even if it means paying higher prices because of higher labor costs.

Rombach said Campbell understands that, but the union wants it to be in writing.

The company also agreed to work with the union to help get the Ohio Legislature to pass a state law similar to the California Agricultural Labor Relations Act, which allows for secret union ballots and is designed to protect workers from abuses by growers. California’s law does not, however, provide for binding arbitration of contract disputes.

The National Council of Churches was helping to mediate the argument, and progress toward the agreement may have been helped when, on June 17, bishops of Ohio’s six Catholic dioceses said they would urge all Catholics in the state to support the union boycott.

The union was also stepping up its pressure on officials of other companies that have substantial financial ties to Campbell--Philadelphia National Bank, Equitable Life Assurance Society and Prudential Insurance Co.--through the New York-based Corporate Campaign Inc., which puts pressure on financial institutions and other firms that deal with a company involved in a labor dispute.

Ray Rogers, head of Corporate Campaign, was a key figure in the successful effort to get J. P. Stevens & Co. to work out a settlement with the Amalgamated Clothing and Textile Workers Union after years of bitter struggle.

Campbell says proof that it is not anti-union is shown by its contract with Cesar Chavez’s United Farm Workers covering workers in California mushroom fields that are owned by Campbell. The firm also has contracts with the United Food and Commercial Workers covering thousands of workers in its processing plants.

A Crimp in Child Care

President Reagan’s proposal to tax employees’ fringe benefits could put a crimp in efforts to create more child-care centers for children of working parents.

Dr. Leonora Alexander, head of the Labor Department’s Women’s Bureau, said current law encourages workers and companies to use such centers by allowing write-offs on certain costs connected with child care.

In an interview here last week, she noted that, in the last five years, the number of child-care centers has tripled to 1,800. While the total is still relatively small, she said, it represents “phenomenal growth” that has been possible, in large part, because of favorable tax laws.

Clearly, Alexander and her agency are in an awkward position. They don’t want to fight their boss, but they are eager to encourage creation of more centers, and they feel that tax incentives are an important way to do that.