Lineup of PSA Board Gives Airline Diversity
There appear to be few professional similarities between John Fanning, a Washington labor lawyer, and Sol Price, the founder of San Diego-based Price Cos.
The first has been appointed to the National Labor Relations Board by five U.S. presidents, and the latter is known for his innovative retailing, having founded both the now-defunct FedMart and the Price Club chains.
Nonetheless, both men were at the same table in Pacific Southwest Airlines’ Lindbergh Field offices Monday morning for the first-ever meeting of the airline’s board of directors.
Fanning and Price, along with San Francisco attorney Jack Curtis and Minnesota Mining and Manufacturing Chairman Lewis Lehr, were nominated to the airline board by PSA employees. The newly formed board will oversee airline matters, while the PSA Inc. board will deal with the corporation’s growing non-airline businesses.
Oddly enough, neither Price, who relies primarily on a newly purchased Price Cos. airplane for business trips, nor Fanning, who logs thousands of miles on commercial airliners each year, pretends to be expert in airline industry affairs.
Selected by Employees
But Price and Fanning, along with Curtis and Lehr, were selected by PSA employees to help guide the airline as it expands its fleet, payroll and flight schedule in the turbulent and competitive West Coast market. Employees won the right to choose their directors last year in exchange for absorbing a 15% pay cut and promising to boost productivity by 15%.
As part of that agreement, employees will share in 15% of PSA’s (the airline, not the corporation) future pretax profits, to be distributed half in cash and half in stock. In addition, employees will eventually receive 15% of the airline’s common stock.
Fanning and Price were selected by PSA’s 3,500 Teamster-represented employees. The Air Line Pilots Assn. selected Curtis, who helped craft the wage-for-ownership agreement last year, and non-represented employees selected Lehr.
Although PSA’s board accepted the directors suggested by employees, the four aren’t really employee “representatives,” a distinction that both Price and Fanning stressed.
“I don’t work for Teamsters,” Fanning maintained. “I work for every stockholder in the company. I’ll do the best and most honest job that I can do, to the best of my abilities . . . but I don’t take any orders or instructions, and if it comes to that, I’ll say, ‘Thank you, goodby, it’s been fun.’ ”
Price said he is “not going to be a specific representative (for anyone). I’m going to be a director . . . (not) someone who just goes to meetings and says ‘yes’ and ‘no’ on a knee-jerk reaction basis. . . . If I’m not a positive influence, I will leave.”
Sensitive Information
Fanning, Price, Curtis and Lehr have each told employees that they sometimes won’t be able to discuss what goes on behind the board room’s closed doors.
Curtis has warned the pilots who selected him that, “when it comes to sensitive information, he won’t be able to talk to us about it,” said Pete Pettigrew, master executive council chairman for PSA’s Air Line Pilots Assn.
“That’s fine with us,” Pettigrew said. “It’s his right to vote his conscience (on board decisions). What we wanted is access to the board, someone we can talk to, and we’re really happy with what we’ve got.”
“Everyone’s looking forward to seeing how the ‘grand experiment’ works out,” said Gil Oakes, a Teamster business agent who works with PSA’s flight attendants and agents.
That “experiment” with employee stock ownership and employee input into the board selection process is already changing the way the airline does business, according to Pettigrew and Bonnie Johnson, an accounting department manager.
“There’s more interest in the company and people try harder,” surmised Johnson, a 25-year PSA employee who was on a non-union employee committee that selected 3M Chairman Lehr. “They’re less apt to throw out something and more apt to say, ‘Let’s not spend that money, let’s try to get by on something else.’ ”
Pettigrew offers a more pointed example: ALPA grievances decreased after the wage and ownership agreement was introduced.
Although grievances by PSA’s Teamster-represented flight attendants have also declined, grievances lodged by mechanics and reservationists have risen, according to Marv Griswold, principal officer of Teamsters Airline Local 2707, which represents employees of airlines in 13 Western states. Griswold linked the upswing in reservationists’ grievances to uncertainty about how a planned reservations office slated to open in Reno will affect jobs in San Diego.
‘Positive Thing’
“Although we’re not happy with the pay give-backs . . . we see stock ownership as a positive thing,” Griswold said. “It provides employees the incentive to really get involved with their company, and participation at the board level can be good, providing that the company truly is interested in hearing from its employees.”
PSA is definitely hearing more from its pilots, according to Pettigrew, who said pilots are, for example, forwarding their ideas on which cities should be added as part of the airline’s continuing expansion, Pettigrew said.
One pilot identified a destination that “sits right in the middle of ‘Yuppieville,’ which would be perfect for our new (BAe 146) airplanes,” Pettigrew said. “I don’t think that pilot would have (made the suggestion) a year ago.”
Pilots now see passengers as “revenue that can come back into their pockets if passengers return” for more flights on PSA, Pettigrew said.
Pettigrew said there is also “the other side of the coin. Management is more responsive and responsible to employees, basically because employees are part-owners. Company managers have to be more aware, more sympathetic to employees (because) it’s no longer a fiefdom of serfs and masters. The serfs have some ownership.”
That philosophical change is not lost on Fanning and Price, both of whom have long histories in the labor relations arena.
Price, who has never before been a director of a company he didn’t manage, praised both PSA management and labor for trying new methods. However, he cautioned that “it remains to be seen if they will work or if they will need to be changed. I think it’s good that everyone (at PSA) recognizes that something other than the adversarial approach between labor and ownership has to be tried.”
Good Reputation
Although Price downplayed his labor relations expertise, he “has always kept in close touch with” employees, according to Louis Cotarelo, president of Teamsters Local 542 and business representative for the 2,600 Teamster employees of Price Cos.
“Sol has always had a good reputation with his employees,” Cotarelo said. “He can walk through the warehouse and talk to individuals about their children, which impresses people very much.”
That personal relationship is not just for show, Cotarelo said. Price Cos. Teamsters have never gone on strike, and the company has never entered into a full-blown arbitration case. “That’s not very common,” Cotarelo said. “Although (Teamsters) work with a number of good employers, (the dearth of arbitration cases) is unusual for the amount of people in one company.”
Cotarelo said Price brings other talents to PSA’s board. “He’s got the Midas touch when it comes to marketing, and you’d have to say he’s got a lot of financial expertise,” Cotarelo said.
“It’s probably not terribly smart at my age (to be) going on someone’s board in a business I know nothing about,” said Price, who is 69. “But who knows, maybe some of the suggestions I have will contribute something. Sometimes it’s good for a board to have a totally outside member.”
Fanning, who also serves as a Teamster-selected board member for Transcon, a Los Angeles-based trucking company that is partly owned by its employees, said that although he is attuned to union problems, union “interests are identical to the interests of the average stockholder. They both want to keep the company healthy and prosperous.”
Consequently, if PSA’s board chooses a course that makes Fanning uncomfortable, he’ll object, “not because it’s something that would make the Teamsters unhappy, but because it’s not a good business course to pursue.”
Fanning said he “doesn’t believe in confrontation and adversarial positions. I don’t think you have to hate your employer, and I don’t think you have to hate the unions.
PSA’s “plan is a very good way in which employers and unions can see that their interests are not necessarily adversarial.”
