Eastern Plans Layoffs and Cuts in Pay : Flight Attendants Union Threatens to Fight Carrier’s Moves
Eastern Airlines, hurt by fare wars with competitors enjoying lower operating costs, said Monday that it will lay off 1,010 flight attendants, reduce pay for the remaining 6,000 and put in place tough new work rules aimed at improving productivity.
An Eastern spokesman said the work-rule changes and payroll reductions will save the troubled carrier between $400 million and $500 million this year alone.
The actions, which Eastern President Joseph B. Leonard said “were demanded by the marketplace,” put the nation’s third-largest carrier on a collision course with its unions.
Robert V. Callahan, head of the union that represents Eastern’s flight attendants, vowed that “since it is a fight you want, we will fight you . . . in the board rooms, in the banks, in the media, on Wall Street and with the public . . . and maybe in the streets.” He added: “It’s all-out war.”
However, he gave no indication of what action the union would take other than to repeat an earlier promise that there will be no strike before March 1.
Creditors Could Act
On Feb. 28, Eastern’s 60 lenders could pull the carpet out from under the airline unless it is able to gain vast new concessions from its workers. Eastern owes $2.5 billion on which it must pay interest of $220 million annually.
If the company by then has failed to obtain new agreements with its unions and has been unable to put together a business plan that shows the likelihood of profits, it risks falling into default on its loans. The creditor banks set the Feb. 28 deadline earlier this month and could demand immediate repayment of Eastern’s loans and other long-term debts.
Although the airline is in conflict with all its unions, the problems with the flight attendants are the most pressing. The attendants are working without a union contract and negotiations are at an impasse.
A 30-day cooling-off period in the talks ended Sunday after a federal mediator was unable to bring about an agreement. Despite the flight attendants’ pledge not to walk out before March 1, Eastern has trained “several hundred” management people to serve as substitute flight attendants.
During the past weekend, they were sent to cities throughout the country to be available in the event of a strike but will be called home in a few days, a spokesman said.
Talks between Eastern and the Air Line Pilots Assn. were recessed Saturday and, according to National Mediation Board Chairman Walter Wallace, a federal mediator will study the dispute and report to the board next week. Eastern has a contract with its machinists that has two years to run but says that it must also be reopened and renegotiated before Feb. 28 in order to reduce operating costs.
Leonard said the layoffs and pay cuts will be effective Feb. 4. Flight attendants’ pay, which was reduced 18% two years ago, will be cut another 2%, he said. The average flight attendant, under the new pay plan, will make $31,000 a year, the airline president said. However, starting pay for newly hired flight attendants will be $12,000 a year.
The company’s flight attendants, who now average 50 to 63 hours a month in the air, will be required to put in flight time of 80 hours a month. Because of the changed work rules, the company said, the layoffs will not affect flight schedules.
It added that it hopes to put the attendants back to work sometime.
Callahan, president of Local 553 of the Transport Workers Union, which represents the flight attendants, called the layoffs “absolutely unnecessary and inhumane” as well as “financially insupportable.”
Based on Seniority
He said that Eastern has had a program of voluntary leaves for senior employees for the last 15 years. “We could have gotten rid of most of the 1,000 through leaves,” he said. “We did in 1982.”
The flight attendants to be laid off will be those with the least seniority.
Callahan noted that the flight attendants had agreed to the 18% pay cut in 1984. Other unions also made concessions in 1984, he said, but those have been fully restored. “Every worker is 100% except us,” he said.
John V. Pincavage, airline analyst with the brokerage firm Paine Webber, said labor is so angry with Eastern that it wants a housecleaning of the airline’s management.
“The unions will go to management and say, ‘We’ll give you concessions of a permanent nature, 20% to 30% reductions; we’ll help you avert Chapter 11 (bankruptcy proceedings). Our conditions for reopening contracts are the firing of (Eastern’s Chairman) Frank Borman and top management.’ The quid pro quo is Frank Borman’s head on a plate.”
Eastern officials deny that the unions want to oust Borman.
Politically Difficult
“They have not said that they want top management ousted,” said Jerry Cosley, an Eastern spokesman. “I think that the union heads want the problems to go away. This is a politically difficult situation. They know the magnitude of the Eastern financial problems, especially since two of them are on the Eastern board, but it is politically difficult to explain that to their members.”
Nevertheless, it is known that the unions would like to oust the current Eastern administration. In fact, they have begun a campaign for Eastern’s 41,000 employees to gain control of the company through the purchase of stock. The employees already own 20% of the airline’s stock, which they received in exchange for past wage and benefit concessions.
Charles Bryan, head of the airline’s local of the International Assn. of Machinists, recently asked members to purchase as much Eastern stock as possible so labor can control the airline. Callahan declined to say if his members would be asked to do the same.
Both Bryan and Callahan are members of the airline’s board of directors.
Neither Bryan nor officials of the Airline Pilots Assn. could be reached for comment Monday.
