Machinists Give Tentative OK to Concessions for Ailing Tiger

Flying Tiger Line, the financially troubled Los Angeles air cargo carrier, has reached a tentative agreement with its largest union over wage and benefit concessions worth more than $20 million a year, a source close to the negotiations said Tuesday.

The tentative agreement, which calls for three-year, 15% wage cuts and a $10-million reduction in benefits for members of the International Assn. of Machinists, was reached last Friday, according to a source close to the negotiations.

The 2,200 Flying Tiger employees who are members of the union voted on the package Tuesday, but results were not expected until today.

The package of concessions also was said to provide for a two-tier pay scale, under which newly hired machinists would be paid at lower rates.

In return for the concessions, the company reportedly said it would initiate a profit-sharing plan.

The concessions are smaller than those granted by Flying Tiger’s 650 pilots on Nov. 27. The pilots agreed to 3 1/2-year, 25% wage cuts and $10 million in benefit reductions, but a source at the company said Flying Tiger management felt it could not ask the lower-paid machinists to take as large a wage cut.

The package of concessions would reportedly reduce a machinist’s average $40,000 yearly wage by $6,000 to $34,000 and cut vacation benefits by 20%. The concessions will go into effect Jan. 1 if union members ratify the package. At Flying Tiger, machinists union members, among other things, repair and maintain aircraft and handle cargo.

Neither Lawrence M. Nagin, senior vice president and general counsel of Flying Tiger, nor Louis R. Schroeder, president and general chairman of International Assn. of Machinists Local 141, which represents the Tiger employees, was available for comment Tuesday.

Flying Tiger, the world’s largest air cargo carrier, sought the concessions from pilots to help stem losses that have averaged $74,600 a day since 1981. Last year, Flying Tiger, a unit of Los Angeles-based Tiger International, lost $44.2 million on revenue of $1.1 billion.

Stephen M. Wolf, Flying Tiger chairman and chief executive, has said the air cargo carrier could not continue operating unless it obtained hefty wage and benefit givebacks from employees.

He has also said the concessions were necessary so the air cargo carrier could refinance about $300 million of its $525-million long-term debt.

The firm must still negotiate for concessions from its flight attendants and its flight instructors. Those two groups have a combined total of about 200 employees.

A source close to the negotiations with the machinists said the union agreed to vote on the proposal before Flying Tiger’s board of directors meeting today. The board is expected to consider a request from Wolf that it rescind an earlier decision to take bids on Flying Tiger’s assets.

As previously reported, the company put itself up for sale when negotiations with the pilots union stalled in mid-November. After the pilots agreed to take large wage and benefit cuts, Wolf said through a spokesman that he would ask the board to take the airline off the market.