Pan Am Cuts Managers’ Pay 20%, Asks Union Help

Pan American World Airways announced Wednesday that it is cutting its management employment costs by 20% through layoffs and salary freezes and asked its unions to begin talks toward cutting labor costs by an equal percentage.

Pan Am said it told a meeting of the unions’ Joint Labor Council, attended by leaders of all the unions except the Transport Workers Union, that it plans to eliminate 464 management positions and freeze management salaries.

The company, which has suffered heavy losses recently, said these steps will save $30 million a year.

Pamela Hanlon, a Pan Am spokeswoman, said the layoffs, which will affect management in all parts of the company, take effect April 1.

The airline is seeking an additional $180 million in cuts through talks with the unions, which also include the Teamsters, Airline Pilots Assn., Flight Engineers International Assn. and the Independent Union of Flight Attendants.

The unions did not respond to the request at the meeting Wednesday, Hanlon said. Asked what Pan Am plans to do if the unions refused to talk, she replied, “I’m not going to anticipate what the (company’s) next step would be in that case.”

Hanlon said the airline is also cutting $50 million in advertising costs, consulting fees and suppliers’ costs.

The company said the board of Pan Am Corp., the airline’s parent, approved the reduction plans Tuesday.

The announcement follows a letter sent to all employees last week by Chairman C. Edward Acker and Vice Chairman Martin R. Shugrue that said the airline is prepared to seek labor-cost concessions as part of its “1987 Pan Am Plan,” to return to profitability.

The letter was written after Pan Am directors rejected a cost-savings plan proposed by the unions, company spokesman James Arey said.

In return for an increased stake in the company, the unions had proposed concessions and work-rule changes they said would save $600 million over the next three years.

The unions also have said they will seek a buyer for the airline, which owns attractive, profitable transatlantic routes. AMR Corp., parent of American Airlines, was reportedly negotiating to buy Pan Am, but last week it announced that it was not interested in a purchase.