Pan Am Hires Plaskett to Fill Top Position
Financially troubled Pan Am Corp. ousted its two feuding top managers Thursday and replaced them with Thomas G. Plaskett, a respected airline industry executive.
Officials of most of the company’s unions lauded the firing of C. Edward Acker, chairman and chief executive, and Martin R. Shugrue Jr., the vice chairman and chief operating officer. Three other high-ranking executives resigned and four were promoted in the reshuffle at Pan Am, which is the parent of money-losing Pan American World Airways.
The head of the airline company’s Teamsters Union, William F. Genoese, said in a telephone interview from Palm Springs that his union has called for Acker’s firing since 1983. But the new management, he added, has only 30 days to “correct all the damage done to us in the last four years” or there will be a strike. “The ball is in their court,” he said.
Battles With Unions
Unions representing pilots, flight engineers and flight attendants have made agreements--granting wage, work rules and benefits concessions to the company--that were contingent on a change in management and specifically on Acker’s departure.
The Transport Workers Union has not yet approved a concessions agreement and contract talks with the Teamsters broke down earlier this month. The union has turned down Pan Am’s demands for pay cuts, reduced seniority and pensions and cutbacks in medical insurance coverage.
The degree of support that the unions give Plaskett and his management team will be a major factor in determining whether the 60-year-old carrier can survive.
Archie Lenzi, chairman of the Air Line Pilots Assn.’s Master Executive Council at Pan Am likened Thursday’s developments to a change of managers by a losing athletic team. “If the team does not (win), you have to make a change at the top to turn it around,” he said. He praised the choice of Plaskett, saying that his reputation “will be recognized and the financial community will make the funds the company needs available.”
Plaskett, 44, was president of Continental Airlines from October, 1986, until last July, when he was fired amid Continental’s difficulties in absorbing People Express, New York Air and Frontier Airlines. Before that, he had served American Airlines in a variety of marketing and financial capacities.
Pan Am will need all of his skill. The company is very short of cash and, according to Julius Maldutis, airline analyst with Salomon Bros., a New York brokerage house, faces a major liquidity crisis.
As of Sept. 30, 1987, Pan Am had only $195.8 million in cash. “Because the airline faces its maximum losses and cash drain in the fourth and first quarters,” Maldutis said, “we believe that maximum liquidity pressures will occur before the end of the first quarter.”
Tom Lambert, president of the Pan Am Chapter of the Flight Engineers International Assn., lauded the ouster of Acker but lamented the removal of Shugrue. “We felt he had a plan for the airline for 1988 and that it would have flown.”
Lambert said he had spoken Thursday with Plaskett, who was appointed as the parent firm’s chairman, president and chief executive, and told him he would be “busier than heck--especially in trying to keep the Teamsters from striking.”
The situation with the Teamsters reached an impasse Thursday when Pan Am said it had formally turned down an offer of arbitration from the National Mediation Board.
The clock ticking toward a Teamster walkout began when the arbitration proposal was rejected. After a federally mandated 30-day cooling-off period, the company will be allowed to impose its contract proposal, and the union will be free to strike.
Geneose said Thursday that Pan Am has “beat up on our people for four years.” He said members of some of the other unions had gotten pay increases from the airline and “we got none. We have a lot of IOUs out there.” The Teamsters represent 4,500 Pan Am employees, including reservation clerks, sales clerks and cargo clerks.
Shugrue and Acker had both been on thin ice with the Pan Am board since they had a loud argument during a board meeting in December. The fight was over Acker’s efforts to spin off the airline subsidiary and sell it to Jay A. Pritzker, the Chicago millionaire who is the largest shareholder in Braniff Inc., a Dallas-based airline.
Shugrue opposed the plan, which was contingent upon the unions granting Pan Am wage and benefits concessions of at least $200 million a year for four years.
‘Insurmountable’ Problems
According to one person within the company, who did not want to be quoted by name, “two very different reasons caused the departure” of Acker and Shugrue. In Acker’s case, the source said, “the board realized that there were going to be insurmountable union problems.” And, “after the occurences of last December, the board did not see Shugrue as a team player.” Officially, the company called the departures of the two men “resignations.”
Before being elected Pan Am chairman in 1981, Acker had been chairman and chief executive of Air Florida, which went bankrupt. Shugrue joined Pan Am in 1968 as a Boeing 707 pilot.
Some analysts said Thursday’s moves by Pan Am were only cosmetic.
“The basic structural problems at Pan Am are the same,” said Edward J. Starkman, an analyst with Paine Webber in New York. “Nothing has changed. The window dressing is fine but the problems have not changed. The problems with the unions are not going away.
“Pan Am has no domestic routes to feed its international flights. It has no domestic hub. There is no domestic airline left to acquire, and the airline is going to be cash negative until April 1.”
Plaskett sent Pan Am employees a three-page newsletter right after the announcement of his appointment.
Other Resignations
“This certainly not the time to dwell on how or why things have happened,” he said. “Finger-pointing serves no purpose. . . . Today marks the beginning of that new era for our company . . . a bold and unprecedented partnership between Pan Am and its employees. . . . It is a partnership that must eliminate the ‘we-they,’ ‘management-union’ or ‘us-them’ attitudes.”
Pan Am said Russell Thayer, senior vice president for operations, C. Raymond Grebey, senior vice president for industrial relations, and Donald L. Parker, senior vice president for market developments and passenger service, had also resigned.
Hans Mirka, Pan Am’s senior vice president for field sales and services, was named executive vice president and general manager of operations; Robert L. Gould, senior vice president for airline and strategic planning, was appointed senior vice president of operations; William R. Boesch, senior vice president for sales and advertising, was named senior vice president for field passenger and cargo sales and services, and Thor Johnson, the company’s regional managing director for the Northeastern United States, was named vice president for field sales and services.
