Texas Air Dispute Hearings Open : Federal Mediation Bid Centers on Union Representation

Federally mediated hearings opened Tuesday to settle a bitter dispute between airline unions and Texas Air Corp. about whether the company’s two subsidiaries--Continental and Eastern airlines--should be considered a single airline for bargaining purposes.

The issue is important for the unions because neither pilots nor mechanics at Continental Airlines are unionized, while both groups have militant union organizations at Eastern Airlines.

Texas Air Corp. contends that while it owns both Eastern and Continental, the subsidiaries remain independent air carriers and should have separate dealings with labor.

Meanwhile, a union-commissioned study concluded that “downsizing” of Eastern Airlines and the draining of its assets and funds by parent Texas Air Corp. leaves Miami-based Eastern with a precarious future.

“It is not possible for an airline to shrink its way to profitability,” said the report by Touche Ross & Co., an international accounting and management consulting firm.

The report, commissioned by the Air Line Pilots Assn., detailed the sales of Eastern assets to Texas Air for what it called less than market value and the apparently heavy management fees Eastern paid to Texas Air, which bought the troubled carrier in 1986.

An Eastern Airlines spokesman, Robin Matell, replied Tuesday that the figures used in the report were misleading and that the conclusions showed “a lack of understanding of normal business practices.” Texas Air spokesman Bruce Hicks called the Touche Ross report “a work of fiction.”

Hundreds Demonstrate

In Washington, the first day of hearings before Roland Watkins, a hearing officer for the National Mediation Board, began as about 120 Continental pilots staged a protest across the street from the board’s headquarters because they have not been allowed to participate in the proceedings.

“We don’t want to be railroaded by this,” complained Rick Swanson, who has been a Continental pilot for six years and is a leader in a Continental employee group called “Continental by Choice.”

A spokesman for the group, Carter Smith, said a total of about 400 pilots, flight attendants, reservation clerks, mechanics and other Continental employees also participated in the demonstrations.

The pilots later marched to the headquarters of the Air Line Pilots Assn., where they also set up protest pickets.

ALPA, which represents 40,000 commercial pilots, has led the fight to get the Continental and Eastern work forces under a single bargaining system.

In Tuesday’s testimony, the pilots union argued that Texas Air “asserts centralized control” over both airlines and “exercises close control over the management of both Eastern and Continental, particularly with respect to labor relations.”

It cited as examples in support of its argument Texas Air’s recent arrangement to provide $22.5 million to Eastern in event of a strike. The union also noted other joint agreements between the two airlines in the transferring of assets, the sharing of sales forces and integration of its frequent-flier programs.

Joseph Manson, an attorney for Texas Air Corp., sought unsuccessfully at the beginning of the hearing to have the proceedings stopped, arguing that the board had no jurisdiction over the matter.

The three-member board has reserved time into late June for a series of hearings. The board is not likely to consider the case until mid- or late summer.