Showdown Between Eastern, Machinists Starts Friday

Eastern Airlines, smaller and deeper in debt than a year ago, begins 1989 facing federal mediation considered crucial to what the carrier will look like a year from now--if it still exists.

“We simply cannot survive if the National Mediation Board persists in holding Eastern hostage as it has been doing,” wrote Tom Matthews, Eastern’s senior vice president for human resources, in a Dec. 28 letter to Walter C. Wallace, chairman of the mediation board.

Wallace will participate Friday in mediation at an undisclosed location between Eastern and its Machinists union. The mediation sessions, with no deadline set by the federal board, are aimed at settling a 16-month-old contract dispute that has been before the board for a year.

New Questions About Safety

Failure to reach agreement could lead to the mediation board’s declaration of an impasse. That would trigger a 30-day cooling-off period, after which the union could strike and Eastern could impose its own work conditions.

While some union leaders suspect that the hard-line Texas Air Corp. ownership would like a strike so that it could try to break the strike and bust the union, the struggling airline might not last through disruptions and much more negative publicity.

Eastern ended the year with new public questions about its safety after an emergency landing Dec. 26 in Charleston, W.Va. of an Eastern flight with a hole in its fuselage. There were no injuries, and company officials say Eastern has one of the industry’s best safety records.

But the incident came after Eastern earlier in the year went through a comprehensive Federal Aviation Administration probe and Department of Transportation scrutiny. Those studies said Eastern was safe, but its unusually bad labor-management relations could threaten safety.

Executives of Eastern’s pilots union will meet early this month to discuss their contract talks, begun about six months ago, with management. The pilots are also hopeful that the National Mediation Board, which has set final briefs for early February, will agree with them that Eastern and its Texas Air sister, Continental Airlines, are being run as a single carrier.

A single-carrier ruling could lead to unionization of Continental, to which Texas Air has transferred some Eastern assets because of its non-union status, the pilots union says. Eastern officials say Continental is run separately from Eastern.

The pilots haven’t said whether they would honor a Machinists strike.

Still $200 Million Apart

Since Machinists negotiations began, Eastern has laid off 7,233 employees, or about a fifth of its work force, and lost $319 million, the company says.

It has been lobbying ardently for declaration of an impasse, bringing the 30-day deadline that the company says will force movement in the negotiations.

Eastern reported $233.7 million in losses for the first three quarters of 1988, and its loss for the past decade totals $1.3 billion.

Management and its largest union, the 8,500-worker Machinists, are $200 million apart in their latest contract offers. But besides money, there are important philosophical differences between the two sides.

Machinists District 100 President Charles E. Bryan firmly believes that workers should have a major role in company decision making. His dream has been an employee-owned Eastern.

The management of Eastern, bought nearly three years ago by Houston-based Texas Air, has been more interested in slashing the wages of the non-mechanics in the Machinists union. Mechanics make up about half the union, but the management says it must cut baggage handler and other non-mechanic wages.

Some baggage handlers, for example, would have hourly wages cut over three years from $15.60 to $10. Mechanics would be cut only by small amounts. Union officials have described the company offer as a divide-and-conquer strategy to split the union between mechanics and the other workers.

Eastern management also points out that Machinists refused to take the 20% salary cuts agreed to by its pilots and flight attendants unions in February, 1986, in an effort to stave off bankruptcy or the sale to Texas Air. Machinists leaders say Eastern employees are being told to suffer even more for bad management that isn’t committed to keeping Eastern alive.

Transfer of Assets

The unions say Texas Air Chairman Frank Lorenzo is stripping away Eastern’s assets and will abandon a carcass.

The $365-million sale of Eastern’s profitable Northeast shuttle service to New York developer Donald J. Trump and the earlier spinoff of Eastern’s computer reservations system to Texas Air are cited to support that argument. Planes and gates have also been sold, and Eastern reportedly has been offering other assets such as Canadian routes.

Eastern says it needs cash infusions to keep operating.

Bryan, who portrays his union’s resistance to Lorenzo as a virtual holy war, has sought a “white knight” to rescue Eastern employees and allow them to take over the airline. But the only reported serious talks last year about buying Eastern were with TWA Chairman Carl C. Icahn, who wanted steep union concessions.

In a Nov. 9 letter to Bryan, Lorenzo, who hadn’t deigned to communicate directly with Bryan until recent months, said the contract negotiations were the most realistic way to help the airline.

“Time is running against Eastern,” Lorenzo wrote.