Strike at Eastern Likely, Pilots Union Official Says
An official of the pilots union at Eastern Airlines said Sunday that he sees an “8-out-of-10” possibility of a work stoppage against the ailing carrier as a March 3 strike deadline set by the Machinists union approaches.
Frank Lorenzo, chairman of Eastern’s parent Texas Air Corp., is “looking at the abyss. The evil empire is tottering,” said Wright B. George, a member of the Eastern master executive council of the Air Line Pilots Assn.
Sixteen months of talks on wages between Miami-based Eastern and the International Assn. of Machinists have resulted in no settlement, and the union will be free to strike legally March 4 if a 30-day cooling-off period mandated by the National Mediation Board expires without a new contract.
The cooling-off period expires at midnight EST March 3. Intensified talks involving Eastern management, the Machinists and federal mediators are to start Wednesday in Washington.
The two unions representing pilots and flight attendants at Eastern have said they would honor any picket line set up by the machinists, who represent about 8,500 mechanics, baggage handlers and other ground personnel.
“We understand the risk (of striking),” George said in an interview. “The worst thing that can happen to us is that we lose our jobs.”
Eastern spokesman Robin Matell in Miami said the airline is “guardedly optimistic” that the dispute will be settled without a strike.
“We don’t want a strike. A strike is not in the company’s or the unions’ best interest,” he said. Matell reiterated Eastern’s vow to continue operating in the event of a strike.
Many financial analysts and other observers believe a bruising strike against Eastern could jeopardize the airline’s survival.
$150 Million in Wage Cuts
Eastern recently reported a record net loss of $335.4 million in 1988, nearly double its $181.7 million loss the year before. Revenue dropped to $3.8 billion from $4.4 billion in 1987.
The airline’s latest contract offer to the machinists calls for $150 million in wage cuts.
George conceded that Lorenzo could well put Eastern into Chapter 11 bankruptcy, liquidate its assets or sell it outright.
He said pilots union officials have set up a meeting with Wall Street analysts and Eastern creditors later this week in New York to discuss the risk to creditors if there is a strike. The pilots held a similar session with analysts alone last September.
Eastern currently has $550 million to $650 million in cash reserves, roughly equivalent to its accounts payable, George said.
Matell put the reserve figure at about $400 million.
“Eastern has substantial cash reserves,” the spokesman said. “We keep our creditors well informed, and they know that they have no cause for concern.”
3,400 Eastern Pilots
George insisted a strike will occur “if rational heads don’t prevail.” The 3,400 Eastern pilots, he said, have been seeking talks with management for months with job security their primary issue.
Tom Matthews, Eastern’s senior vice president for human resources and chief labor negotiator, has told the pilots the company plans to contact their union on Tuesday to discuss a schedule for negotiations.
However, Matell said, talks with the pilots have been made more difficult by Wednesday’s scheduled start of “super-mediation” with the Machinists, which will tie up Eastern’s top negotiators. He said the situation also has been complicated by the pilots union having recently changed the members of its negotiating committee.
