Ueberroth, Eastern Unions Agree on Five-Year Deal
Former baseball commissioner Peter V. Ueberroth announced a tentative agreement on a new five-year labor contract with Eastern Airlines’ three unions late Monday, but snags remained as negotiators worked to get Eastern flying again.
“This is a historic labor peace,” Ueberroth said as he left the federal Bankruptcy Court here Monday night. “This is a historic labor partnership,” he added, praising the leaders of the machinists’, flight attendants’ and pilots’ unions.
Ueberroth’s remarks represented a sharp departure from the three years of constant warfare between Eastern’s unions and the company’s current chairman, Frank Lorenzo, who is now viewed by union leaders as their archenemy.
Talks Resume Today
But Ueberroth’s deal with the unions still faces objections from Texas Air Corp., Eastern’s parent company, prolonging the drama over the survival of the venerable airline. Negotiations are to resume here today to deal with the objections.
“We have another bridge to cross,” Ueberroth said, referring to the need to secure approval from other parties involved in Eastern’s pending bankruptcy. “There are difficult issues and there is no guarantee we’ll cross it.”
Ueberroth indicated he was hopeful that an agreement could be brought before federal Bankruptcy Judge Burton R. Lifland before day’s end. Lifland must approve the terms of any such agreement.
Ueberroth also touted the contract as advantageous for Eastern’s 11,000 non-union employees, “who are also our partners for the future.” But Mary Grace Shor, a pro-management representative of those non-union employees, withheld judgment until she had seen the terms of the agreement and said she had asked the judge for a voice on whether it is approved.
An hour before Ueberroth emerged from the meetings to proclaim success, it became clear that obstacles were presented by lawyers for Texas Air. Eastern’s lead bankruptcy lawyer, Harvey Miller, said the agreement “is not satisfactory to Texas Air Corp.”
Similarly, David Boies, a lawyer for Texas Air, said: “There may be agreements between some of the parties, but there is no overall agreement.”
Monday night, a Texas Air spokesman appeared to backpedal on the company attorney’s seeming criticism, saying: “No one’s rejected the agreement. Our lawyers simply haven’t read it yet.”
Miller and Boies made their statements late Monday as they left the Bankruptcy Court in lower Manhattan after a full day of meetings. Neither provided any details as to what Texas Air’s objections are.
One stumbling block reportedly is the issue of who will run Eastern while it is operating under the supervision of federal bankruptcy officials. Eastern filed for protection from its creditors under Chapter 11 of the federal bankruptcy act March 9, five days after the machinists walked out. The strike, with strong support from pilots and flight attendants, virtually shut down the airline.
Sources indicated Monday that Frank C. Carlucci, the former secretary of defense, would play a major role in getting Eastern operating again, possibly as bankruptcy trustee for the company. Carlucci flew here on a plane from Washington with all the key players in the Eastern situation Monday morning.
When asked what he was doing here, Carlucci would only respond: “I am an unemployed government servant who is interested.”
Sources say Carlucci’s presence served to heighten the concern felt by Texas Air officials that they are being pressured to surrender short-term control of the airline before it emerges from bankruptcy.
Since Eastern filed for bankruptcy last month, Judge Lifland has been wielding a heavy club in an attempt to get the unions and management to reach some kind of accord that would get the airline--which he described as “a national asset"--flying again.
30% Ownership Stake
Ueberroth reached agreement with Texas Air to buy the strikebound carrier for $463.9 million last Thursday. However, both sides stipulated that the deal could be voided if the unions did not agree to major wage and work rule concessions by midnight today. As part of the deal, workers would get a 30% ownership stake in the airline in exchange for making $200 million in wage and benefit concessions for each of the next five years.
Carlucci traveled to the New York meetings with Washington attorney David Shapiro, the man appointed by the Bankruptcy Court last week as a special examiner to ride herd on negotiations and deliver an agreement swiftly.
Referring to Carlucci and to the reaching of a union-management agreement a day before today’s deadline, a source close to the talks said: “This has got to be the worst day in Frank Lorenzo’s career.”
“The judge gave Shapiro a huge club and he banged us,” a union source said. “He came back with an agreement two days early that could get the planes flying again, and look who’s holding up the deal--Texas Air,” which Lorenzo heads.
Leroy Washington, a Machinists union official from New York, said that 24 hours after the bankruptcy judge approves the agreement, the airline could start operating 20% of its normal flights. It has operated only about 10% of its 1,040 normally scheduled daily flights since the strike began.
However, Raymond Wright, vice chairman of the Eastern pilots’ master executive council, said that it would be “45 to 60 days” before the financially strapped carrier would be fully operational.
Details of the new five-year contract were not disclosed by Ueberroth or any other parties because they have been ordered by Shapiro not to disclose them or any aspects of the talks.
The bargaining began Friday at the Machinists union headquarters in Washington and were concluded early Monday morning at Shapiro’s Washington law office. The parties then spent most of Monday closeted in offices adjoining the judge’s New York offices.
Takes No Questions
Ueberroth faced a phalanx of television cameras and microphones and read a hastily drafted statement on a yellow legal pad as he emerged from the courthouse at dusk. Even to make his brief statement, he had to secure permission. He declined to answer any questions.
“We’re all very tired. We haven’t slept in two nights,” Ueberroth said.
After the marathon weekend session concluded, Ueberroth returned to his Washington hotel to change clothes and discovered, he said, that his room had been given to someone else. He arrived at the Pan American shuttle ticket counter at 9 a.m. and was immediately asked by a reservation clerk: “Mr. Ueberroth, why are you leaving baseball?”
He smiled and responded: “Because I’ve got 26,000 airline employees to get back to work,” he said, referring to the Eastern workers who have been without jobs as a result of the airline’s troubles. Then, he bought a ticket and flew to New York with a group of union officials, lawyers, Shapiro and Carlucci, in hopes that the new contract would be approved by Judge Lifland.
During the flight, Ueberroth sat between Jack Bavis, the head of the Eastern pilots’ union, and Charlie Bryan of the Eastern machinists. As Bavis left the plane, one of his colleagues asked: “What did you get out of him?” Bavis laughed and responded: “Not much. He’s trading me for (Boston Red Sox player) Wade Boggs.”
The mood on the plane seemed to be that it would be possible to quickly fine-tune the agreement and secure approval from Lifland.
However, like virtually everything else associated with the Eastern saga, what was expected to be a short meeting dragged on into Monday evening. All the key players appeared haggard, having gone without any sleep Sunday night and getting only two hours sleep Saturday night.
The key players, including Ueberroth and leaders of the three unions and their lawyers shuttled in and out of meetings in private offices adjoining Lifland’s chambers. They took a break for lunch at a nearby coffee shop and then resumed meetings at 2 p.m.
At 3 p.m., two key lawyers for Eastern--Miller, a New York bankruptcy specialist, and Boies, one of the country’s top litigation experts--arrived on the sixth floor of the court building and brought a court reporter lugging a stenographic machine with him.
A meeting commenced with only the lawyers and examiner Shapiro. However, after 90 minutes, Ueberroth re-entered the meeting. The discussions went on for 2 1/2 more hours. Then Miller and Boies emerged and said that as far as they were concerned, there was no deal. “There is no meeting of the minds,” Miller said. But he would not elaborate.
All day there were caucuses among various key players in rooms adjacent to Lifland’s courtroom inside the historic old Custom House, which overlooks the harbor and offers a view of the Statue of Liberty. But it appeared that there had been no formal meeting between the judge and the parties.
“I’m a little bit in the dark--a little bit,” Lifland said to reporters on one of his periodic strolls through the hallway. At one point, he brought popcorn, which he made in his office, into the room where Ueberroth was in conference.
Ueberroth and a group of investors, including J. Thomas Talbot, a Newport Beach, Calif., real estate executive, started negotiations to buy the airline weeks ago. They reached agreement on a purchase last week, after initially being told by Texas Air officials that they had been outbid by Chicago hotel magnate Jay A. Pritzker. The Pritzker bid turned out to be “soft,” sources said, and the proposed Ueberroth deal was on again.