How Eastern Airlines was able to dodge the strike that Pan American couldn't
Two major airlines that survived financial hard times over the past three years, largely with the help of their unions, have now run into labor problems -- leading to a strike for one. Eastern Airlines avoided a showdown with its unions in early February through compromise settlements with pilots, mechanics, and other unionized employees. The costs were high, but Eastern's planes maintained schedules.
Pan American World Airways, however, which had reached an agreement with its pilots, was shut down Feb. 28 by the Transport Workers Union (TWU), which represents 5,753 mechanics, baggage handlers, flight dispatchers, and food-service employees.
Other Pan Am unions observed TWU picket lines, bringing the number of workers off their jobs to about 19,000. The TWU is seeking largely to recoup wage and other gains lost through contract concessions in 1982.
Pan Am's domestic flights were grounded over the weekend and overseas service was sharply curtailed. Management pilots and supervisory personnel in other jobs were being used on Monday to try to maintain 40 percent operations on international flights.
Tempers at the bargaining table were hot on Monday following Pan Am's large advertisments in some major newspapers appealing directly to strikers to accept an offered settlement. The ads appeared as the carrier was reported to be training 800 replacements for flight attendants. No resumption of negotiations is scheduled.
Eastern, Pan Am, and some other airlines have run into serious financial problems since government deregulation of the airlines in 1978 spurred low-cost competition. This came as labor costs were rising for major carriers and as the economic downturn cut into business.
Both companies were near the brink of bankruptcy when unions agreed to contract concessions, including 18 percent to 21 percent wage cuts to remain until Jan. 1 this year. They also cooperated in raising productivity. For Eastern, the concessions amounted to $380 million in savings, enough to save the carrier from a serious crisis.
Still far from sound, with a $2.2 billion debt, Eastern agreed to graduated restoration of wage rates and a profit-sharing plan and cost-savings program.
Pan Am initially offered a 20 percent wage increase over 36 months and cash bonuses of $1,000 for mechanics and $800 for other workers. A Pan Am mechanics' top base salary is now $29,500, and a baggage handlers base rate is $23,800 per year.