Eastern buffeted by financial crosswinds
Once she finally got a job with Eastern Airlines seven months ago, flight attendant Sharon Quinn thought she had arrived. ``I was proud of them,'' she says. ``This was going to be my career.'' Monday she glanced at a Miami newsstand while shopping with her sister and read that the airline was laying off 1,010 of its 7,200 flight attendants. She knew her short tenure would make her one of them.
The hard news came as abruptly to the rest of the employees of Eastern, Florida's largest private employer and the nation's fourth-largest airline.
The layoffs -- together with the deep, permanent pay cuts for the remaining flight attendants -- are the first moves in an effort by Eastern to save some $450 million a year.
The airline is financially precarious. It owes $2.5 billion to 60 lenders, who set a Feb. 28 deadline for Eastern to show leaner operating costs. If not, they will declare the company in default, driving it into bankruptcy, according to Eastern management.
This is apparently the most severe of a long series of financial wobbles for Eastern in the past decade. The company has been staggering badly since federal regulations on airline routes were lifted in 1978.
In the deregulated environment, Eastern has had to compete with lower-cost airlines that moved in on its routes. When People Express offered its latest fare of $59 from Miami to Newark, N.J., Eastern was forced down to $69, even though its costs are much higher than People Express's and it offers more service on board.
Eastern's unions are aware of the company's problems and assert that they are willing to make concessions, just as they have been making concessions for the past decade.
But the severity of the company's treatment of the flight attendants caught all three unions -- flight attendants, pilots, and machinists -- off guard. Union members are also growing weary of making pay concessions that never seem to set the company back on track.
``We can't keep throwing money down a black hole,'' says John Mazor, a spokesman for the Air Line Pilots Association. ``Something's got to change.''
Eastern is giving its remaining flight attendants what averages to a 20 percent pay cut. The more-senior attendants will face deeper cuts. Work rules are also changing to allow more flying time per month, so that the smaller pool of flight attendants can keep up the same level of services as before.
``It's impossible,'' says Richard Broderick, a flight attendant awaiting a furlough notice. ``People don't realize the workload.'' During one 48-hour period last week, Mr. Broderick worked 23 hours. ``That is exhausting,'' he says, especially when late-night flights are involved.
Analysts say that Eastern has been inconsistently tough -- threatening bankruptcy and getting temporary concessions, rather than behaving like other airlines, which have gone for permanent concessions that help ease the debt load.
The latest announced cuts in flight-attendant pay will not be enough either, according to Lee Howard, editor of the Airline Quarterly, a periodical analyzing industry trends. ``It might be a temporary fix. But eventually they've got to negotiate those favorable two-tier-type contracts with their unions or [something] very similar.''
Increasingly, airlines are getting two-tier contracts, which continue the high pay of current workers but start new workers at a much lower rate.
``The employees are not underpaid or overworked,'' Kit Darby, president of Future Airline Professionals of America, says. ``The real problem comes from the up-and-down style of the management. People are fed up.''
All three unions at Eastern have agreed to work for the ouster of chairman Frank Borman. ``My attitude is: Either Frank Borman leaves or I leave,'' says Ted Carter, a Boeing 727 pilot based in Atlanta. ``I consider our management not only incompetent but arrogant.''
Should the unions call a strike, industry analysts and the unions themselves are not sure the airline could survive. Even a healthy airline like United has not fully recovered from its strike last year, Mr. Howard points out.
``We have to be very careful, in whatever we do, not to tip the boat over,'' says one Eastern pilot. ``Eastern Airlines is our life.''
But Rhonda Bourne, an Atlanta flight attendant, feels differently. ``We're willing to lose our jobs because the jobs, the pay, and the benefits just aren't worth it.''
Staff writer Laurent Belsie contributed to this report.