TWA managing to fly despite strike
In the airline business, problems seem to be landing as frequently as flights these days. Take Trans World Airlines, for instance. Late last week the company's 5,700 flight attendants went on strike. This was not good news for the airline or for its chairman, Carl Icahn, who seems to be getting more than he bargained for when he wrestled TWA away from Texas Air's Frank Lorenzo last summer.
Despite concessions from the pilots and machinists, Mr. Icahn has not been able to stem the flow of red ink, and the company is losing about $1.4 million a day, if first-quarter projections are accurate.
The flight attendants' strike may not be that devastating, however, either for the airline or for travelers. TWA has already put 1,500 newly trained flight attendants on its planes, and there are another 1,500 employees who can man them temporarily.
The airline has canceled service to four of its 23 cities overseas (Tel Aviv, Copenhagen, Cairo, and Athens). Many domestic flights were canceled, though they tended to be the emptier ones, and TWA was still flying into all the cities it serves in the US.
At this point the pilots are not supporting the flight attendents. The leadership of the machinists' union is leaving individual members with the decision of whether to honor picket lines. In Kansas City, for instance, most of the 3,200 machinists who repair the fleet refuse to cross picket lines. Whether the pilots and machinists in the end fully support the flight attendants will determine if TWA can fly through the strike.
TWA seems unlikely to compromise in its demands for a 22 percent wage reduction and work-rule changes that would add two hours to the workweek. TWA says it does not need 6,000 flight attendants. If it gets the work-rule changes it wants, it can pare down to 3,000 to 3,500. That would help costs by reducing numbers and by getting new, lower-paid employees into the pipeline.
The union says the company is asking for 45 percent reductions in wages and benefits. It says TWA is discriminating against flight attendants because the company believes they are not ``breadwinners,'' and the union has filed a complaint with the Equal Employment Opportunity Commission.
The hard line presented by Icahn is new to TWA, says an analyst for Value Line, a financial research firm, and who declined to be identified. ``In the past, TWA gave in at the last minute, and that's why its cost structure is so unfavorable compared with the other airlines.''
Even if Icahn can get labor costs in line, the analyst says, ``he'll still have a rough time because the domestic structure [TWA has] to feed [its] international routes is not as extensive as other airlines'.''
Late last month, in an effort to expand its regional flights and hook them up to the more lucrative international flights, TWA bought Ozark Airlines. The purchase, however, is probably too small to get TWA on a firm competitive footing. Low-cost competitors like People Express are bringing the same fare wars to the international market that are turning the domestic market on its ear, and it's making it a lot less profitable for high-cost carriers like TWA.
The days when TWA could subsidize its domestic business with its international business may be over, at least temporarily. The falling dollar is putting a crimp on Americans' traveling abroad. Terrorist acts, including bombing at European airports and hijackings (including a TWA plane last summer), may also be cutting into international travel, the Value Added analyst says.
There is some irony in the union strike. Just last summer, the pilots' and machinists' unions, with quieter help from the flight attendants, threw their support to Icahn. The alternative was for the airline to be bought by Texas Air. Its chairman, Frank Lorenzo, had earlier taken Continental Airlines through bankruptcy and thus voided the labor contracts.
If Icahn can hang onto the support of pilots and machinists, he may have a fighting chance of working TWA back into the big league. But, one analyst says, ``it's going to be a tough fight.''