Striking Continental pilots `sue for peace'. Airline's ability to prosper, despite picket lines, undercuts walkout's effect

Some call it a truce. But others say it's surrender. Pilots on strike at Continental Airlines are trying to end one of the nation's most visible labor disputes.

``The best terminology is a cease-fire,'' says John Prater, spokesman for the Air Line Pilots Association (ALPA).

Ever since entering bankruptcy and voiding its union contracts, Continental has become a symbol of corporate America's new aggressiveness with organized labor.

Chairman Frank Lorenzo outfoxed the flight attendants' and machinists' unions, by getting both sets of workers to return to nonunion jobs. And for two years he has successfully ignored the pilots' strike, coaxing some 600 pilots back and hiring 1,000 more to rebuild Continental into the eighth largest airline in the United States.

Now, even the pilots' strike shows signs of entering another, perhaps final phase.

Last month, ALPA urged the strikers to reapply for Continental posts -- something the bankruptcy judge overseeing the airline's reorganization had urged for months.

``This is not the end to the pilot strike at Continental,'' ALPA president Henry Duffy said at the time, putting the best face on a difficult situation. The union held several meetings with bankruptcy judge T. Glover Roberts last week, hoping to find some way to push the company toward a settlement.

But others call the union's move, in effect, surrender. ``I think ALPA has given up,'' says one longtime airline-industry observer. ``They lost it, basically.''

Events of the past two months have hardly been encouraging for the union.

In late August, Contintental broke off talks with the union, saying ALPA no longer represented the pilots. The same day, it released a petition to that effect, signed by 90 percent of the airline's working pilots. Later, when ALPA sent out the back-to-work call, the company sued the union, charging that it was trying to infiltrate the operation. The suit is still pending; and, apparently, none of the strikers was hired, pilot sources say.

If no moderation is evident at the top echelons of the company, a different kind of moderation is slowly spreading among the grass roots -- between Mr. Lorenzo and his employees and between current pilots and those on strike.

``I've really changed my attitude,'' says Jerry Shafer, a DC-10 captain who crossed the picket line after four months on strike. ``When you're with a company that's making money and expanding, you have a good feeling.''

``I have never seen a more upbeat group of people since I've been working,'' adds John Gaylord, another DC-10 captain, who crossed after eight months.

Morale problems persist in some quarters. ``They still owe me $8,000'' in back pay, complains one veteran flight attendant after a long, late, and crowded Denver-to-Chicago flight. Like many Continental employees, she's working longer hours for less pay. Nevertheless, she says, she plans to stay.

Tensions between the strikers and nonstrikers have begun to ease as well.

``I guess there's a slow healing process,'' says Mr. Gaylord, who recalls tire slashings, character assassinations in various strike literature, and animosity even from pilots of other unionized airlines during the strike's first few months. ``It's moderated,'' he says.

``It's not as caustic a situation as it may seem,'' adds Mr. Prater, who has been on strike for two years. ``You don't completely turn your back on someone [who's crossed over]. I can still call him at night'' and chat.

One reason for the lessening of tensions is Continental's financial success and employee involvement.

Last week, for example, the airline announced record third-quarter revenues of $479.4 million and net income of $41.3 million. Of profits so far this year, $21.1 million already has been set aside for employee profit-sharing.

``I could stand some of that profit-sharing,'' says Phil Nash, outgoing head of the striking Denver pilot group. ``I'm tired of trouble. We're not coming back to start a war. We're trying to sue for peace.''

If the pilots fail to move toward a settlment through Judge Roberts in the next few weeks, they will have to call off the strike or fall back on hopes that either a pilot shortage or the threat of litigation will persuade Lorenzo to settle.

Continental is expanding at a time when major airlines are on a record-breaking hiring binge. Last week the company applied for a second Atlantic route -- Denver to London -- to supplement its Houston-to-London run. Lorenzo has also tried to take over TWA and Frontier Airlines in recent months. Though these attempts were foiled in part by unions of the two carriers, each time Continental walked away richer.

Some analysts add that they doubt a shortage of pilots or the threat of litigation will force Continental, which plans to come out of bankruptcy next year, back to the bargaining table.

``That,'' says one airline analyst, ``may be whistling in the dark.''