Sky-high losses threaten to ground US airlines
Airlines seeking to cut their labor costs in a desperate fight to return to profitability are winning concessions from some unions, but running into bitter confrontations with others.
William W. Winpisinger, president of the International Association of Machinists (IAM), one of the unions heavily involved, has angrily criticized airliner industry cost-cutting moves as ''classic union-busting tactics.'' He says the issue will be given attention at the AFL-CIO's biennial convention that opens Saturday in Hollywood, Fla.
Workers are being used as scapegoats for the economic woes of airlines that have been hurt by ''cutthroat competition that airline deregulation has spawned, and fare wars that lose money every time an aircraft takes off,'' Mr. Winpisinger says.
Many major carriers are losing money heavily and blame unions - unjustly, organized labor contends - for unprofitable operations.
Continental Air Lines, which on Sept. 24 filed for reorganization under Chapter 11 of the Federal Bankruptcy Act, claims that work rules and labor contracts forced it to employ ''hundreds more pilots and flight attendants than it needed.'' The inflated payroll costs contributed, it says, to losses of $471. 9 million since January 1979, including $84 million so far in 1983.
''High labor costs were a critical part of the difference between very substantial losses and reasonable profits,'' Continental officials said in an affidavit. If it had been able to reduce labor costs in 1982 to a ''reasonable'' 19 percent of total operating expenses, it would have earned $71.3 million instead of losing $135.5 million.
Other airlines are saying much the same thing. According to government figures, wages and benefits accounted for nearly 38 percent of US airline costs in 1982. C.E. Meyers Jr., president of Trans World Airlines (TWA), said a few weeks ago, ''Time is fast running out on us. Our high costs, especially our employment costs, are eating us alive.''
TWA announced in mid-September that it intends to cut its work force by 3,500 employees by 1984. Mr. Meyer, who said the cuts are being discussed with unions, called the action ''unavoidable'' because of domestic losses.
Eastern Airlines is asking its 3,500 employees to take a 15 percent pay cut Nov. 1 and a further 5 percent reduction Jan. 1, and to cut paid vacation time at least 20 percent. Frank Borman, Eastern's chairman, said employee acceptance of the proposals would ''put us back on the path toward profitability.''
The IAM and the Transport Workers Union, which represents flight attendants and other unions, oppose the plan. The TWU, which has been bargaining for 18 months on a new contract, could strike Oct. 31 if there is no agreement.
But some workers have responded to pleas for help. Republic Airlines warned in August that it planned layoffs this month if cost cuts could not be made. Since then, IAM unionists approved a 15 percent pay cut through May 1984. The concessions are subject to acceptance by the airline's five other unions.
Northwest Airlines pilots also have agreed to fly more hours each month, to accept rules changes, and to go along with a six-month wage freeze. Western Airlines unions are submitting to members a plan for a 10 percent pay cut and no cost-of-living increases for one year, in return for company stock and a share of profits for three years after 1984.
Meanwhile, a number of new airlines, particularly Frontier Airlines, have taken advantage of airline deregulation to fly new routes on a nonunion basis, with wages and benefits about 30 percent less than those on competing unionized carriers.
Unions charge that the nonunion operations are ''a direct attack on organized labor.'' They have announced plans for ''appropriate action'' against them.