TIME: Almanac 1993/TIME Almanac 1993.iso/time/031389/03138900.037

Text File | 1992-09-23 | 5.5 KB | 111 lines

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Going for Broke at Eastern


The strike disrupts travel and could bankrupt the airline


    Few labor-management battles in the 1980s have matched in
bitterness the feud between Texas Air Chairman Frank Lorenzo and
the machinists at Eastern Air Lines. Since 1987 the
International Association of Machinists and Aerospace Workers
(I.A.M.) has staunchly resisted Lorenzo's demands for wage
concessions. At midnight last Friday, after more than a year of
federal mediation failed to produce an agreement, the union
launched a strike that is producing havoc for the carrier's
100,000 daily passengers and could throw East Coast airports
and other transportation hubs into turmoil.

    The walkout by some 9,000 Eastern machinists, baggage
handlers and other I.A.M. members was supported by thousands of
Eastern pilots and flight attendants who refused to cross the
picket lines. Determined to continue operating, Eastern said it
had hired 1,100 accredited mechanics and 5,500 unskilled
workers to fill in for baggage handlers and other
ground-service workers. But without its pilots, Eastern was
nearly paralyzed. In contrast to an average daily schedule of
some 1,040 flights, on Saturday the airline managed to get only
a few dozen jets into the air.

    Both sides in the dispute realize that a strike at the
financially hemorrhaging carrier may finally send Eastern to
"the corporate graveyard," as Lorenzo puts it. Eastern posted
record losses of $335 million in 1988 and since then has been
losing an estimated $1 million a day, a deficit that can only
grow during the strike.

    The machinists were the last major obstacle to Lorenzo's
cost-cutting campaign. Since taking over the troubled airline in
1986, Lorenzo has slashed the work force from 40,000 to 30,000,
dropped service to 14 cities and sold off the profitable Eastern
Shuttle for $365 million to Donald Trump. Eastern's pilots and
flight attendants had already submitted to wage cuts before
Lorenzo took over.

    Eastern started talks with the I.A.M. in October 1987,
demanding $150 million a year in concessions. The airline wanted
15% wage cutbacks for machinists, which would reduce their top
rate from $18.83 an hour to an average of $16. For baggage
handlers, Eastern wanted to lower the top rate from $15.60 to
$10. In exchange, the airline offered enhanced job security,
along with training programs that would enable workers to move
up to higher-paying positions. The I.A.M. rejected the wage
rollbacks, insisting on an 8% raise that would cost $50 million
a year.

    The National Mediation Board, a federal agency that steps
into deadlocked labor disputes, has tried in vain since January
1988 to bring the machinists and management closer together. As a
federally mandated 30-day cooling-off period ticked down to the
strike deadline, the mediators called on President Bush to
establish an emergency board to examine the dispute, a move
that would have delayed the strike an additional 60 days. The
mediators pointed out the potential widespread impact of the
strike, since the AFL-CIO has threatened to disrupt rail, bus
and airline transportation across the U.S. in support of the
I.A.M..

    But Bush refused to intervene, contending that such a move
was unlikely to produce an agreement. He also warned the unions
against staging secondary boycotts of other carriers. As the
strike deadline approached, Eastern's management made a
last-ditch offer to reduce its wage-concession demands to $125
million, but IAM viewed the concessions as still too large.

    Eastern's 3,600 pilots pledged to honor the strike even
though Lorenzo had appealed to them at midweek via a 20-minute
video taped at his Houston home. Said Lorenzo: "If the pilots,
the flight attendants and the noncontract employees support the
picket line and don't show up for work, Eastern cannot
survive." As the tape rolled, Lorenzo took out a new contract
he was about to offer his pilots and signed it.

    The gesture fell flat. Under the pact, the pilots, who have
given up $164.5 million in wages since 1986, were asked for an
additional $64 million a year in concessions. The pilots
rejected the contract and threw their support to the I.A.M.
members, asserting that the airline's fleet could not be safely
maintained during a mechanics' walkout. Said John Bavis, head of
Eastern's pilots' union: "What's Lorenzo going to do with 225
airplanes? Take them down to the local Jiffy Lube?"

    On Friday Eastern won permission from a U.S. district court
to order I.A.M. workers to take a day off with pay. Citing
"significant amounts of vandalism" at Eastern facilities last
month, Joseph Leonard, chief operating officer of the airline,
said the carrier was concerned that if the angry union members
were not sent home they would engage in sabotage.

    I.A.M. officials heatedly denied the charges. Said Frank
Ortis, vice president of IAM Local 702 in Miami: "Our people are
professionals. There is no sabotage." But as the strike got
under way, 3,000 IAM members vented their anger outside Eastern
headquarters in Miami. Some hurled rocks, bottles and cinder
blocks, while others charged the gates.

    Starting Saturday, other carriers struggled to accommodate
Eastern customers looking for an alternative ride. Meanwhile,
the airline once run by World War I ace Eddie Rickenbacker was
heading into the heaviest cross fire in its history.