TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/031389/03138900.037

Text File | 1990-09-22 | 6KB | 102 lines

BUSINESS, Page 42

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.