Flying Tiger Says It May Go Out of Business Unless Unions Grant Concessions
LOS ANGELES (AP) _ Flying Tiger Line Inc., which has absorbed a flood of red ink in recent years, said Tuesday it may quit business unless its unions grant it substantial concessions.
The company, the principal subsidiary of Los Angeles-based Tiger International Inc., said mounting problems have forced it to put off a planned restructuring of about $300 million of its $535 million in long-term debt.
″Unless these issues can be promptly resolved, the company will not be able to effectively compete and must evaluate whether a continuation of its operations is economically feasible,″ said Stephen Wolf, who took over as president and chief executive of Flying Tiger last month.
Flying Tiger, founded in 1945 by a group of former World War II pilots, is the world’s largest air-cargo line. In the past 3 1/2 years, Tiger International has rolled up losses of $422.3 million. Those deficits included heavy losses on discontinued operations, including a $132 million writeoff on its entire investment in its North American Car railcar-leasing unit in late 1984.
Flying Tiger accumulated operating losses of $71.9 million during the same period, including a $44.4 million deficit in the first half of this year.
Separately, Tiger International spokeswoman Candace Kale confirmed Tuesday that the parent company still is talking with its investment bankers about making a major acquisition by the end of this year. The holding company disclosed in May that it was considering an acquisition.
Wolf began disclosing the company’s deteriorating situation in a series of meetings with employees that began Sept. 29 and is expected to continue through the end of this month, the company said.
The company also has met with representatives of its major unions, said spokesman Lawrence Nagin.
Nagin declined to say how much the company is seeking in concessions, but he stressed that the company feels the problem must be resolved promptly.
No deadline has been set by the company, he said.
Union officials involved with Flying Tiger were out of the office and couldn’t immediately be reached for comment, secretaries said.
The company has 6,500 workers worldwide, of which 2,840 are represented by four unions - the Air Line Pilots Association, Machinists, Airline Flight Attendants and Teamsters.
Wolf also is telling the employee meetings that Flying Tiger must define a specific niche for itself in the competitive air-cargo arena if it is to be successful.
He didn’t say what that niche would be, Nagin said.
In the past, the carrier has shifted frequently between strategies, alternately stressing domestic and Asian service and bulk-freight and small- package delivery.
Before joining Flying Tiger, the 45-year-old Wolf rescued troubled Republic Airlines Inc., staving off bankruptcy, building strong profits, then selling the carrier to NWA Inc., the parent of Northwest Orient Airlines, earlier this year.