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Continental Airlines and pilots start talks on new contract

April 2, 1997

HOUSTON (AP) _ Continental Airlines and its nearly 5,000 pilots already agree on at least one thing going into contract talks: The pilots deserve and need a raise.

The debate in the coming months, of course, will be over how much.

``Membership has clearly told us pay and retirement are the central issues in the contract,″ says Bill Borrelli, vice president of the Independent Association of Continental Pilots. ``Not to minimize the other issues, but those are the meat and potatoes.″

The pilots are making the first move, presenting their proposals today. The existing two-year contract can be amended beginning July 1.

Continental pilots average $113,000 annually, or 65 percent of what their counterparts at the other major airlines make, according to their union.

Continental won’t put a dollar amount on average pilot earnings, saying much depends on seniority and the type of aircraft the pilot flies. The airline does dispute the 65 percent figure, however, with Chairman Gordon Bethune saying the pilots’ group is comparing its pay to only the five largest carriers.

Taking into account the top 10, Continental pilots are at about 85 percent of the industry average, he has said, adding that he’s hopeful the contract talks can achieve ``normal levels of pay for a normal airline.″

Normal is not a word that often could be applied to Continental, particularly in the turbulent 1980s when it underwent huge expansion, labor strife, customer unrest and financial chaos.

``Continental had to get its operational act together,″ says Vivian Lee, an airline industry analyst at BT Securities of New York. ``When you’re in that vulnerable position, you’re better off fixing the operation and then try to get the employees in line. It looks like they’ve done that.″

The contract would be the pilots’ second with Continental since September 1983, when former Continental Chief Executive Frank Lorenzo sent the airline into bankruptcy and rescinded union contracts.

But the Houston-based airline is no longer pleading poverty. Continental _ the nation’s fifth largest airline _ posted a record $319 million in net earnings for all of 1996, more than 42 percent better than the then-record $224 million made the previous year.

Revenues last year were almost $6.4 billion, up 9.2 percent. And the airline started 1997 with a cash balance of more than $1 billion, the highest in its 62-year history. It also has performed well in customer satisfaction surveys.

``It’s a dramatically different airline,″ Borrelli said, comparing the present-day Continental to the airline he joined in 1987 when his previous employer, New York Air, was gobbled up by Continental during an acquisition spree that also included People Express.

``We went through some growing pains as a result of that,″ he said.

``Today, when I get on an airplane and see the product _ the on-time performance, professionalism of our flight attendants who I believe are the best in the industry _ we’ve watched this thing evolve to really a first-rate carrier, and we’re very proud of that.″

The airline too is proud of its turnaround _ and of its employees _ and is hoping for a quick resolution in talks with pilots. Spokesman Ned Walker said the airline would like to have a new contract in place by July.

Lee, however, notes that negotiations typically can take up to 18 months.

``Management has said most of the reason they’ve turned this company around is attributable to employees, but on the other hand they’re not just going to throw them baskets of money,″ Lee said. ``They’re going to do this in a prudent way.″

The union says it doesn’t expect intense talks to begin for some time.

``It’s not in our interest to rush the deal just to do the deal,″ Borrelli says.

The negotiations come on the heels of acrimonious talks earlier this year between American Airlines and its pilots, where the dispute involved not only pay but also whether the pilots would fly regional jets.

A brief strike Feb. 15 was halted by President Clinton. He ordered an emergency board to put together a proposed settlement and a 60-day cooling off period, but the clock has been halted at the request of both sides.

The American pilots union is scheduled to meet Thursday and Friday to consider the proposed contract. If ratified, it will be sent to the members.

Bethune has said he doesn’t expect similar troubles with the Continental pilots.

``I see no reason to have acrimony and disruption and heartburn,″ he said earlier this year.

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