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Eastern Plans Layoffs, Wage Cuts for Flight Attendants

January 20, 1986

MIAMI (AP) _ Eastern Airlines said Monday it will lay off 1,010 flight attendants and cut the pay and privileges of the remaining 6,000 in an effort to ward off creditors’ threats to declare default on its $2.5 billion debt.

The attendants’ union said ″an all-out war″ had been declared.

″It is absolutely essential to get this company back on the financial footing it needs,″ said company President Joseph B. Leonard, adding that Eastern hopes to eventually recall the furloughed attendants.

The layoffs of attendants with less than five years seniority will be effective Feb. 4, along with a 2 percent pay cut on top of an 18 percent wage reduction instituted two years ago, Leonard said. Other employees also will eventually be affected, he said.

Eastern will maintain its flight schedule, he said.

Leaders of Transport Workers Union Local 553 had predicted the layoffs, and had expected pay cuts of up to 33 percent.

Local president Robert Callahan vowed earlier Monday to fight the action.

″Since it is a fight you want, we will fight you ... in the boardrooms, in the banks, in the media, on Wall Street and with the public ... and maybe in the streets,″ Callahan said. ″It’s all-out war.″

He would not specify what action the union would take, promising only that workers would not strike before March 1. The attendants’ union has no contract and no further talks were scheduled with Eastern, which has a total of 41,000 employees.

Callahan said at an afternoon news conference that he had received a letter from Eastern’s president inviting the union back to bargain. But he said the union will not ratify Eastern’s current proposal, which includes the wage cuts and layoffs.

Earlier this month, Eastern’s creditors ordered the Miami-based airline to get major labor concessions or face default on its $2.5 billion debt to about 60 lenders, including Chase Manhattan Bank, Citibank and a number of European banks.

Eastern’s $6.3 million profit last year was its first since 1979. Eastern Chairman Frank Borman said the airline has lost $335.5 million since 1960.

Eastern hopes to save an estimated $250 million by the end of 1986 from the layoffs and wage cuts, Leonard said. He said it also plans to change the wage and benefit structures of another 17,000 employees from the airline’s two other major unions, the Air Line Pilots Association and the International Association of Machinists.

″This is what it’s going to take to preserve their jobs,″ said Borman.

Besides pay cuts for attendants, the company said it is cutting their travel allowences and vacation time, eliminating extra pay for intercontinental flights and requiring them to work more time at no additional pay.

Flight attendants now average 50 to 63 hours a month in the air. Eastern officials say they will be required to work 80 hours a month starting Feb. 4.

″The bottom line of our proposal demonstrates that these are still very well-paying jobs, but costs need to be brought in line with norms of the established segement of our industry,″ Leonard said.

In 1985, the average flight attendant made $30,464. Under the new plan, they will make 2 percent less, Leonard said.

That is in addition to an 18 percent payroll deduction the three major unions took in 1984 in exchange for 25 percent of the company’s common stock.

The concessions were to end Dec. 31, 1984, but were extended through Dec. 31, 1985. The attendants refused to ratify the extension and the issue was sent to a federal magistrate for investigation. The issue remains unresolved.

Federal mediators had been working with Eastern and its attendants since July, trying to reach agreement on a contract. When talks hit an impasse, the mediation board recommended that both sides enter into voluntary arbitration, said Meredith Buel, an assistant to National Mediation Board Chairman Walter Wallace.

Eastern rejected arbitration, however, triggering a 30-day cooling-off period that was set to end at midnight, Buel said.

Union members voted overwhelmingly to authorize a strike, Callahan said. But he has said such action will not take place until the creditors’ Feb. 28 deadline passes.

Contract talks between Eastern and its 4,000 pilots recessed Saturday to allow a mediator to prepare a report sometime next week, National Mediation Board chairman Walter Wallace said.

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