Pan Am Chief Says Wage Cuts Needed; Teamsters Threaten Strike
MIAMI (AP) _ Pan Am Corp. is in dismal financial condition and must get concessions from its labor unions before it can be pulled out of a financial tailspin, new Pan Am Chairman Thomas Plaskett told shareholders Tuesday at the airline’s annual meeting.
A Teamsters union leader warned, meanwhile, that Pan Am will face a strike if no contract settlement is reached soon between the union and the airline.
″We have urgent problems to solve. We’ve been held in suspension pending the finalization of new (contract) arrangements with our union-represent ed employees,″ Plaskett said. ″That is the first step on our road to recovery.″
Pan Am, the nation’s eighth-largest airline, operates Pan American World Airways, a Northeast shuttle service and a commuter airline.
Plaskett, a former head of Continental Airlines who came to Pan Am in January as part of a major management shakeup at Pan Am, outlined his strategy to stanch financial losses in the immediate future.
He called for expanding the carrier’s existing transatlantic and Latin American routes and beefing up domestic routes so they feed more passengers to Pan Am’s international flights.
Plaskett stressed wage cuts and other labor concessions he said Pan Am must get from the Teamsters, the flight attendants union and the Transport Workers union.
The company has won $75 million in concessions from the two unions representing pilots and flight engineers, Plaskett said.
Since the Teamsters’ contract expired Feb. 21, Pan Am has imposed terms on the Teamsters designed to save $35 million annually by cutting wages 8 percent and boosting productivity. Pan Am also is asking for $27 million in annual savings from the Transport Workers union, which represents mechanics and baggage handlers, and $31 million from the flight attendants.
In return for the concessions, the company is offering $21 million in Pan Am stock, with an additional 15 million shares to be issued to employees if specific profit targets are reached. Pan Am stock traded Tuesday at $2.75 a share on the New York Stock Exchange.
Pan Am, which has debts of around $500 million, posted a net loss of $262 million last year and $462 million in 1986.
In the first quarter of this year the company reported a net loss of $83.3 million, narrowed from a loss of $93.6 million in the same period last year.
Plaskett was sharply criticized by William Genoese, director of the national Teamsters union’s Airline Division.
At a news conference before the shareholders meeting, Genoese threatened that the Teamsters would strike the airline if a fair agreement was not signed soon.
″We can strike them at any time. We can strike them over Memorial Day or the Fourth of July,″ Genoese warned, calling the date merely a matter of organization.
The Teamsters represent more than 4,000 reservations clerks and other ground personnel. Pan Am has a total of around 28,000 employees.
Pan Am continues to lose money and will not regain its financial health until it has signed contracts with all five unions, allowing the company to borrow money to recapitalize, Genoese said.