Determined to Tough It Out

By Janice Castro

After losing more than $1 billion since 1980 and nearly going bankrupt in the process, Pan American World Airways (1984 revenues: $3.68 billion) was in no mood to compromise when some 5,700 Transport Workers Union mechanics, baggage handlers and other ground employees walked out three weeks ago. The carrier responded by selling its food-preparation unit to Marriott In-Flite, an airline caterer, thereby eliminating the jobs of 700 striking kitchen employees.

Last week the war of attrition between the largest U.S. overseas carrier and the strikers grew hotter. Weakened by the return to work of Pan Am's 1,400 pilots, the T.W.U. headed back to the bargaining table. But even as the talks resumed, Pan Am sent termination notices to more than 1,000 flight attendants who refused to cross picket lines and said it would replace them with new workers.

Pan Am, facing an estimated $77 million in losses this year, sees the issue as nothing less than survival. The airline had some $400 million in cash reserves on hand when the walkout began, and was prepared to ride out a strike to win an acceptable contract.

By shifting its resources to protect its profitable overseas routes and using management employees to do the jobs of striking workers, Pan Am has been able to keep 137 of its 390 daily scheduled flights in operation. Thousands of passengers have been stranded from Istanbul to Rio, however, and others have endured service turbulence as supervisors performed such unfamiliar tasks as sorting baggage and serving meals. When a Manhattan traveler whose flight had been canceled demanded to see the management, his ticket agent growled, "I am the management."

Workers have been stunned by Pan Am's actions. In the past four years, employees have helped save the airline by agreeing to wage cuts and other concessions worth $500 million. Arguing that it was high time for the carrier to restore those lost earnings, the T.W.U. pushed for an immediate 14% pay boost. Instead, the company offered a 20% raise over three years. Among the other proposals rejected by the union were sharp reductions in pension and health-care benefits.

To control future expenditures, the company wants a two-tier wage scale of the sort that is becoming an industry standard, under which new employees would be paid less than present workers. In addition, Pan Am wants the right to hire more foreign nationals for overseas flights. The unions see these & measures as a threat to job security for U.S.-based workers. Said Mary Annis Moore, a representative of the Independent Union of Flight Attendants: "What Pan Am is doing is anti-American."

Behind Pan Am's steely negotiating stance are some formidable cost-control problems. With the increased competition created by deregulation, the airline is loath to raise fares to meet rising expenses. Pan Am is already saddled with stiff operating costs. Its pilots, for instance, are among the highest paid in the U.S. The captain of a Pan Am Boeing 747 jetliner can earn $150,000 annually for an average 55 flight hours each month. At People Express, pilots of similar jets make $40,000 a year while flying closer to the industry average of 85 hours. Said Robert Joedicke, a transportation analyst for Shearson Lehman Bros.: "Pan Am has to set an example. It has to hold the line."

The carrier is moving ahead with plans to reinstate service on key domestic routes. And even though the two sides are talking again, the strike is not like- ly to end quickly. Said a spokesman for the increasingly embittered union: "We do not expect a breakthrough anytime soon."

With reporting by Thomas McCarroll/New York