Although he conceded that there are "some problems" in integrating Pan American World Airways and the former National Airlines, Pan Am Chairman William T. Seawell told stockholders today the company believes it can achieve a single airline entity by the fall.
Although integration of the two companies has been orderly so far, Seawell said unresolved problems, notably labor, will prohibit the legally merged company from benefiting fully from its new status until then.
In remarks to more than 700 shareholders and separately to reporters, Seawell said two of four major labor issues have been resolved: one involved class and craft, and a second outlining which unions will represent which employes. The unions that represented Pan Am employes prior to the merger have been recognized as the representative of all the employes of the merged carrier.
The two remaining labor issues are the thorniest, however. One is seniority -- integrating employes of the two companies. For instance, some pilots currently flying National's planes have fewer years' seniority than some Pan Am pilots who have been on furlough for years. If the unions involved don't reach a negoitated settlement on integrating the seniority lists this summer, the issue will go to binding arbitration.
The final labor issue is the integration of Pan Am and National labor agreements into single agreements covering all employes of the consolidated carrier. Seawell said management has begun meeting with the union to accomplish this integration, "But it may take some time."
Until that time, some classes of employes are operating as if they work for separate entities. For instance, Pan Am has added some DC10 flights to National's Miami-London route to fill additional demand but cannot use its larger 747s yet because National pilots and Pan Am pilots won't fly each other's routes until the labor issues are resolved. National had only the DC10s and Pan Am had only the 747s.
"Although we still indeed have some problems, we are making progress," Seawell told shareholders. "Once the integration of people and facilities has been completed, Pan Am will be agressively repositioned as a new entity -- the new Pan Am. . . ."
However, Sewell admitted the merger won't solve all the airline's 1980 problems. He blamed Pan Am's reduced earnings of $76.1 million in 1979 and a loss of $75 million in the first quarter of this year on rapidly rising fuel prices and the inability to recover those costs through fare increases, at least internationally. However, Seawell acknowledged the challenge for Pan Am and the whole airline industry is to recover those costs without raising fares so high that passengers demand it reduced, especially during a economic recession.
Among the steps Pan Am is taking is phasing out its fuel-guzzling 707s by the end of the year, selling five DC10 aircraft, and eliminating a planned 10 percent increase in capacity.
Although it appears that Pan Am "will have to go through a period of substantially reduced earnings, the long-term trend for the new Pan Am is up," Seawell told shareholders today. He said this year's third-quarter results will be particularly important for the company.
Pan Am officials combined the holding of the annual shareholders' meeting -- held here at an Intercontinental Hotel, part of Pan Am's chain -- with the dedication of a new multi-million-dollar international flight academy yesterday for the training of all Pan Am pilots and flight engineers.