If employes of Continental Airlines are successful in gaining control of the airline, A. L. Feldman will stay on as president, but his plan to merge Continental with Western Airlines will be dead, the leader of the Continental employes' group says.
Continental and Western had agreed to merge, until Texas International Airlines moved in and bought a large chunk of Continental stock.
"If we got a chance to vote as shareholders, there won't be a Western merger," according to Paul R. Eckel, the Continental pilot heading the employes' association.
Eckel, who was in Continental management for 2 1/2 years as chief of the pilots during the merger planning, said he was never "too thrilled" about the proposed Western merger. And he predicts a "resounding vote" against one if the employes -- as shareholders -- vote on it, as they would have to for it to go forward. "The (Continental) people out on line aren't in favor of it," he said. "We don't need it."
Eckel was in town to talk to the employes' new lawyer, Simon Lazarus, former associate director of the White House domestic policy staff under President Carter, who was hired to help them fight a takeover bid from another airline, Texas International.
Continental's scheme to block the bid from TI, which holds a 48.5 percent interest in Continental, involves issuing 15.4 million shares of Continental stock to the employes. That amount would more than double the current outstanding shares of Continental, thus diluting TI's interest and giving the employes controlling interest in the airline.
Texas International has sued Continental in court, charging it with violating securities, tax and labor laws in seeking to set up the employe stock plan, which TI alleges is a "management entrenchment scheme" not in the best interests of Continental's shareholders. TI has also asked the Civil Aeronautics Board for some relief to protect its $93 million investment in Continental, possibly by using its shares -- now in a nonvoting trust -- at Continental's annual meeting scheduled for May 6.
Eckel, who was in New York last week with Feldman seeking support for their plan from lenders, securities analysts and the press, admits that Continental has been funding the employes' operation but denies that the plan is an entrenchment scheme.
"This is employes buying the company," he says. "Our attitude now is we have a chance to . . . be the people who will do the work, and if we produce the profits, we will share in them."
The employes have already voted to forgo half of what would have been 10 percent pay increases of over the next four to seven years to finance the loan that will be required to purchase the stock, Eckel says, and they are willing to make other concessions as well.
If the plan goes through, the employes will name four directors to a 15-member board, Eckel said, one each from the pilots, flight attendants and mechanics unions and one noncontract company employe. There would continue to be eight outside directors, while the five inside directors would be cut to three.
Although Continental lost $21 million last year and Feldman cut the route system by 20 percent and the work force by 10 percent, he would be kept on as chief executive officer because "we're very satisfied with his work," Eckel said.