Trans World Airlines President C. E. Meyer Jr. asked company employes yesterday to accept an immediate across-the-board freeze in pay and fringe benefits through the end of next year as part of a wide-ranging program to remain competitive and improve profits.
Other parts of the program will include the creation of a profitsharing plan for employes, deferring the planned order this year of 10 additional Boeing 767 jetliners and improving productivity.
In letters delivered over the weekend to each of TWA's 32,300 employes, Meyer acknowledged that actions taken by TWA over the last two years had allowed the airline to improve its performance steadily, and that TWA has been doing "quite well" in comparison with the rest of the industry.
But he said his earlier projections of earning as much as $100 million a year were going awry because of the continuing slump in the economy and passenger traffic, discount fares that have diluted revenue yield, and increases in fuel costs. Despite a strong second quarter, when the airline reported earnings of $38.7 million, Meyer said "conditions are such that it's clear we have no chance whatever this year of attaining our $100 million goal, or even so much as half of it.
"About the best we can expect in 1982 is to avoid another loss and maybe to make a meager profit," he said. "That's just not good enough."
Because of inadequate profits, Meyer said, the airline has to abandon its plan to order 10 more Boeing 767s in December. He also warned that without moving promptly to bolster earning power, TWA probably faces "drastic further shrinkage." One of the possibilities, he said, would be the grounding of TWA's 60 fuel-inefficient 707s, planes it hoped to continue flying until 1984. Grounding the planes without replacements would result in a further cutback of flights and personnel, he noted. TWA began trimming its flights and number of employes almost two years ago, before most major airlines did.
Citing vigorous competition from new low-cost airlines, Meyer said, "Our current operating costs are killing us."
Because TWA faces contract negotiations this year with its three major unions -- representing flight attendants, pilots and machinists -- Meyer anticipated the possibility that some unions might claim his talk was "some kind of bargaining ploy."