The nation's airlines have mounted an intense lobbying effort to try to block a labor-sponsored measure that would require the airlines to make costly payments to pilots and other employes whose jobs are affected by mergers or the sale of assets such as aircraft.
The chief proponent of the measure is the Air Line Pilots Association, whose president, J.J. O'Donnell, is the labor representative on the executive committee of the Republican National Committee. According to a Capitol Hill source, O'Donnell "has called all his chits on this one."
The provision is to be considered this week by House and Senate conferees working on an otherwise noncontroversial airline industry bill. Although there have been no hearings on the amendment, it reportedly has the support of a majority of the conference members, some of whom have been recent recipients of campaign contributions from the pilots' union. In the last three years, Federal Election Commission reports show that ALPA has made campaign contributions totaling more than $425,000 to more than 200 representatives and senators.
The measure is "officially" opposed by the administration. David A. Stockman, director of the Office of Management and Budget, told Congress that the proposed amendment was "unacceptable" and "an intrusion by the federal government into private collective bargaining negotiations."
The provisions were especially damaging for the airlines in serious financial difficulty, he said. "Federal imposition of labor protection payments at this time, particularly payments tied to mergers and acquisitions, could prevent airlines from taking sensible steps to restructure themselves in order to compete better in today's market," he said."
However, O'Donnell and ALPA have support from other top administration officials, in part because the pilot union backed President Reagan's decision to fire striking air traffic controllers last year, sources said.
The proposal was heatedly debated at a White House meeting late Monday attended by Presidential Counselor Edwin Meese III, Labor Secretary Raymond J. Donovan, Transportation Secretary Drew Lewis, Presidential Assistant Elizabeth Dole and Stockman. They reportedly decided not to withdraw support for Stockman's letter, but to urge O'Donnell to seek a compromise instead.
The amendment would codify labor protection provisions that were routinely imposed on airline mergers and acquisitions by the Civil Aeronautics Board for almost 30 years prior to the Airline Deregulation Act of 1978. The provisions guarantee furloughed employes 60 percent of their salaries for up to five years, compensation for wage loss if an employe is transferred to a lower-paying job, moving allowances, merged seniority lists and binding arbitration.
Since 1978, the CAB has gone along with the provisions only if both parties to a merger requested them.
The payments can be hefty. Under the provisions, severance pay alone to a single pilot earning an "average" pilot's salary could cost an airline $190,000 over five years.
The draft being circulated on the Hill is written in such a way that the airlines say it also could include the sale of assets, such as aircraft, routes, airport gates and other facilities.
"This would take flexibility away from companies to sell assets like planes in an attempt to try to make it in the deregulated environment," says Frank Lorenzo, president of Texas Air Corp., which owns Continental and Texas International Airlines and a majority share of New York Air. "The only option they will leave for a company is bankruptcy."
A Pan Am official said the airlines would avoid "even doing deals that would trigger" the provisions, if they are enacted.
In letters to the Hill, O'Donnell contended that the provisions are an "assistance to the merger process rather than a hindrance" and "wouldn't stop any sensible management from pursuing a merger with a failing carrier." He also insisted that airline employes wouldn't "let their carriers fail rather than negotiate a necessary concession."