Trans World Airlines, which lost $120 million in the first half of this year, said yesterday it will cut the salaries of its 10,000 nonunion workers by 10 percent on Sept. 1 and will seek contract concessions from its unionized employes.
The announcement came the same day that Republic Airlines, which lost $102 million in the first half, said it had reached a tentative agreement with its mechanics for a 15 percent pay cut, also effective Sept. 1. These are but the latest actions by U.S. airlines to reduce their labor costs to meet the competitive pressures of deregulation.
Continental Airlines continued to operate most of its schedule yesterday despite a week-old strike by the International Association of Machinists and Aerospace Workers (IAM), which represents 2,000 of Continental's 13,000 employes.
Further, Frontier Airlines announced recently that it will launch a nonunion airline--Frontier Horizon--to begin 10 flights daily in mid-Decmeber from Denver to Washington, New York, Chicago and San Francisco. Employes initially will earn 30 percent less in wages and benefits than those at competing carriers, Frontier has said.
TWA's salary cuts came as the airline was studying major cuts in its domestic service, which has been a heavy loser. "The implications are for a dramatically smaller domestic airline" with increased emphasis on profitable international routes, said TWA spokesman Jerry Cosley.
Regardless of the outcome of that study, TWA is looking hard for other ways to trim costs, Cosley said. In a telephone briefing to airline management Thursday, TWA President Edward Meyer said the salary cuts for nonunion employes are necessary to reduce the airline's "swelling employment costs."
Most of TWA's unionized employes are represented by the IAM, the Air Line Pilots Association or the Independent Federation of Flight Attendants. TWA signed a new three-year contract with the IAM in January providing for wage increases of approximately 30 percent over the life of the contract.
Meyer told the TWA executives that he has been meeting with the IAM leadership in an attempt to gain "the immediate and long-term relief we must have." A union spokesman told United Press International the machinists have taken the position that TWA's financial difficulties "were created solely by management . . . the problem is not that of the employes." Nonetheless, the union has agreed to hold further meetings with management.
Meyer also told TWA executives not to count on Congress to rescue U.S. airlines from losses they have suffered since deregulation. "Deregulation is well on its way to becoming a huge success for the consumer," he said.
"Just put yourself for a minute in the shoes of our Washington legislators. There's simply no reason to try and safeguard some 290,000 jobs and the levels of pay that go with that at the older, mature airlines, when on the other side of the balance sheet you see the low-fare benefits provided by deregulation to tens of millions of air travelers," Meyer said. "They outvote us; it's as simple as that."
Republic's IAM members must approve the 15 percent cut agreed to yesterday by IAM negotiators. Other Republic employes also are expected to take a 15 percent cut, which Republic estimates will save it $100 million by the end of next May.