The new contract that ended a 55-day machinists' strike against United Airlines may violate the Carter administration's wage standards, a top anti-inflation official said yesterday.
Barry Bosworth, director of the government's Council on Wage and Price Stability, said the council will meet Tuesday with United Airlines executives to decide whether the settlement, ratified Thursday by the striking machinists, breaches the already strained guidelines.
"I have a question whether United is the compliance," Bosworth told an inflation seminar sponsored by the Bureau of National Affairs, a Washington-based publications group. "On the surface, it doesn't seem to me [that] it does [comply]."
Bosworth's skepticism drew a prompt rejoinder from Richard Ferris, president and chief executive officer of the airline, who told reporters in a telephone news conference that the company considers the contract to be within the guidelines.
Ferris said the contract will provide wage and benefit increases of 34 percent over three years, well above the nominal 7 percent a year government guideline. But he contended the settlement is part of an industry pattern that predates the guidelines and is thus exempt from the 7 percent limit.
The pattern originated with a three-year settlement of roughly 30 percent last fall with Trans World Airlines. This became the model for other airline pacts, including the first of two tentative United Airline agreements that were rejected by rank-and-file machinists earlier this year.
Ferris acknowledged that the ratified contract exceeded the first tentative agreement by 3 to 4 percentage points but added: "We do believe this settlement falls within the guidelines."
Ferris declined to speculate what United, the nation's largest domestic air carrier, would do if the government declares its new contract to be inviolation of the guidelines.
The government has threatened to deny federal contracts to guideline violators, but its authority to do so is being challenged in federal court by the AFL-CIO. A ruling is expected next week.
United Airlines carries both mail and federal bureaucrats, but officials disagreed yesterday on whether the government could do much more than divert its employes to other airlines when there is a choice.
"In any case," said one official, "no one is talking sanctions at this point."
While anti-inflation officials have put pressure on negotiators during bargaining, next week's meeting will mark the first time the wage and price council has called upon a major company to justify a contract that has already been ratified.
In the case of the recent Teamsters settlement with major trucking companies, administration officials hailed the contract as a victory for the guidelines, even though both union and industry officials said its three-year cost would be at least 30 percent.
One government source said Carter's advisers were divided over whether to take a hard or soft line toward the United Airlines settlement. The official said, "There's a real question about what you do to a company that has lost maybe $100 million taking a 55-day strike to keep down its (labor) costs."
In his news conference, Ferris said he anticipates that fares will rise at about the same rate they have over the past five years. He attributed the expected increases more to fuel charges than to labor costs. For the time being, United Airlines has offered major discounts and new cut-rate flights to win back business lost during the strike, estimated to have cost the airline about $1.5 million a day.