Pan American World Airways, the nation's largest international air carrier, says it wants to replace many of its U.S. flight attendants, who often earn more than $2,000 a month, with foreign attendants who will work for $600 to $700 a month in Europe and as little as $225 a month in Asia.
The airline, crippled by a 10-day-old strike, also wants to hire more part-time employes and already has taken steps to fire 700 food-service workers, while hiring an outside commissary to provide meals more cheaply.
Drastic cuts in labor costs are crucial to Pan Am's survival, company executives and industry analysts say, but such moves also sparked the bitter strike by five unions that threatens that survival. Two of the five unions, representing pilots and flight engineers, have returned to work, but the strike by mechanics, baggage handlers, flight and ticket attendants and ground crews is expected to be lengthy and costly to both sides as Pan Am loses more than $5 million a day in revenue.
The confrontation between Pan Am and the unions representing 19,000 workers reflects the dilemma that airline deregulation has presented organized labor. Unions are fighting to stop the erosion of hard-won pay and benefit increases, but they fear that the employer can be damaged permanently, even fatally, because deregulated competitors can seize the chance to take over the market.
In Pan Am's case, the situation is further complicated by the widely held belief within the industry that the company is poorly managed. This belief fuels union anger because Pan Am employes since 1981 have agreed to about $500 million in "givebacks" that workers contend that the company has squandered, forcing it to seek further cuts. While the industry recovered its profitability in 1984, Pan Am was the leading money-loser, with a loss of $200 million.
"None of the five unions wants to put this company out of business. That would be suicide," said William Galanis, the Teamsters' chief union steward at Washington National Airport. "But we don't believe what this company is telling us . . . . And the people I work with believe Pan Am is not managed properly."
Just before the strike, a criticalstudy by the consulting firm Lazard Freres & Co. said Pan Am could save $100 million by improving its budgeting, accounting, airplane-purchasing, and other systems. The study characterized the firm as suffering from "inability or unwillingness to confront its own problems." Pan Am officials this week declined to comment on the internal report.
Pan Am Chairman C. Edward Acker said, "We are terribly disappointed that the Transport Workers Union negotiating committee has rejected what we consider an outstanding economic package.
"It is inconceivable that union negotiators have turned their backs on . . . an increase in excess of 20 percent over the three-year life of the contract."
The Feb. 28 strike by the Transport Workers Union (TWU) was triggered by a contract stalemate over job security and wages. TWU members earn between $23,000 and $27,000 yearly. The Teamsters and the Independent Union of Flight Attendants (IUFA) honored the picket line. Because TWU previously agreed to forgo 16 percent in pay raises, Pan Am's 20 percent offer represents a 4 percent raise over two years, the union said.
Pan Am has told the flight attendants that it wants to eliminate a contract clause giving jurisdiction over international flights to the American union. That would mean that after planes land overseas, the airline could hire nonunion and foreign attendants.
IUFA spokesman Star Hesse said the 6,000-member union has offered alternative cost-saving measures, including lower starting pay and schedule changes. The union estimates that its plan could save Pan Am up to $16 million a year, Hesse said, "but they just don't want to listen."
TWU spokesman Joseph Kutch said anger against the company runs deep because the 700 layoffs follow Pan Am's previous efforts to reduce pension contributions and to deny the union promised pay raises on Jan. 1 this year. TWU won a federal court order to implement those raises.