PI H M Eastern, TWA emerge from 1985 in trouble NEW YORK (AP) — While The carriers, which both rank most big U.S. airlines emerged about fourth in size after United from 1985 in fair health, Eastern Airlines, American Airlines and and TWA suffered heavy losses Delta Air Lines, are facing possi- and face uncertain futures in an ble strikes by demoralized em- industry shaped by lower labor ployees and have concentrated costs and intensifying competi- on building up emergency cash tion. because of that threat. i A Jrayejjypower-sharing pact "If the economy withers, then with inilitant unions, a $2.5 Eastern's in a lot of trouble, quite bilUoiTaeBTand impatient credi- frankly," said Timothy Pettee of ' tors have hurled Eastern Air- L.F. Rothschild, Unterberg, lines into a crisis that industry Towbin, a New York investment analysts are calling thq most se-_ firm. "The situation is indeed im- . xiouiLin the carrier's turbulent mediate." ' hlstoryT^ The problems at Eastern were " Transworld Airlines, target of underscored Tuesday by a a protracted takeover fight that fourth-quarter and year-end < ended in a bittersweet victory for earnings statement that said the ' financier Carl Icahn, lost an esti- Miami-based carrier lost $67.4 mated $140 million last year and million in the last three months reportedly is losing about $1 mil- of 1985 and posted only a $6.31 lion a day. million profit for the year. 1 v } 1CSS r ? >i M <1 3
u to 3S >q Braniff takes iS N lYi 44
hard lesson aa 'j; from Eastern IUI Airline's salary deduction I plan has a familiar ring
By PHILIPP HARPER loss of $128.5 million bore eloquent witness to the carrier's cash flow Staff Writer problems. So, too, did the announce *1 Braniff International Corp. will be ment last week that Braniff was ask sporting a decidedly Eastern look if ing its private lenders to defer loan employes of the Dallas-based carrier payments until July 1. accept the profit-sharing plan being Eastern spokesman Jim Ashlock re pushed by management. In principle, called recently that Eastern also need the plan closely parallels one adopted ed lender concessions to stay afloat in 1977 by workers at Eastern Air shortly after Frank Borman took over lines Inc. as president of the airline in 1976. In fact, analysts say, because the And, he said, lenders were unwilling Braniff move follows a sharp reduc to make those concessions, which in tion in operations, it could prove more cluded deferred payments and fur effective than the Eastern program, ther credit, until Borman was able to which has prevented needed person convince them of the carrier's viabil nel cuts at the Miami-based carrier. ity. He did so, Ashlock said, by in Under the Braniff plan, 10 per cent volving the employes in the rejuvena of an employe's salary would be de tion process through the profit- ducted every month and put in a sharing plan, or variable earnings profit-sharing fund. How much program as it's called. would be returned to the employe in Without the program, Ashlock as a given year would hinge on Braniff's serted, "we might have been belly up ability to meet a profit goal. Paybacks by now." could range from zero to sums in ex Employe acceptance of the program cess of the amount contributed. mollified Eastern's lenders, Ashlock i While the Eastern plan also in said, and with the funds it was able to volves employes putting up part of secure, the carrier struck out on an their pay to cover corporate losses, the ambitious program to update its badly Miami-based carrier's 30,000 employes out of date aircraft fleet. In recent donate only 3.5 per cent of their pay years, Eastern has taken delivery of to the profit-sharing fund. Money 84 fuel-efficient aircraft and will take from the fund is not paid back to em delivery of 58 additional planes by 1984. ployes unless Eastern achieves a prof it of 2 cents on every revenue dollar. In today's environment of ever-ris Not only are the schemes similar in ing jet fuel costs, a modern fleet is the design, but Braniff's action has been key to survival for trunk carriers, prompted by a set of circumstances Ashlock said, adding that Borman's not unlike those in which Eastern idea is "that nothing's going to work found itself several years ago. unless we have the best airplanes As one industry source said last available to industry." week, "Braniff is in the same situa By helping stabilize Eastern's prof tion Eastern was in in 1975. They're itability and making the company staring over the lip of bankruptcy." more attractive to lenders, the profit- While that, assessment may or may sharing plan has enabled Eastern to not be too apocalyptic, Braniff's 1980 See BRANIFF on Page 2 to it. Braniff salary plan familiar incidi Bapti BRANIFF — to secure participation in analyst. He said this would not has n ,From Page One the program. Converse Because Borman has be the situation at Bran pract ly, workers are under made good on his prom iff, since adoption of a name continue the moderni pressure to perform ise, the analyst said, profit-sharing plan zation of its fleet. more efficiently since some of Eastern's more would come when the The net employe con the plan, by its very na marginal operations airline is already down tribution to the program ture, rewards increased have not been pared to "its bare bones" in has varied widely over productivity. down. terms of operations. the three and one half Noting that the LAM R< years it has been in ef- contract approving the 'fect. In 1978, for exam plan is set to expire in ple, Eastern workers July, 1982, Bryan said, contributed $27 million "We don't know how Major Machine Shop to the fund and got back we'll approach it in fu Located in Arlington, Texas has open ma $36.8 million, or 135 per ture negotiations." repor cent of what they put in. Apparently Eastern's chine time available immediately for NC/ pilots will be more whea However, in 1980, a year CNC and conventional mills and lathes; and 1 of poor profit perfor tractable. grinding; honing; broaching and EDM ma tors t mance throughout the A senior Eastern pilot industry, none of the who works in the Miami chining. office of the Air Line Pi range $37.3 million anteed up Contact Howard Killingsworth range by the workers was re lots Association said, "We feel generally that bush( turned to them. Their Telephone 817/467-4927 contributions reduced these are pretty tough Hudson Aerospace, 3SOO S. Cooper tors i times and an airline conti] Eastern's loss from over $54 million to $17.4 needs some stability." useag •million. •He added that most 1981 pilots regard the plan as to pr During the six months being in their own best Gold/Silver supp] of 1977 the program was interests, since the sta Lowest Possible Rates On: and in effect, worker contri bility it promotes pro • 1, 5, 10 and 100 oz. Silver Bars (.999 pure) graii butions totaled $12.7 tects their jobs. $ 1.50 per oz. ouer spot (for lOO oz.bars) million, of which $6.7 whicl "If the airline were to • 1,10 and 100 oz. Englehard Silver Bars t million, or 52.8 per cent, lion r. suffer, Borman says, and e '/io. 'A, 'A and 1 oz. Gold Krugerrands f was returned. In 1979, we have reason to feel e Maple Leaf Gold Coins • Gold Pesos - workers were paid back he's credible, the airline e Silver Coins — U.S. 90% and 40% mesti * $10.1 million, or .30. 7 would have to retrench e Rare Coins for collectors & investors able I per cent, of the $32.9 and size down," the pilot Metroplex'Largest Volume Dealer recen million they contributed. said. "We Make The Market " in coi 1 -With the exeption of The fact that Borman 1 time. last year, the program gave employes assur • has enabled Eastern to ances that he would DALLAS # lent | | meet its profit goal. keep layoffs to a mini small • While Eastern man-. mum if they approved Gold & Silver The . ) agement appears unani- the plan has had a nega EXCHANGE Corp. ' Tnpus in its delight with tive impact, according to 228 Park Forest Ctr. ("A mile South of LBJ at Marsh & Forest Lns.j the profit-sharing plan, a New York airline 24 HOUR QUOTES 357-1706 Metro 263-3618 5 there are beginning to be some rumblings of discontent among work- ers, although it seems • doubtful that this senti G ment will prevent the program from being £ extended. ( * Charles Bryan, presi dent of district 100 of 1955 « the International Associ j low dc ation of Machinists and ; Many, Aerospace Workers in ' fields. Miami, "said now that T. Eastern is perceived to i draine j be in relatively good fi- I gradui nancial shape, the plan | ing th should be made j accord voluntary. logical Because the plan is presid mandatory, he said, Itr i there is no incentive for j more i the company "to run a I _We to good company" in order 2C The Miami Herald / Sunday, June 8,1986 Ebc Miami Herald 1 JOHN S. KNIGHT (1894-1981) JAMES L. KNIGHT, Chairman Emeritus
RICHARD G. CAPEN, JR., Chairman and Publisher PHIL DEMONTMOLLIN JIM HAMPTON HEATH J MERIWETHER President and General Manager Editor Executive Editor JOANNA WRAGG, Associate Editor PETE WEITZEL. Managing Editor A Stark Message HE UNSEEN hand has been pasting bits and pieces of the message to Eastern's Future T Eastern Airlines' wall since 1978, when the Government began to disman Lorenzo, whose reputation for toughness tle the complex regulations that had matches the difficulty of the task that he protected major commercial air carriers faces. As an outsider, he bears none of from competition. The text inexorably the responsibility for Eastern's current took shape in spite of the determination precarious financial condition or for its of civic optimists and union leaders alike bitter labor relations. Nor does he yet to ignore it. share Colonel Borman's commitment to Eastern under Frank Borman first South Florida, though he has expressed reversed its course and in 1976 posted understanding of the importance to the the first of four straight years of profits. community of Eastern, the region's Then it slipped into the decline that now largest private employer. Most of East has cost the airline its independence and ern's jobs can be preserved — but only if •§ Chairman Borman his position. they contribute more to Eastern's return With Texas Air's announced purchase to profitability than to its troubles. It's of Eastern, followed last week by Mr. that simple. The stark figures make it so. Borman's resignation, the last gap in the Most of the community is relegated to message has been filled. It is clear and the sidelines, without power to influence direct. It says, "Look out!" Eastern's course. Those who can be For whatever one thinks of Mr. constructive, including both manage Borman's performance at Eastern's ment personnel and union leaders, must helm, his departure leaves the troubled allow the colonel's departure to mark company bereft of scapegoats. Into the the end of Eastern's internal rancor. solitude of New Mexico with Frank Instead, this crossroads must signal the Borman goes the last excuse for East beginning of a new determination to ern's failure to cut labor costs and make Eastern a lean, proud, and profit fll increase revenue the way a heavily able company on which its regional indebted major corporation must. community and more than 30,000 em Enter now Texas Air Chairman Frank ployees can depend. What's With Cuba? HE HEADLINES hint at a story yet surprising. The Castr untold. "Castro ' «ses 30 politi off the trips p T cal - " > is the P' land * Business News Thursday, January 8, 1981. The Miami Herald 8C —1 U.S. airlines gladly say farewell to 1980, their worst year ever
By MARTIN MERZER drops. Herald Business Writer More ominously, however, most of the carriers reported drops in Buoyed somewhat by surprising their load factors — the percentage ly strong holiday travel figures, the battered U.S. airline industry Wed of seats actually filled on jetliners, nesday said goodby and good rid-, Since the cost of operating an dance to 1980 — the worst year in empty airplane is nearly the same as the cost of flying a full craft, air the industry's history. lines watch load factors very care Traffic reports released by sever fully. al major airlines Wednesday and "Any time the load factor slips, it earlier this week showed unexpect worries you," Ashlock said. "Frac ed strength in December, with tions of load factor represent in many carriers reporting business credible numbers of dollars." superior or nearly equal to that ex Eastern's load factor fell to 61.3 perienced during the same month in per cent in 1980 from 67.2 per cent 1979. in 1979. TWA, United and Ameri can also reported decreased load Despite that, most airlines will factors. report sharp losses for the year. How llie airlines slipped But Braniff, the financially trou "The thing that hit everybody in bled carrier that is being studied by the pocketbook was fuel supplies, RPMs* RPMs RPMs RPMs Eastern as a possible merger part and other costs kept rising also." Dec.'80 Dec.79 1980 1979 '80 Load ner, improved its load factor — an said David Venz, a spokesman for Airline (Mill.) (Mill.) (Mill.) (Mill.) Factor indication that it was cutting back Trans World Airlines. from some of the low-yield flights Airline officials attributed De Eastern .2,390 2,410 28.200 28.900 61.3 that had gotten it into trouble. cember's surge of business to a sud-, Air Fla. 155 83 1,600 690 72 Other airlines, attempting to im den rush of holiday travel. TWA 1,910 1,800 28,000 30.000 61.7 prove their load factors and their "Thank heavens for the last two United 3,160 3,470 39.400 38,400 58.4 balance sheets, are expected to drop out of marginal markets during weeks of December," said Eastern Braniff 823 1,030 11,800 13.400 58.4 1981. Airlines spokesman Jim Ashlock. American 2,300 2.500 28.200 33.400 60.4 "If nothing else, it helped us keep In part because of the slipping our head above water in a very load factors, most carriers are ex Revenue passenger miles. pected to report heavy financial rough year." "There was a Christmas rush," losses for 1980, and one industry said Braniff spokesman Mike Kaes- And Air Florida, which enjoyed lines, battling a severe economic group has estimated that the indus er. "We were pleased with it. The an 88 per cent growth in revenue downturn and rising costs that try's total loss would approach load factors were good and there passenger miles in December and a prompted higher fares, had beeh ex $200 million. were some days with very high 132 per cent increase for the full pected to show sharp decreases in That is one of several. reasons that U.S. airlines are not likely to load factors." year of 1980, carried more people RPMs for the full year. Eastern enjoyed its second busi last month (201,948) than during But the statistics released this look back on 1980 as a pleasant est day in history last Sunday, car any other month in its history. week showed mixed results. Air year. "The whole year was one of un rying 145,852 passengers, company Revenue passenger miles (RPMs), Florida and United posted RPM in certainty," said Eastern's Ashlock. officials said. American Airlines the number of miles flown by pay creases, Eastern and TWA showed "We're just tickled to death to get had its third busiest day on Sunday, ing customers, is a common indus only moderate decreases and Bran out of 1980." a spokesman said. try benchmark. And most U.S. air iff and American reported hefty flights Pan Am edgesH Eastern for Mexican ticipate mounting such excellent service that By MARTIN MERZER elect Ronald Reagan overrules the agency by Herald business Writer March 2. Pan Am will be required to begin it will be thereafter renewed." Eastern spokesman Jim Ashlock refused Pan American World Airways, celebrating service on the routes on April 26, a CAB offi comment, other than to say that Eastern offi the first anniversary of its merger with Na cial said. cials were "disappointed." tional Airlines, Wednesday received a present On the same date, Eastern Airlines — When Pan Am surrendered the route, from the Civil Aeronautics Board — permis which began serving the route on a tempo company officials said it was not profitable. sion to re-establish direct service between rary basis after Pan Am surrendered it in But during the first year after it supplanted Florida and Mexico City. 1978 — will have to cease operations be Pan Am between Florida and Mexico City, The CAB selected Pan Am over three tween Mexico City and Florida. Eastern — using more modern equipment and other applicants, including Miami-based East "We're pleased to get the CAB's recom more attractive fares — registered a 153 per ern Airlines, to operate daily nonstop service mendation and hopeful for the President's ap between Miami and Mexico City and between proval," said Pan Am spokesman Walt Rob- shaw. "We are disappointed that the recom Tampa and Mexico City. Please turn to PAN AM / 9( If neither President Carter nor President mendation is only for two years, but we an Branill names new chief, cloor to merger still open
By ROBERT DODGE Herald Business Writer John J. Casey was named chair man and president of Braniff Inter national Corp. Wednesday and said the door was still open for a merger with Eastern Airlines of Miami. Meantime, he said, the Dallas carri er must return to a position of fi nancial stability. "If a merger were to develop, it is a long way off," Casey told about 25 reporters following a board meeting at the airline's headquar ters at the Dallas-Fort Worth Air port. "In the interim, Braniff has to survive." Eastern and Braniff announced Dec. 15 they had begun preliminary merger talks. Associated Press At the same time, the airline an John J. Casey: Named to head nounced its board had elected Rus Braniff. sell Thayer, formerly president and chief operating officer, vice chair Frankfurt and Brussels, more care man. Thayer, who has essentially fully control the number of discount been stripped of his power, will be tickets on each flight and use air responsible for "accelerated efforts craft and facilities more efficiently. to sell aircraft and administer fuel Casey made clear that Braniff, purchases." which lost $51.6 million in the first Thayer had been considered a top nine months of 1980, was talking to contender for the job vacated by its major lenders about the airline's Harding L. Lawrence. Lawrence precarious finances. However, he announced his retirement Dec. 30 gave no details as to whether a following a series of board meet major restructuring of Braniff's ings in which Braniff's lenders debt was planned or how long lend made known their preferences for ers may have given management to new management. He was named improve the carrier's financial con chairman emeritus. dition. Attired in a pin-stripped suit and He did say Braniff expected to re accompanied by three newly chosen port losses in the fourth quarter of executive vice presidents, the 62- 1980. year-old Casey publicly acknowl "To our lenders we say we intend i edged for the first time that Braniff to repay our debts and look for- j was in deep financial trouble. But ward to your cooperation," Casey he was quick to add the airline has said. many strengths and can become Casey, an aviator for nearly 40 profitable again. years, is the brother of Albert V. "Yes, Braniff does have financial Casey, chairman and chief execu problems," Casey said. "We were tive officer of American, also based caught out on a limb of expansion in Dallas. The brothers have been by a combination of events in the reluctant to comment on their simi second quarter of 1979. lar roles at airlines which compete "Braniff has many strengths and against each other on most of their it can be a strong company again. major routes. We recognize our financial prob But on Wednesday, Albert Casey lems and will resolve them . . . This h'ad a few words for his brother, airline has a positive future." which were characteristic of his In addition to the organizational wit. Said he: "I congratulate him changes, Casey said he would sell and wish him the best of luck and additional aircraft, eliminate un success except if it interferes with profitable routes including those to the success of American Airlines." Eastern dii (appointed over CAB' s decision
curred. PAN AM / From 8C "We agree with |Argerakis| that cent Pan American's service-fare pro increase in travel. posal is, on balance, superior to That prompted Pan Am. Western those of the other applicants," the Airlines and American Airlines, all board said it its decision. anticipating profits from a new in The board added that it was par flux of Mexican tourists to South ticularly impressed by Pan Am's Florida, to join Eastern in applying ability to carry Mexican travelers for permanent permission to serve through Florida to Newark, N.J.; the route. Washington, D.C.; Orlando; Saraso After a year-long battle, CAB Ad ta; San Juan, Puerto Rico; Frank ministrative Law Judge Alexander furt, West Germany; and Paris. R..Argerakis ruled last October that The ' CAB's decision was an Pan Am was in the best position lo nounced exactly one year after Pan serve the market. Am officially acquired National Air In its final decision, the CAB con- lines. Jim Russell / 4F Markets / 11F DU8IIHS99 mSWS Sunday, April 4,1982 The Miami Herald Section F Borinan's big gamble: Can it save Eastern?
By MARTIN MERZER Herald Business Writer It owes more money than almost any other airline; it is enduring persistent loss es; its bond rating was just lowered; its cash hoard declined by 60 per cent last year; it is, once again, turning to its em ployes for help. So the question, however painful, must be raised: Is Eastern Airlines, South Florida's larg est corporate employer, on the brink of be coming another Braniff, another Western, another airline en route to bankruptcy? Company officials and independent ana lysts agree that the answer to that ques tion is: "No." But nearly all of them add two ominous words of qualification: "Not yet." "We're going through some difficult times, and there's no sense in trying to un derplay the seriousness of this," says East ern Chairman Frank Borman. "We have made the decision to be a responsible, large airline in a deregulated market because we think it's in the best interests of our em ployes, our passengers and our share holders. "But in order to do that, we're walking a financial tightrope through 1984." Employe help Eastern's 37,500 employes (16,000 of them based in South Florida) must con tinue to help the company cross that tight rope, Borman says. Nothing less than East ern's existence as a major airline depends on their cooperation, he says. Independent analysts agree. "The company can't handle another two years of losses," says David Campbell, an airline analyst who has just Completed a Eastern chief Frank Borman: 'The employes have within their own hands the future of this airli BILL FRAKES / Miami Haratd Staff detailed study of Eastern's finances. "If the employes don't cooperate in helping the company bring down its labor costs and But Eastern's problems extend beyond a "They're in relatively bad shape on that caused airlines such as Braniff, Western, ting uncomfortably Close to the original there isn't any revenue growth, then it will possible stalemate on that one issue. Some basis, but the debt that they do have is rel Continental and Republic to remain at the line. be another Braniff. No doubt about that." of those problems are common to most atively long-term institutional money — mercy of their lenders. As operating losses persist. Eastern has To keep Eastern from falling hopelessly major airlines, and some are unique to outstanding convertible debentures, equip And, in this regard, Eastern is in much begun dipping into that pool of money, into debt as it completes a fleet-moderniza Eastern. ment trust certificates," says Campbell, better shape than those other carriers. Its borrowing $20 million in each of January tion program Borman calls crucial to its Any examination of Eastern (or any who works for Wheat, First Securities in year-end 1981 balance sheet carries $76.6 and February. survival, employes already have been other airline these days) must begin with Richmond, Va. "There is no [immediate] million in notes payable within one year; "We had to use the money... to keep up asked to extend a program under which the balance sheet. pressure to pay this debt." 1980's balance sheet carried $84.6 million. our level of cash," Borman says. 3.5 per cent of their pay is returned to the In addition, Borman notes that while the But to tide it over the next four years, Although he defends the action by say company. They also have been asked to en $83.3 million lost debt is large, the overall interest rate Eastern recently arranged a $400-million ing it "was part of our plan," analysts dure a wage freeze this year, to improve comes to only 8.9 per cent. The long-term pool of revolving short-term credit from a view it with some alarm. their productivity and to accept work-rule It Is no secret that Eastern, like most debt will cost Eastern only $76.6 million in consortium of banks. The loan's interest "It is not a good thing," Campbell says. changes. trunk airlines, has lost planeloads of payments this year, $68.2 million in 1983 rate floats about 2 per cent above the pre But he quickly notes that United Airlines, On top of all that, Borman last week money in the last two years (a combined and $71.2 million in 1984, officials say. vailing prime rate, and interest accrues generally considered in better financial called for a five-year program in which net loss at Eastern of $83.3 million). But Braniff, on the other hand, must figure only as Eastern uses the money. health than Eastern, had to hit its short- employes would rebate another 5 per cent there are other worrisome financial devel out a way to return nearly $1 billion to its term pool of money for $500 million during of their pay in return for corporate bonds opments. lenders (most of it in short-term debt) this Close to the line the first two months of this year. paying 12 per cent interest. The company Eastern's long-term debt and long-term year. Braniff Chairman Howard Putnam Eastam's cash position is another trou can save at least $300 million through the lease obligations total $1.7 billion — far hopes to convert most of that debt into In order to maintain access to this ble spot. plan, estimates show. more than any other airline. The compa stock and other equities. money, however, Eastern must keep cer At the end of 1980, the company held Borman says he must have it all; leaders ny's total debt-to-equity ratio at the end of Indeed, it is short-term debt — loans at tain financial ratios above established lim $283 million in cash and short-term invest- of Eastern's two largest unions say he'll last year was 4.5 to 1, Campbell says. The much higher rates and for much shorter its — limits that recently were loosened at never get it. industry average was 1.6 to 1. periods than long-term debt — that has the company's request when it began get Please turn to EASTERN /7F °°« Sunday, April 4,1982 / The Miami Herald 7F Eastern turns to employes during crisis
EASTERN/From IF the chief negotiator. (Bryan has also been criticizing East 'We are adamant in our position that there will ern's accounting practices, suggesting that ments. At the end of 1981, it held only through creative use of depreciation, amor $116 million — a drop of almost 60 per not be a five-year extension of the 3.5-per-cent tization and other devices, the company is cent. making its financial picture appear worse This multifaceted decline in financial giveaway — and that's what I have .come to call than it truly is. strength could hardly come at a worse (Eastern, however, says it follows indus time for Eastern. it, a giveaway.' Charles Bryan trywide accounting standards, and airline As part of his ambitious fleet-modern analysts say they see nothing unusual ization program, Borman will be paying about Eastern's bookkeeping.) $1.5 billion between now and 1985 for 40 'We'll get the program. I'm not going to sign a Patricia Fink, leader of the Transport new jetliners — including the 27 Boeing Workers Union that is currently negotiat 757s that he views as Eastern's best hope contract without it.' Frank Borrnan ing a new contract for Eastern's 6,300 for the future. Bryan Borman flight attendants, also states flatly that the Government deregulation of the airline VEP will not be renewed. industry has forced the established carriers Borman, on the other hand, insists that to lower their operating costs in order to employe take-home pay has grown sub match new competition from scrappy up stantially during the past few years — de starts such as Air Florida and New York spite the VEP. And he says he will win all ited with saving the company from its Air, he says. man Jim Ashlock. "It's what Delta does. If successful negotiation of the "financial of the elements of his new recovery plan. And, along with reducing employe ex they get them [757s] and we don't, that's tightrope" depends on earning respectable worst-ever financial crisis. penses and increasing productivity, the it. They pound us down and we have no profits during the next four years. Since then, employes have been return Thus, a stalemate appears to be develop "best way to lower your cost is to keep way to get up again. We live with this ing 3.5 per cent of their paychecks to com ing. modernizing your equipment," Borman everyday at Eastern." pany coffers through the Variable Earn says. 'Thin the herd' "We'll get the program," Borman says. Machinists union leader Charles Bryan, ings Program (VEP). Although employes Primarily because of large improve "I'm not going to sign a contract without other union leaders and even some of Bor- Part of his plan to do that is to outlast can earn a dividend on their contributions it. ments in fuel efficiency, the Boeing 757s man's counterparts at other airlines ques the competition. Ashlock says the woes of during good years for Eastern, they have can be operated at a 30 per cent savings tion his insistence on acquiring the 757s. the economy in general and the airline in contributed $97 million more to the compa "In the final analysis, we're not doing over the Boeing 727-IOOs they will replace, dustry in particular will "thin out the ny through the VEP than they have re this in the best interests of anyone other he says. "We do not suggest that Eastern should herd" on many routes before long. ceived in return. than the people who have invested their not have a moderate program of moderniz Now, the leaders of two of Eastern's futures in this company," he says. "Their The arch-enemy ing its fleet," Bryan says. "But the desper Borman puts it a little more discretely. major unions insist that their members job security depends on this." ate, fast-track pace has to be toned down." "I think individual markets will start to have had enough — that they might agree There is another reason for Eastern's de rationalize and we'll see less competition," to a variation of Borman's bond program In employes' hands termination to acquire the 757s. Pan Am Chairman C. Edward Acker he says. but are irrevocably opposed to any exten says he is in basic disagreement with Bor Arch-enemy Delta has 70 of the planes Perhaps, but a study released last week sion of the VEP. If Eastern does not generate more reve man. nue and more profit, it either will have to on order or option, and Eastern fears that "I don't see the need for this new gener by analyst Edmund Greenslet of Merrill "We are adamant in our position that Delta — which already has lower operat Lynch showed that — even after a strong there will not be a five-year extension of cancel its jetliner orders or go even more ation of aircraft," Acker says. "Fuel costs deeply in debt, Borman says. ' ing costs — would be invincible if it ac are modifying." second half — Eastern's traffic will in the 3.5-per-cent giveaway — and that's quired the 757s and Eastern did not. But Acker concedes that he is gambling crease by only 0.1 per cent during 1982. what I have come to call it, a giveaway," That is the smallest increase of any major And, if either of those things happen, In the late 1950s, Delta began flying that another fuel crisis won't appear, and says Bryan, president of District 100 of the airline (other than Western, which will Eastern could find itself in very severe DC8 jetliners while Eastern was still in the he has his own money problems that rule International Association of Machinists lose traffic, Greenslet says). trouble two years from now, he says. propeller age. Some Eastern executives out the acquisition of new aircraft. (IAM). still remember the competitive nightmare Borman says he has arranged an aircraft So, once again, the focus shifts to East The IAM, which represents 13,600 "It would mean 'Katie, bar the door,' " the resulted. financing plan (which includes $273 mil ern's employes. ground-crew workers, is the largest union he says. "That's why we're going to the "What American or United does is of lit lion in tax credits currently endangered by In 1975, Borman's success in winning at Eastern and is in the middle of contract employes now. The employes have within tle conseauence to Eastern," says spokes congressional action). But he stresses that concessions from his work force was cred- negotiations with the company. Bryan is their own hands the future of this airline." <1
Wednesday, June 9,1982 The Miami Herald 5D Empty seats plague Eastern Airlines
Jy MARTIN MERZER worse than the rest of the industry." service also helped to add capacity, ierald Business Writer Analysts estimate that a carrier such which was down just 1.2 per cent from Eastern Airlines' passenger traffic de 'It looks like as Eastern needs a load factor of at least May of last year to 3.92 billion available fined 8.4 per cent last month despite 63 per cent (10 percentage points higher seat-miles from 3.96 billion." :he addition of Latin American routes < Eastern's doing than the May results) to begin earning a During the first five months of.the :hat Eastern has coveted for years, com-... profit, v year, Eastern's revenue passenger miles pany officials said Tuesday. worse than the rest Company officials said the latest re totaled 10.8 billion, down 4.9 per cent Although several other major carriers sults were skewed by an unusual surge from the same period in 1981. But the reported modest traffic increases for of the industry.' of business in May 1981 and by the sud company's five-month load factor im May after a year-long slide, Tuesday's den increase in available seats that re proved slightly from 55.7 per cent to Julius Maldutis, 57.9 per cent. report indicated that Eastern's recovery Salomon Brothers analyst sulted from the acquisition in mid-May is not yet in sight, according to analysts of Braniff Airway's Latin American Analysts and company officials said and company officials. routes. the latest traffic report augured ill for Eastern flew 8.07-billion revenue pas But they also conceded that business, Eastern's balance sheet. The company senger miles (the number of miles flown aviation analysts because every empty generally, was disappointing;. lost a record $51.4 million during the by paying customers) during May com seat on a jetliner represents a missed op "Results for May 1981 were inflated first quarter of this year when its load pared with 2.26 billion miles during portunity for profit. by deep discount fares which offered factor hovered at 58.4 per cent — 5.5 May 1981, officials said. Julius Maldutis, an airlines analyst roundtrip flights systemwide at very points higher than May's result. In addition, the company's load factor for Salomon Brothers in New York, low prices," said Russell Ray Jr., East "It just hasn't turned upward yet," (the percentage of seats filled by paying emitted a long, low whistle when he ern's senior vice president-marketing. Jim Ashlock, a company spokesmen, customers) fell to 52.9 per cent from learned of Eastern's latest report. "This year's Memorial Day weekend said of Eastern's traffic. "The trend of 57.1 per cent. "That's worse than I expected," Mal traffic also was lighter than normal," decline is still with us ... .We're hoping The load factor is watched closely by dutis said. "It looks like Eastern's doing Ray said. "The added [Latin American] maybe it will pick up in the summer."
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By THEODORE STANGER arrives in Opa-locka Airport Sun Under Borman, Eastern has shed vived the "Borman blood bath' Herald Staff Writer day, May 7, at 2 p.m., a host of its fat-cat image of the mid-1960s staff reductions. Pilots packing Smith and Wes Eastern officials, pilots and em and early 1970s for a pared-down, sons, dresses for Burdines, faithful ployes — past and present — will survival-of-the-fittest look. DESPITE SOME potential pitfalls DC3s and untrusty Electras, em be on hand to celebrate the event. Under former astronaut Frank Bor- The former astronaut, who took on the horizon (chief among them is ploye-management feuds, nickel- There also will be a show of an man, right, Eastern has shed its fat- over in 1975, sets the new corpo impending federal airline deregula pinching Rickenbacker, an army of tique and experimental planes and rate tone by driving himself to tion), the Golden Anniversary finds limousined, overpaid VPs, a brush antique cars, and the public is invit cat image of the mid-1960s and work in a nine-year-old Chevrolet the mood at Eastern's headquarters with bankruptcy and rescue by a ed to attend from 11 a.m. to 4 p.m. Camaro. at LeJeune and NW 36th Street def cost-conscious moon-orbiter. early 1970s for a pared-down, sur- initely more buoyant and optimistic The airline, that helped make vival-of-the-fittest look. Fired were hundreds of execu than in recent years. That's the buffeted-but-unbowed greater Miami the nation's sunshine tives and 31 vice presidents who heritage of Miami's No. 1 corporate capital remains a world giant. Only weighed down Eastern's adminis At a stockholders meeting last offspring, Eastern Airlines, which two airlines — United and Aeroflot tration. Gone is the fleet of compa week in New York, Borman was marks its 50th anniversary today. — carried more passengers than did dozen foreign countries. far better. Eastern still owes a ny Cadillacs and limousines, and the able to announce a new profits rec Eastern last year, some 31.3 million. But Eastern nearly didn't make it private jet. Vanished are such ord of $19.5 million for the first In commemoration, one of East mammoth $934 million. But in 1976 quarter ended March 31. ern's first planes, the Pitcairn Mail- Eastern's South Florida payroll to the 50-year mark. Three years and 1977, the company managed "perks" as fat year-end bonuses, wing, takes off today from New lists 12,000 employes and directly ago, the company was in a financial healthy profits under the guidance stock incentives and designer-styled There's something definitely deja ark, N.J., to duplicate Eastern's old contributes $350 million to the local nosedive. Losses had outpaced prof of former astronaut Frank Borman. offices. vu in the new spartan approach at U.S. mail route through Richmond, economy. Nationwide, the airline its by $75.5 million since 1959, and And Eastern recently took a big "Heaven help the poor SOB Eastern. Atlanta and Jacksonville to Miami. has more than 34,000 workers and Eastern's major lenders were talk step toward modernizing its old around here who dares to order It was patented by Edward Ver- flies to 104 cities in 28 states, the ing about calling in their notes. fleet by signing to buy a fuel-effi new office furniture now," noted WHEN THE ANCIENT Mailwing District of Columbia and almost a NOW, THE SITUATION looks cient European jet, the Airbus. one Eastern executive who has sur Turn to Page 6B Col. 1 Airlines 5
By MARTIN MERZER have been better to just shut it Herald Business Writer down, a la Braniff," he says. Borman already had dusted off B trying to describe what he and his "doomsday plan" — a long his company have been through standing survival plan that would Iin recent months, Eastern Air Frank Borman's slash the airline's operations — and lines Chairman Frank Borman uses found it lacking. words like "turmoil" and "adversi "When we looked at it, it didn't ty" and "trauma." make any sense at all," he says. In trying to describe what could "The doomsday situation — it's have happened, he uses words like very hard to take a major airline "bankruptcy" and "doomsday." survival course with the overhead and debt-struc At one point, Borman says, he ture that this airline has and cut it considered filing a bankruptcy peti by one-third. I don't think it's ever tion to reorganize the company. been done before." Then, some of his labor relations problems would be dumped in the uring the interview. Borman lap of a federal judge. also: Later, a financial crisis appeared D • Defended his stance in negoti so grim that even a carefully honed ating with the machinists. "doomsday" corporate survival During the talks, he had main plan was set aside. It was deemed tained that Eastern would rather inadequate. take a strike than cave in to the Later still, faced by a looming IAM. Later, company officials said cash shortage, Borman says he they would have done almost any could identify only two options if thing to avoid a strike. his employes failed to accept wage Although non-union employes concessions demanded by bankers later criticized Borman for settling in return for new loans: with the union, he said that the ne Either he could stand by helpless gotiating ploy had resulted in some ly and watch Eastern's operations concessions from the IAM. A strike wither and eventually die from a would have bankrupted Eastern in lack of cash, or he could simply 12 days, he said. shut down the company. He leaned "If I'd been faced with no change toward the second option. on the part of the other side, we After all, the situation could deja vu for me.' would have had to [take the strike) hardly have been worse. 'This period ... has been almost Frank Borman and that would have been the end Eastern's employe groups were of the game..he said. "It would at war with management and at have been a lost cause. Going down war with each other. in a blaze of glory because your of Machinists (IAM). The union, After winning a few compromis The company was running out of before the deadline. cause is lost, that was not some "That will allow us to pay the which represents about 13,500 es from the union, the company cash and facing intransigent lend thing that was acceptable to me." Eastern employes, was demanding agreed to a contract that would ers. bills on the 30th," Borman says. • Said that the recent near- pay and benefit increases that Bor raise its costs by $170 million. East An Eastern jumbo-jetliner had He says that passenger reserva ditching of the Eastern L1011 after man says he could not afford. ern — which lost $74.9 million last nearly ditched off Miami because of tions are strong this summer, and all three engines ran out of oil and "We examined the prospect [of year and another $60.7 million dur an in-house maintenance error. In — other than an effort to modestly failed was "perhaps the most ad declaring bankruptcy] ... and then ing the first three months of this addition, two Eastern flights had increase fares — the company plans verse thing in our relationship with just allowing a judge to Impose a year — couldn't afford that, either, been hijacked to Cuba. very few changes to its current op the public" and cost the company suitable wage solution," Borman and was immediately plunged into a Sales were off. Losses were erating strategy. dearly in canceled reservations. says. cash crisis. mounting at the rate of $1 million a "I believe that we are over the But he defended the decision not But how do you persuade passen Without new loans. Eastern day. Morale was terrible. hump," he says. "I feel confident of to fire the two mechanics involved. gers and travel agents to give their would be unable to meet its payroll the future." "We investigated and found there n searching for a comparison, in Analysts tend to agree. business to an airline in bankruptcy or pay many other bills on June 30, the company said. were problems of our own making trying to explain just how omi Robert Joedicke, an airlines ana proceedings? as well as theirs," Borman said. "I "I became convinced after the But the banks already had frozen Inous the situation was just a few lyst for Lehman Bros. Kuhn Loeb, think we did what was right. I'd briefings that we had with the legal Eastern's credit line and were un weeks ago at South Florida's larg agrees that Eastern is one of the rather be doing what's right than experts that it would be impossible willing to thaw it until much of the est corporate employer, Borman leaders in the current attempt to what's perceived as popular, espe reaches back to the 1967 flash-fire eliminate some unprofitable dis- to run an airline under the protec work force agreed to new wage concessions. cially when people's jobs and lives that killed three Apollo astronauts. - count fares, and he says that the en tion of Chapter 11," Borman says. are involved." "I wasn't about to try it." Eastern's 37,200 employes (in Although Borman spent eight - tire industry seems poised for an He said the company's proce years as an astronaut and traveled:, upturn. cluding 12,000 in South Florida) had just been released from a five- dures have been Improved. to the moon, he rarely mentions his- "If you buy that we're in an eco "The No. 1 goal of this airline is earlier career. He made an except nomic upturn-, as the statistics and-a-half-year Variable Earnings Program, under which they re safety," Borman said. tion last week during his first 'ex? would indicate, then the traffic will • Reiterated that he has no tended press interview since East recover," Joedicke says. "This obvi turned 3.5 per cent of their pay to the company. plans to resign, although he says he ern plunged into the maelstrom of ously has to be a key factor in his has received attractive job offers crisis four months ago. a scenario, and I don't think he's un ost workers recently accept from non-airline companies he "The whole Apollo program was realistic in expecting an improve ed the new concessions, would not identify. destabilized [after the tragedy)," he ment." M though it was a tough sell. "It never entered my mind to quit says. "We questioned ourselves; we Michael Derchin, an airlines ana And as a result. Eastern should be under these circumstances," said questioned the program; we ques lyst with First Boston Corp., pre able to save $200 million in payroll Borman, 55. "I like to think that we tioned our competency. I was right dicts that Eastern will narrow its costs by the end of next year, Bor have threaded our way through this in the middle of that. losses this year and report a re man says. mess as well as anybody could "This period at Eastern has been spectable profit during 1984. More important, the lenders are have. almost like deja vu for me," Bor expected to give Eastern enough "I had a lot of people who said. man says, a humorless smile flash ut Eastern's brush with cor porate disaster is still fresh in credit this week to keep the airline 'You're wasting your time down ing across his face. "I felt like I had B solvent through December. By then, there in a hopeless situation. Come been there before." Borman's mind, and although the subject Is painful, he speaks Borman says, the company's finan join us and we'll double your sala ry.' candidly of just how close he was to cial status should be secure enough administering over the bankruptcy that it won't have to humble itself "So, aside from the people who ow, Borman says, the situa — even, possibly, the demise — of again before the lenders. suggested I quit because I was no But if the employes had balked at damned good, there were a lot of tion is much better. Eastern Airlines. '... People ... the concessions. Borman says, his people who suggested I quit be He says that a Chapter 11 bank choices would have been limited to cause I had a hopeless situation. Most of Eastern's labor relations ruptcy petition, which allows reor suggested I quit problems are under control, he ganization of a company under watching Eastern die a slow death "But I have no plans to leave. because I had a- • Frankly, I enjoy the airline... . I'm says. Most employes have reluc court-administered protection* fropi through gradual cash starvation or a more rapid one at his own hand. not about to retire to some gilded tantly, accepted new wage conces creditors, was considered in March. hopeless situation.' "That would have led to a deci cage. I don't play golf. I don't play sions,. and morale is recovering. Eastern was faced at the time Frank Borman sion that would have required a lot tennis. I don't drink. I enjoy my New loans should be forthcoming with a strike threat by its largest of thought — whether it would work." this Wednesday, June 29, one day union, the International Association —N.Y.S.E./9D MwwS ~'~'~]L Amex/IOD " / ^ /~\ H ^ NASDAQ/OTC/1ID
Tuesday, April 26, 1983 The Miami Herald
: X>Vv'"Tv/ V% '•' >-• *"•"/. .. '-'• '.• • r'-.V"•: vVv'v • - - • . ' ...... • .'By MARTIN MERZER $-j cently won a S170-million contraCt'set-.' ' and Exchange Comrriissiori; Eastern said Monday, a company source said that ''Herald Business Writer ...... •;'// -5 tlement from the company after threat - its latest wage settlements with the m'a- the lenders recently "expressed practi f - Eastern /Airlines is having trouble ar ening a strike. " I.;.; - chinists and other employe groups cally an out-and-out rejection of lending ranging new. loans to pay for its recent - Bryan stressed Monday that his union "would force the company to borrow any more money to pay for these sala wage settlements and once again is was not renegotiating its hard-Won pact substantial sums and ease; restrictions in ries." "y: 1 • ' r seeking help from its unions, company with Eastern. But he and company offi existing'loan agreements. 'But"the source said the talks With the and union officials said Monday. cials refused to detail the precise riaturfe v If the company fails to arrange the lenders were continuing and the compa Eastern Chairman Frank Borman, of the help being requested by the com loans and modify the agreements, -it ny was exploring Other, unspecified op - who Will meet today with stockholders pany. * " • . .V, 'P could be ."unable to meets its obligations tions. during the company's annual meeting in Jim Ashlock, a spokesman for East-, ' in June 1983," the report said. / ;'• Eastern, with about 14,000 local em New York, sought the help of top offi em, confirmed that Borman and several ./^-• Eastern already has borrowed at least ployes, is the largest corporate employ cials of the machinists', and pilots' top aides ffiet; With Bryan, other IAM dfV 4.y.$l 10 million of the $400 million it is au-v er in South Florida:/; unions during a meeting last Saturday in ficials apd officers of the pilots' union thorized to borrow under a 1980 agree- 'Bryan said that he hohed" all of .East Atlanta. _ on Saturday. • . .ment with a group of banks. But be ern's 37,600 employes would join what "He was talking about ail . the em- a "He was telling them about the situa cause of its large, recent losses and ever program emerges from the unions' ployes trying to develop" some kind of tion we face;1' Ashlock said. "We've got. ./;/|ieavy/debt/load, Eastern must receive talks with company officials/ ': •. : ' relationship to get a' "collusiveness to borrow money and the /question?'^ v the hanks'- -approval before . using •••the :• r"I,think Eastern is definitely the best throughout Eastern," said Charles Whether or not we can get it. It |the.yy.balance of the $400 million. . . . airline in the country,''..he said.."It is the Bryan, a leader of the International As meeting) was a state-of-the-nation deal. - -Z In the past, Borman has quoted the best managed and the best run airline in sociation Of Machinists (IAM). We have to get them to realize that the banks as saying that they will not lend the country. For us to be threatened by The union, which .represents 13,500 situation is rough." : ; - ..the company money to pay for salary- the bankers now.is just totally wrong. ground-based workers at Eastern, re- ; In a recent filing With the Securities increases. It's just not morally correct." // .
| - Feb. Mar Apr. 1 • Source: U.S. Treoiury Dept. 1, ••-'f-n.s Siatui'da:y. May 14,'1983 . iSgk teS; The Miami Herald >}pr: 4B
i.-.^r.i^i y;/.,-- * g.Lj i-kO i &i®#ff !*fo l* •/'r^rt'v,». • n»i* .,;,vU" *1 i toiffy: rHA^ »'.**:{: 5< '-V w ':4 :[ > jt; 6 ...j. • 't i;;. ,' !''l. •si.' fhr/ By MARTIN MERZER': tract people in a form tailored for & Poor's Corp. said that it! Was add Herald Business Writer . ? i :: 'We arc them," said Jim Ashlock; a compa- ing Eastern to "CreditWatch,"',its I :•;> (Virtuallyall; of-Eastern!Airlines'- V; pn ny spokesman. list of companies whose credit posi ; 39,000 employes \yill be asked to ODVlOUSly . The nonunion employes probably tion; must be monitored.' |• i""; j accept a portion of their salaries in p-nin? to will, be asked as an entity to accept ' ; Company' officials had been' ex bonds that, eventually, can be con'- f ° jj pected to release details of the plan the program, he said. Infthe past, 1 verted into stock, company officials inCOTpO- jpl „. Eastern has imposed wage conces- Friday after fijing registration pa : pers with the U.S. Securities and said Friday. rate this siori programs on, all; nonunion, em- 1 The program could save; Eastern c r, •., ployesI after a , majority .voted in Exchange Commission (SEC), but Ashlock said those papers probably hundreds' of, millions of dollars and Set- ij ', favor of the plans. i,):' pilot , f,v would not be filed until Monday." help the ailing firm regain the con The company ,s,v. ground-based, The1 Herald earlier reported that, { fidence of?its Renders, officials said. fiyvorkers.and flightt attendants/all of 'under'the company's briginal plan, :A(cruCial 'meeting with those lend- and Hope whom are represented:; by; unions, the' debentures' could' be converted eris is scheduled for Tuesday. -yi . -, -. ^ -j .iwil > i will be asked to: participate. in the ;int0 ;Eastem stbck at a'-price of $16 If the banks do not agree to re- IUily ex- v ;. ; program: wfIhdividbalSi,(:according^;^ ^e''T^"^1^.^^I^y''is M^fe^S^ffi^tt^ifcthrbughbUt.the ; to company.and.union officials... '_ . s|)'jngjJ thJ$i:'pef!share fTnge .rest; of rn company.' -" m®kI ^Last-week/theAir LinePilots ^ . serve; as a m^el forother company totel issue could be converted. Sirlii- that its 3,980 members at.Eastern ,,,;j .emplpyds»:rL}-.^'iiii«vj««i«r-f»at«o<»*t::<-u»H.'KiA*i;ierttA.'.w-.:.i.w.;i—i:- 'i • ^ rt, i-'i >5. .Ai'fif , „« {thatthey would ask the rest ofltheir / "We mePBHious gram- employes next week to join the pro- corporate this pilot ; In lieu of $54 million toj^74 mil- gram. Eastern's 16,000 manage-_ nopeiuuyexienahopefully extend 11it throughout! the.:/1#was!impossible'to estimate how!; libtt in-pay. rai^ ;...... 7.ment?and .•*. other lnonuriioh'employes ^ test of the company," Borman said, much of Eastern's;stock would be yearandyear and nextnextyeartjthe>pil6tswould year,,the pilots would will be among the.first to hear the He called- the prografn "very, held, by employes because several . receiverCCeiVe 3debentures'debentures tllflt^paythat pay - 5"P6r5-per , proposal,propospI''°1 .officialsc cqiHii:/«i>iinia1said. very crucial tnto tkathei -•! cent'jilterestcent ' interest and ;eventuallyeventually .couldtcpuid :/^l?'We, :."We ; are . working towards ex- enormously important beionvertedintocommpnstock^ll tending'^the^proposal'K&to^btherJlifpiBut^WainStreet^aF On Friday, company officials said employes,' particularly the noncon- less impressed! On Friday; Standard program. - - ... : - • ' . ^ m • M ~^ht"7" pltSi>",v '•&, • ••<':>• •: Utbi^rf«w| ** i, ,;jt> f|| fi Ijtfif. v^dT . J /.u • q,y ,...• •—,v,;...... • ...... , ..... •• ,—— ;; • - .. . -.i.,.,-' a 'j'•:'''!yjl''-Friday; December 31,,1982. I The Miami,Herald Section E Sv;i<>• :1 - I S ' \ ,'i >j W4-|V, r U } • ' • :'^V'' \^ r ' " '< ' • ) !' '*••',« < '- • t f •• . iltv:i M v^w- ;ifvEastern I.*}* *g ..r-ito ••lay " '..01,;)oil . I* iz:; yoOO i~V pilots"!t'g ';r' next'' gij-i year't.^iajrf „ .'..j -gjujii .tfjw,' sif)- ?>'•• a. By MARTIN MERZER receive wage increases. Herald Business Writer "We cannot have major inequi Eastern1 Airlines, reacting to ties among employe groups of a wage increases recently won by its near-peer relationship," Ashlock largest union, Friday awarded said. about 13,000 nonunion employes Earlier this week, leaders of their first raises in two years. Eastern's pilots union — also angry Company officials said that the over the IAM settlement — voided employes, including reservations the pilots' narrow endorsement of clerks, ticketing agents, secretaries $30 million in wage concessions and and clerks, would receive 1983 ordered a new vote1 on the matter. . raises ranging from 9.5 per cent to 15 per cent. Not included in Friday's action by The average increase is 13.5 per Eastern were about 3,000 upper cent, and all of the raises are retro management officials. Ashlock said active to last Jan. 1, company that group would not be receiving spokesmen said., j any raises. Under the new pay scales, the av "That's just the way things are in erage dirport-ticketing agent- at the corporate world," he said. Eastern will see his or her pay in-,, "We've said we've got to save crease to $2,327 per month from every cent we can. Upper manage $2,050 per month, according to the ment is still supposed to set the aus company. terity levels for the rest of the com The raises will be included in the pany, and we need to make every employes' next paychecks, officials Eastern Airlines clerks and ticket sellers are among those economy possible." said. getting a raise. 7 . V . Eastern lost $74.9 million in The International Association of, < ' ' . 1982, $65.8' million in 1981 and Machinists (IAM) recently won a designed to "increase the pay scales , , The loss-plagued company had, $17.3 million in 1980. During the new three-year contract for its 13,- [of the nonunion workers] to match vowed not to cave in to the IAM's first two months of this year, the 500 members at Eastern — a con the industry standard for these jobs -Wstrike threat and many non-IAM .company lost $44.1 million. tract that features an immediate 21 at other airlines." 1 ! members criticized Eastern for per cent raise (retroactive to Jahi 1) But he and other company offi- agreeing,to the $170-million settle1 Last week, in a cost-cutting and a total increase of 32 per cent •rials have- acknowledged that the ment. ' move, the company laid off 1,600 by the end of next year. increases were necessitated by the1 After the IAM settlement, corti- workers — some, of them, IAM Jim Ashlock, a company spokes residual effects, of Eastern's recent i^ pany officials said they realized members and some of them non man, said that Friday's action was settlement with theTAM. - j that other employes would have to union employes. ' ' Friday April 22,1983 i • Labor pact will force Eastern to boost By MARTIN MERZER , But Jim Ashlock, a company spokes much worse off than Eastern." tain certain ratios involving financial Herald Business Writer man, said that the company "didn't In its latest filing with the SEC, East data. 7*£% Recent wage settlements with the want to alarm anyone unnecessarily," ern noted that its recent $170-million "Unless the company receives/ ap machinists and other employes will and he noted that in the past, Eastern settlement with the 13,500 machinists proval for the drawdown of the addi force Eastern Airlines to borrow sub has been able to borrow funds and win and the cost of subsequent wage settle tional funds, or obtains additional funds stantial sums of money and ease restric concessions from its lenders. ments with other employes would force from other sources, it anticipates it will tions in existing loan agreements, ac In their official review of Eastern's the company to borrow "substantial ad be unable to meet its obligations in June cording to the company's latest finan condition, the company's auditors, Price ditional funds." 1983," Eastern said in its "Form 10K" cial report. Waterhouse, took special note of the Eastern already has borrowed at least filing with the SEC. If Eastern fails to arrange the loans disclosures, but did not comment upon $110 million of the $400 million it is au "And unless it receives modifications and modify the agreements, the compa them. thorized to borrow under a 1980 agree of its [loan] covenants, it anticipates ny could be caught in a cash crunch and David Campbell, an airlines analyst ment with a group of banks. But, be that it will be in default under [the loan "unable to meet its obligations in June with Wheat, First Securities in Rich cause of the company's persistent finan agreement's standard of ratios] in April 1983," the report says. mond, Va., said that the lenders were cial losses and heavy debt load, Eastern or May 1983," Eastern said. Company officials refrained from likely to cooperate with Eastern. must receive the banks' approval before But the company went on to report specific comment Thursday on the dis "I don't think there's a chance of de using the balance of the $400 million. that, in the past, it has received approv closures in the report, which was re fault," Campbell said. "The economy is In addition, as if often the case in al to draw funds under the $400-million cently filed with the U.S. Securities and going very well and things are looking large corporate loan agreements, the credit agreement and modify the finan Exchange Commission (SEC). better. There are (airline] companies banks have required Eastern to main cial ratios. / . ,'.5