No Break in the Turbulence

Strife at Eastern and Continental shakes the airline industry

In Washington, customers of the Thomas Cook travel agency refused to fly on Eastern Air Lines. In Manhattan, clerks at the bustling Avos agency on Fifth Avenue stopped writing tickets for Continental Air Lines. In Houston, passengers had to pass through picket lines on their way to flights. All across the U.S. last week, the normally routine business of air travel was suddenly overtaken by confusion and uncertainty. "People are scared," said Kathy Prezas, manager of Chicago's Apollo Travel. "They used to choose an airline for its food, or fares, or times. Now they are deciding which carrier to take by guessing which ones will be flying."

The chaos stemmed largely from labor strife at Continental and Eastern, two of the largest and most financially troubled airlines. Continental (1982 revenues: $1.4 billion), which lost $84 million in the first half of 1983, was struck by its pilots and flight attendants on Oct. 1 after it had first filed for protection from creditors under bankruptcy laws and then ordered its workers to take pay cuts that in some cases exceeded 50%. At Eastern (1982 revenues: $3.76 billion), where losses reached $128.9 million during the three quarters that ended last month, Chairman Frank Borman gave employees an ultimatum: accept wage reductions of 15% by Oct. 12, or Eastern would also file for bankruptcy. In addition, Eastern's more than 5,000 flight attendants were set to strike the Miami-based carrier unless it agreed to a new contract by Oct. 12.

During the week, Continental Chairman Frank Lorenzo, looking weary and discouraged, shuttled between Denver and Houston for what proved to be unproductive talks with striking pilots. A crew shortage forced Continental to defer its plans to add ten flights to the 158 remaining on its schedule. Pilots who had crossed picket lines were already flying at the rate of 83 hours a month, well under the federally mandated limit of 100 but still some 28 hours more than Continental's pre-strike average. In view of the turmoil throughout the industry, the Federal Aviation Administration stepped up its safety inspections at the Houston-based carrier and other airlines. "There have been no safety violations so far," said FAA Administrator J. Lynn Helms of conditions at Continental.

The strikebound airline kept its flights about two-thirds full by offering $75 one-way rates between any two nonstop points that it serves. Furthermore, it announced an extension of the discount fares, which few other carriers have sought to match, until Oct. 22. Said Gladys Henn, 68, before boarding a Cleveland-bound Continental jet in Houston: "If the pilot is flying this thing, he's got his life in his hands too. I have to feel safe, or I wouldn't get on."

At Eastern, one hopeful sign emerged late in the week when Borman abruptly dropped his ultimatum. The action followed a series of labor-management talks prompted by former U.S. Labor Secretary William Usery Jr., whom Eastern had hired as a consultant. Eastern agreed during the sessions to retain a pair of outside advisers to examine its financial woes and propose solutions. The move was welcomed by the carrier's unions.