Airlines: The Ground Crew Walks Out

Pan American Airways flew past one patch of labor turbulence last week but then jetted straight into another. The ailing airline (1984 revenues: $3.68 billion), which has not shown a profit since 1980, grounded most of its U.S. flights after some 5,700 mechanics, baggage handlers and other ground workers walked off the job Thursday shortly after midnight. The strike by members of the Transport Workers Union, which also sharply curtailed Pan Am's overseas operations, began less than 48 hours after the carrier had agreed to a new contract with its nearly 1,500 pilots.

The T.W.U. talks collapsed when union negotiators refused to accept a company proposal calling for hefty cutbacks in pension and health care plans, along with 5% annual wage hikes through 1987. Union members have not had a raise since they agreed to defer a 14% pay increase in 1980. "I expect a long strike," said Michael Bakalo, a T.W.U. vice president. Securities analysts noted that the airline has some $400 million in cash on hand that it could use to cushion the impact of a lengthy walkout. But a protracted struggle could severely harm both the troubled airline and the strikers.