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Eastern Lays Off 1,010 Flight Attendants, Slashes Pay 2% : Lenders Ordered Cost Cutting; Union Will Fight

January 20, 1986|From Times Wire Services

MIAMI — Eastern Airlines, faced with a mandate to cut costs or lose its financing, today announced that it will lay off 1,010 of its 7,000 flight attendants on Feb. 4 and impose a new contract cutting pay and giving the carrier greater flexibility in scheduling.

The announcement came eight hours after a midnight deadline on contract negotiations passed without an agreement.

Chairman Frank Borman declined to speculate on whether more layoffs would be necessary, but he said Eastern also plans a pay cut of 2% effective Feb. 4 on top of an 18% cut instituted two years ago.

Borman said the proposed new contract will give Eastern a cost structure similar to American Airlines.

'Whatever Is Necessary'

"We will do nothing until the cost structure of this airline is fixed," Borman said. "We will do whatever is necessary to ensure that Eastern Airlines is profitable."

Borman said Eastern expects to cut labor costs by $250 million in 1986 by negotiating new agreements with all of its employees. He would not say how much the new, low-cost contract with the flight attendants will save.

The contract must be ratified by the 7,200 flight attendants. Borman declined to speculate on what would happen if they reject it.

President Joe Leonard said that despite the layoffs, the airline will fly its normal routes.

Fight Vowed

Robert Callahan, president of the Transport Workers Union Local 553, vowed to fight the action.

"Since it is a fight you want, we will fight you . . . in the board rooms, in the banks, in the media, on Wall Street and with the public . . . and maybe in the streets," Callahan said. "It's all-out war."

He would not specify how the union will fight the measures, promising only that workers will not strike before March 1. No further talks between the union and Eastern, which has 41,000 employees, are scheduled.

Besides pay cuts for flight attendants, the company said it is cutting travel allowances and vacation time, eliminating extra pay for intercontinental flights and requiring attendants to work more time at no additional pay.

80 Hours Required

Flight attendants, who average 50 to 63 hours a month in the air, will be required to work 80 hours of flight time a month starting Feb. 4.

In 1985, the average flight attendant made $30,464. Under the new plan, the attendants will make 2% less.

This is in addition to an 18% payroll deduction the flight attendants took in 1984 in exchange for 25% of the company's common stock.

Eastern owes about $2.5 billion to 60 lenders and lost $67.3 million last quarter. Earlier this month, the banks jointly issued a Feb. 28 deadline for Eastern to obtain major labor concessions or face technical default on its debt.

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