DALLAS -- American Airlines president Robert L. Crandall says he must win union contract concessions or the company could go out of business.
Restrictive work rules are the overriding issue, said Crandall in an exclusive interview with UPI in which he discussed airline labor-management relations in the 1980s.
Crandall said he must persuade the line's employees and unions 'that if you insist on a continuation of those things, (like restrictive work rules) we will not be in business. You won't have a job. We will literally not be in business.'
Crandall said that during 1981, negotiations would begin on labor contracts covering both American Airlines' flight attendants and pilots. Members of either could ground American with a strike.
'We are mindful of the company's request for productivity increases,' said Ralph Harkenrider, executive administrator of the Allied Pilots Association, contacted in Arlington, Tex., 'and we are not unsympathetic to these objectives.
'But, we're not in collective bargaining negotiations yet and we don't know in any detail the specifics of what the company desires.'
He added, however, 'We don't intend to give away all that we've fought for during the last 40 years.' The APA represents American Airlines pilots. It split off from the powerful Air Line Pilots Association in 1963.
Crandall said 'it is not important whether a company is union or nonunion.
'Unionism is not the issue,' he said. 'Restrictive work rules are the issue. You can have a union without having restrictive work rules. That has not been true, but it is possible.
'I don't have any problems with unions -- if they are responsibly led and if they perceive properly that the interest of the union and the interest of the company are the same.'
For 35 years, said Crandall, the labor movement has viewed the creation of more jobs as its prime mission, but that perception must change.
It was fine to create more jobs when the airlines could afford to pay for them, Crandall said. 'But in fact what we've got now is a situation where unless we get more productive, the major airlines aren't going to be in business' due to the emergence of discount, point-to-point nonunion carriers.
Noting the trend, Robert J. Joedicke, an airline industry financial analyst, said recently: 'The fact is that 1981 may well be a year of confrontation between labor and management. At least 66 contract agreements become amendable before year end and other nationwide airline unions are likely to take a more militant stance as the productivity issue comes to a head.'
Crandall said he is spending a great deal of time -- far before the contract negotiations, when he believes it will be too late -- meeting with union leaders and American employees to explain his position in an attempt to prevent bitter confrontation at the height of negotiating tensions.
He tells the union leaders: 'It is no longer sensible to direct your efforts toward creating more jobs. What you ought to be doing is directing your efforts toward greater productivity, which will lead to higher income for the members of the union. There may not be as many of them -- but they will have higher incomes and job security.'
'It's a matter of changing the pattern of traditional airline union thought,' Crandall said. 'We're having more or less a continuing discussion with all the unions and all the employees of the company. Now this will have to be formalized during the negotiations -- but we're certainly not waiting for the negotiations to have those discussions.'
In a series of articles in American's internal publications, Crandall has guaranteed absolute job security for existing employees if they will accept some contract concessions, particularly 'cross-utilization' -- considered by union leaders as a company code term for 'more work with less people.'
Crandall also has offered employees the right to participate in a profit-sharing plan if they approve proposed contract changes.
'Yes, we're talking about cross-utilization,' said Crandall, 'which we define very simply -- it's everybody doing whatever needs to be done at the moment. Forget about this business that you're a cleaner, you're a baggage loader. If you've got five people there and you're capable of doing the job, do it. That's cross-utilization.
'We're talking part-timers, which simply means where we need part-time people ... we want the ability to use them. This is a business with peaks and valleys.'
He also conceded American was seeking concessions in contract clauses covering cockpit personnel and flight attendant crews.
Crandall said he realized the possibility of strikes because of management attempts to modify labor contracts.
'We are not going to precipitate the confrontation. We think we can persuade people that they ought to work with us rather than against us.
'Basically it boils down to a process of communication. We've got to persuade the people of the airline that to continually push for these rules ... is contrary to the individual's best interest.'
'It's a matter of saying, 'Look, there are a number of things in the working agreements now which may be nice to have but offer very marginal kinds of benefits to the individual but they cost the company vast amounts of money.'
'So we go through and eliminate those things... then we can make the company profitable, buy the aircraft we need to compete, provide everybody with higher incomes and job security and nobody loses very much. That's the job of persuasion that we've got to do.'
Crandall admitted the success or failure of attempts to gain contract concessions depended upon his credibility and what kind of cooperation he could gain from union leaders representing his employees.
'But I think the point is, if they don't believe what we're saying, we're not going to try and jam it down their throats. We're simply going to continue the process of shrinking the airline so that what they will see is the company gradually eroding away, getting smaller and smaller and smaller and smaller because -- in the absence of earnings which will allow us to acquire new capital -- we can't go out and make commitments for new airplanes.'
Crandall, 45, did not mention it, but his father spent time in strongly unionized coal fields of West Virginia. In 1976, Crandall invented the industry's premier deep discount fare, the widely known 'Super Saver' program.
A native of Westerly, R.I., Crandall was a former vice president of Trans World Airlines and came to American in 1973 in top marketing and financial posts before being named president. Crandall is a computer expert and is credited with developing American's computerization program into the most advanced in the industry.
Crandall spoke to a feeling that American and Delta Air Lines were trying to put financially troubled Braniff International out of business to corner lucrative passenger traffic in the Southwest. Both Braniff and American are based in Dallas, American having moved to the Dallas area from New York City two years ago.
'Braniff, because it has encountered some difficulty, is trying everything it can think of and one of the things it's playing is the role of underdog. 'I suppose if I were in that situation, I might try to play the same role.
'But the fact is, that Braniff knows very well that we're not making any attempts to put Braniff out of business. We're totally indifferent to what Braniff does... Braniff's weakness or strength is a function of what Braniff does, not a function of what we do.'
He said 'you can't help' competing for the same passengers -- 'that's the way the world works.'
Crandall is a fierce budget cutter. President since last July, he has directed a reshaping of American that kept its first quarter operating expenses essentially flat through the elimination of 5,000 jobs by attrition and 'cutting the hell out of all our other expenses.' His budget surgery goes from major to minor. When the decorative plants in his spacious office die, for instance, they will not be replaced.
After a devastating 1980 -- a net loss of $75.8 million -- American turned a net profit of $3.9 million for the first quarter of 1981, traditionally its worst period.
Crandall said American faces major challenges in the 1980s so it can operate profitably in the next three decades. They include:
--Completing the transformation of American 'from what it was prior to deregulation to what it must be after deregulation.'
--Lowering costs by retiring obsolete, fuel-hungry aircraft and making the remaining airplanes lighter and more efficient.
--'Getting rid of every superfluous function and every person who isn't absolutely needed' and the remaining task of seeking labor contract modification.
--Completing the transformation of the fleet by accepting deliveries of the new generation of Boeing 757s and 767s and selecting 'the most appropriate short range aircraft' to complement the larger planes.
But Crandall said, 'the single biggest challenge that we face between now and two years from now is the job of persuading all the people of American that greater productivity is in everybody's interest.'
