Attendants rip American's two-tier pay
MIKE SHERIDAN Staff
MON 03/30/1987
HOUSTON CHRONICLE, Section Business, Page 1, 2 STAR Edition
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DALLAS — To Patt Gibbs, American Airlines is promoting a "two-class" work force, where one group of employees — performing the same functions — are paid 50 percent less than the other group.

"It's not a good system," says Gibbs, the president of the Association of Professional Flight Attendants, the 10,300 member union that represents American flight attendants. "When you have two attendants, working side-by-side and doing the same thing, and one is paid $12,000 and the other gets $25,000, there's something wrong."

But not to Al Becker, director of corporate communications for Dallas-based American, who notes that the two-tier pay agreement American instituted in December 1983 means that the carrier not only will remain competitive in today's heavily cut-throat aviation industry, but will also be able to offer thousands of individuals who otherwise wouldn't have a job a position with a major airline.

"Since implementing the two-tier plan, our work force has grown from 34,000 to 51,000," continues Becker. "The system has created thousands of new jobs. Through the two-tier system, we've achieved what other carriers have done through either bankruptcy or reduced wages. We are able to grow by hiring new people at market rates. "

The two-tier pay system, which three years ago was cited as the savior of the airline industry, is now the focus of a classic labor confrontation at American Airlines, the carrier that is credited with its invention and a company that analysts say is among the nation's most profitable. The stakes are high for both sides.

According to union officials, if the flight attendants can't make economic gains at American — which is financially healthy — they probably won't be able to achieve monetary gains at other, less profitable carriers. At the same time, other U.S. airlines that have adopted their own version of the two-tier pay plans — two out of three other carriers have followed American's lead — are closely watching to see whether American retains the innovation.

The reason for this interest, explains Lee Howard, executive vice president of Airline Economics Inc., a Washington, D.C.-based consulting firm, is that the older airlines such as American and United have higher operating costs in comparison to full frills, low cost carriers such as Houston-headquartered Continental Airlines.

Continental now has low labor costs, observers say, because it entered the protection of the bankruptcy court in September 1983, partly to rid itself of high-cost labor contracts that cost the carrier millions of dollars each year. Continental declared Chapter 11, pruned its route structure and fired its work force. Employees were hired back several days later, at a substantial salary cut. Since that time, Continental has remained fairly profitable.

American sought to achieve a reduction in the cost of labor through its two-tier wage plan. Because of lower labor costs at carriers such as Continental, American decided not to reduce the wages of current employees, but instead to hire new workers at a drastically reduced rate. The plan, officials said, would mean that over a period of time, American's labor costs would decline.

However, the plan is now being fought by American's flight attendants, led by the feisty and articulate Gibbs. A 25-year veteran of the airline industry and a longtime union advocate, American has tried to fire Gibbs three times and to discipline her 17 times. But the daughter of circus performers and a third-year law student at the University of West Los Angeles Law School, remains unwavering in her belief that the two-tier wage program must go. Gibbs adds that it is unconscionable that a successful company such as AMR Corp. - American Airlines' parent - would be paying low salaries to its employees.

According to Gibbs, the base rate paid the "B" scale American flight attendants — the newly hired workers drawing the low end of the salary scale — is $972 a month, a figure that, she contends, qualifies some attendants with families living in cities such as New York for food stamps.

"Changes must be made in the two-tier system," she said during an interview at her offices 10 minutes away from Dallas-Fort Worth Airport. "It's a return of the two-class system in America, the very rich and the poor. With the two-tier system, you have people working side by side, doing the same job, and one gets paid half as much. Pretty soon you have some dissention in the ranks, since the lower- paid person is going to say, `Hey, you make more money than I do. You do it'."

American's Becker notes that the airline intends to blend in the "A" and "B" scales in a single salary structure over a number of years.

"It's the most reasonable, equitable way," he continued. "We have to compete against low-cost carriers. Our average available seat-mile-cost last year was 2.6 cents, compared to Continental's 1.4 cents. That's quite a difference."

Becker notes that American has been profitable, but says that the company has an $11 billion growth program over the next few years.

According to officials, American is proposing that it merge the two tiers in 15 years with increases of 4 percent to 8 percent annually for the veterans and 31 percent to 37 percent over the three years for the new group. But Gibbs says American is "using mirrors" in its calculations and has rejected the move.

Gibbs notes that by keeping the pay scale for new hires low, that means constant turnover of younger workers. For example, the average age of flight attendants at American has declined by four years, 32 years of age, over the past four years. With such low pay, many people see a flight attendant position as a temporary position for young, attractive women who would soon move onto something different, union officials say.

Currently, she adds, American has 6,500 flight attendants who are under the "A" scale — the top pay — while 4,000 under the lower "B" scale. As the higher-paid workers retire or quit, more and more lower-paid workers will be hired, thereby tipping the balance of power in the union.

Negotiations are continuing between both sides. American's flight attendants have disavowed use of one of labor's major weapons — a strike — pointing to the experience the flight attendants' union had with TWA last year. In March 1986, some 6,000 flight attendants struck the St. Louis-headquartered TWA. The airline promptly hired replacements - at about half the salary that had been paid the strikers. Today, about 4,000 former TWA flight attendants are still without work.

Instead, Gibbs says, the union will use job actions such as strictly adhering to the rules and by liberal use of amenities - providing passengers with a can of soda instead of merely a glass, for example.

In addition, the union has hired a labor consultant to begin a corporate campaign aimed at American and the carrier's major stockholders. Last week, attendants demonstrated in New York outside the offices of the Equitable Life Assurance Co., which has roughly 12 percent of AMR's stock.

American's management hasn't been idle either. Last week, it fired 20 flight attendants who were distributing leaflets at DFW Airport, saying the information contained in the handouts was "malicious" and damaging to American. The APFA has since filed suit in federal court, charging the company with illegally firing employees for collective action. Now, Gibbs says, union members who picket or hand out literature are urged to wear masks.

"Except me," she says, "because I'm kind of hard to hide."

What Patt Gibbs doesn't hide is her contempt for the two-tier wage system.

"We must achieve pay parity," she emphasizes. "Flight attendants work closely together. The pay difference causes problems. Some of the people who are on the "B" scale can't afford to go out and eat during layovers, and they eat stuff right off people's plates. And they're working for one of the most successful airlines too."