Airlines: Back to Work Through an Open Gate

Six weeks after it began, the biggest and costliest strike in U.S. airline history ended last week with a labor triumph. The 35,400 striking members of the International Association of Machinists not only slapped down Lyndon Johnson’s personal efforts at peacemaking, but won a settlement so lavish as to threaten the whole economy with a major round of wage-price inflation.

Somewhat grudgingly, the strikers voted at week’s end to accept an 18% raise in pay and benefits over three years and to return to work at five airlines that normally carry 60% of the nation’s air traffic. That 4.97%-a-year boost shattered what little was left of the President’s 3.2%-a-year guideposts for restraining wage and price increases in the inflation-threatened U.S. economy. More ominously, the settlement opened wide the gate for other unions with 2,250,000 workers, including those in such key industries as electrical equipment, autos, trucking, clothing and rubber, to demand and get as good or better gains in contract negotiations scheduled between now and the end of 1967.

The Casualties. By Government and industry reckoning, the 43-day strike cost the U.S. economy at least $3 billion; it was the nation’s most serious strike since the 116-day steel stoppage in 1959. The five grounded airlines—United, TWA, Eastern, National and Northwest—lost $335 million in revenue, a presumptive $28 million in profits.* Their employees—not only the machinists but also some 42,500 laid-off pilots, stewardesses, office and reservation clerks—missed a total of $68.8 million in pay. The federal, state and local governments lost some $45 million in tax revenue. The tourist indus try, expecting one of its busiest and most profitable years, was hit even harder than the airlines, lost an estimated $1.6 billion. Occupancy in leading Puerto Rico hotels fell 25% below normal; some Miami Beach hotels, shops and restaurants were half empty. American Express reported a sharp drop in travel bookings for the fall and winter. California flower growers, source of a quarter of the nation’s floral supply, and dependent on air freight to deliver their fragile crop, lost $1,000,000 a week in sales to out-of-state customers.

In all, some 7,000,000 would-be passengers were grounded, delayed or forced to revise their plans. Such frustration fell most burdensomely on 16,000 TWA travelers temporarily stranded in Europe. The only strikebound line that flies across the Atlantic, TWA loaded other airlines with its strandees—a move that added $1,000,000 a day to the nation’s balance-of-payments deficit. Even so, some 1,500 Americans were still looking for a way home last week, including 250 at Shannon, Ireland, and about 400 in London, where a party of Massachusetts schoolteachers bedded down on airport couches. The strain in Spain was mainly to get aboard Iberia Airlines planes from Madrid to New York. Last week police quelled one fracas in which 19 irate tourists threatened to slug counter attendants and then stormed the runway gates when told that their supposedly confirmed reservations could not be honored.

Within hours after the union’s strikeending ballot, all five of the afflicted lines resumed at least half their normal schedules. National, with a DC-8 flight leaving Miami for Los Angeles at 1 a.m. Saturday, was first to get into the air. Among TWA’s first flights were three transatlantic jets bearing only extra flight crews, who were needed overseas to man flights for stranded tourists.

Dillying & Dallying. The final settlement, accepted by a vote of 17,727 to 8,235, is retroactive to Jan. 1, gives the machinists a three-stage pay hike that will lift the earnings of the top-rated mechanics from $3.52 an hour to $4.08 an hour by May 1, 1968. The pact also boosts holiday pay from double time to double time and a half, calls for 50-an-hour company contributions (up to $2 a week) toward health and welfare plans, provides the union with what the airlines fought longest and hardest to avoid: an automatic further pay increase of up to 60 an hour if the cost of living keeps rising at about its present pace. With that, the mechanics will not only keep their rank as the nation’s top-paid industrial production workers (runners-up: oil workers, at $3.37 an hour), but will also collect more than civilian pilot instructors at U.S. Air Force bases, who average $3.60 an hour.

All this came about only after a great deal of dillydallying by both President Johnson and the Congress. The Democratic leadership had been bluntly warned by A.F.L.-C.l.O. President George Meany that any Government action that did not favor the machinists’ union would bring widespread labor reprisal at the polls in November. During the long negotiations, the airlines raised their offer to the machinists no fewer than five times—from $48 million last spring to the final $87 million.

At one point, President Johnson himself practically dictated a settlement—only to see it overwhelmingly voted down by the machinists. Then Congress tentatively got into the act; Oregon’s maverick Democratic Senator Wayne Morse, who had headed a presidential panel that recommended one rejected settlement, led the way in introducing legislation that might end the strike by legal fiat. Union President Roy Siemiller, insisting that he could not engage in collective bargaining while a congressional club was being held over his head, merely used the proposed legislation as an excuse for walking away from negotiations. Last week, after it was all over, Siemiller claimed that the strike would have ended a month ago if Congressmen like Morse had “just kept quiet.” However dubious that claim may be, the fact remains that Congress, fearful of losing labor votes, ended up doing nothing.

Time and again throughout the negotiations, the union broke faith. At one point, Assistant Labor Secretary James Reynolds, the Government’s chief mediator, relayed an $84 million offer from the carriers to Siemiller, who accepted —but later, obviously apprehensive about his control over his own membership, denied that he had ever agreed. Next day Labor Secretary Willard Wirtz summoned both sides to his office, asked Siemiller why he had backed down. “We don’t know what you’re talking about,” said Siemiller. To that, TWA Vice President David Crombie, a top management negotiator, snapped: “Your statements have raised an issue of credibility. We can choose between what you have said and what Jim Reynolds has said. And we have come to respect Jim Reynolds.” Thereupon Siemiller pounded upon the desk and cried: “You’re calling me a liar.” He used that as a new excuse to walk out on negotiations.

Repercussions to Come. In the end, the airlines, controlled by the Federal Government in almost every conceivable way, finally did what they knew the Administration wanted them to do. They buckled under completely. In a letter to local leaders urging acceptance of the new contract, Siemiller said with barbed accuracy that the pact “effectively and thoroughly shreds the so-called wage guidelines.” What he did not say, naturally, was that even under the new contract it will take the average machinist 16 months to make up the pay he lost during the strike. Instead, adding crude personal insult to gross national-inflationary injury, he took a public swipe at the chairman of the President’s Council of Economic Advisers, who deplored the pact. Sneered Siemiller: “Gardner Ackley has all the answers, and none of them work.”

The first repercussions of the pact will be felt soon. A presidential study group is already looking into a wage dispute involving American Airlines mechanics, who are represented by the Transport Workers Union. American might be grounded on Sept. 28. Beyond that, the airlines settlement, marked as it was by a wretched performance on the part of an Administration and a congressional majority that placed the labor vote above the national interest, carried with it serious implications for the continued prosperity of the U.S. economy.

* Thanks to a mutual-aid agreement dating from 1958, all the struck lines but nonparticipating National will recoup a small part of their losses from the “windfall” income of nonstruck American, Pan American, Braniff, and Continental. Pan American announced last week that it had handed over $7,341,000 in such payments; Braniff paid out $750,000. The complex formula called for rebates equal to revenue from traffic added because of the strike, less the cost of handling it.