Judge Blocks Eastern's Plan to Fire 4,000

By PAUL HOUSTON

Aug. 31, 1988 12 AM PT

Times Staff Writer

WASHINGTON — A federal judge Tuesday barred Eastern Airlines from firing 4,000 employees until it negotiates with unions over the proposed layoffs, but he allowed the company to make deep cuts in flight schedules today as it had planned.

As unions cheered the order blocking immediate furloughs, Eastern filed an appeal. Eastern President Phil Bakes charged that the ruling by U.S. District Judge Barrington D. Parker was “gravely wrong” and that it “would profoundly disrupt the entire airline industry and undermine the very essence of deregulation.”

Jonathan Cohen, an attorney for the Air Line Pilots Assn., said that “we’re happy the judge is preserving jobs during bargaining. We want the people who run the airline to have the freedom to make the business decisions. But when those decisions are really an effort to get rid of unions, we think it is proper for a judge to step in.”

Non-Union Workers

Seeking the court order were unions representing 500 pilots, 1,000 flight attendants and 1,000 machinists affected by the proposed layoffs. The order also barred the immediate firing of 1,500 clerks and managers who do not belong to unions.

In a 50-page opinion critical of “shocking” testimony by Eastern officials, Parker found that Eastern’s cutbacks were grounded in anti-union bias and represented part of a broad effort by parent Texas Air Corp. to shift operations to its low-cost, non-union Continental Airlines subsidiary.

Although financially strapped Eastern contends that the layoffs would save several million dollars a month, Parker suggested that they would trigger a strike that would cause economic hardship to the airline, its employees, customers and the public.

He said that “the very objective” of federal labor laws is to “avoid such potentially disruptive strikes by prohibiting parties from unilaterally abrogating their collective bargaining agreement before exhausting the mediation process.”

Thus, he concluded, “the public interest will be best served by maintaining the status quo . . . Eastern must abide by the Railway Labor Act and bargain with its unions before pursuing unilateral action which would eliminate 12% of its work force.”

On the other hand, Parker upheld Eastern’s right to drop nearly 12% of its flights--including stops at San Diego, Las Vegas and Lake Tahoe--and to stop using Kansas City as a hub airport.

Cites ‘Past Actions’

The judge permitted the schedule changes because they are “similar to past actions.”

In protesting Parker’s preliminary injunction, Bakes said that “Eastern, like any American business, must be allowed to prune money-losing operations. We must be able to take prudent, although sometimes painful, measures in the best interests of the company and our employees.”

Bakes did say that the ruling had a positive side in that “the consumer and traveling public will not be inconvenienced . . . Eastern’s basic fall schedule remains intact.”

Airline industry analyst Louis Marckesano said that he hopes the court action will “get the parties together again to negotiate a settlement. But that may be too optimistic.”

Airline May Be Sold

Marckesano, who is with the Janney, Montgomery, Scott brokerage firm in Philadelphia, said that other alternatives for Eastern, if it loses an appeal in higher courts, include selling the airline and filing for bankruptcy.

“But I don’t see that necessarily happening right away,” he said.

In his opinion, Parker said that the unions had shown by “abundant and credible testimony” that Eastern’s proposed furloughing was illegal.

Parker said it was clear that, before Eastern was sold to Texas Air in 1986, the two airlines had joined with Continental in coordinating operations aimed at frustrating bargaining efforts by Eastern’s unions.

The judge said that Eastern’s management has contributed significantly to the firm’s financial instability.

‘Questionable Loans’

“Management has led the company into a number of questionable loans and questionable ventures which have drained off cash reserves and other assets,” he said.

Referring to a $16-million non-interest-bearing loan that Eastern gave Texas Air two years ago, without demanding any repayment since, Parker commented: “The lack of knowledge and the uncertainty of Eastern officials about this loan were shocking; it clearly showed that interests and concerns of Texas Air and Continental were paramount to Eastern’s.”

Parker added that “ironically, two top officials of Eastern and Texas Air, Phil Bakes and Frank Lorenzo, could not answer many relevant questions about” a $40-million loan from Eastern to Continental early this year.

“In short, the record shows that Eastern has served as a lending institution to meet the needs of Texas Air and Continental,” the judge said.