Storm clouds are gathering around Trans World Airlines` efforts to emerge from bankruptcy court.
The union representing the airline`s pilots said Thursday that a reorganization plan put together by the carrier`s management and creditors doesn`t address job or pension security-two issues critically important to its members.
As a result, union officials said, they will be hard-pressed to endorse the plan, which calls for the ouster of Carl C. Icahn as TWA`s chairman and the transfer of its operations to its creditors and unions.
”We have had preconditions all along to any agreement, and we think they`re fair and realistic,” said David Berkley, a spokesman for the 2,800-member TWA branch of the Air Line Pilots Association. ”These are very important issues to us.”
Without the pilots` support, the reorganization plan undoubtedly would have to be scuttled, a situation that could bring about the liquidation of Mt. Kisco, N.Y.-based TWA.
The support of the pilots is critical because a key element of the proposed deal to get TWA out of bankruptcy calls for the airline`s pilots, along with its other employee unions, to make about $200 million a year in pay and benefit concessions. In return, the unions are to receive a 45 percent stake in the airline; creditors would receive the other 55 percent.
Unions representing TWA`s flight attendants and machinists have more or less agreed in principle with the reorganization plan. The TWA chapter of the pilots union says it wants to agree, too, but needs assurances that its members` jobs will be secure.
Specifically, the union wants management and TWA`s creditors to include a provision in the reorganization plan that would require airlines that buy routes from TWA to hire the TWA pilots assigned to fly those routes.
The provision is critical, according to the union, because TWA undoubtedly will have to sell off at least some of its remaining overseas routes and other assets to alleviate its financial crunch.
In addition to job security, the pilots want TWA to make up the deficit in the airline`s employee retirement fund. That would take $1.2 billion, according to the federal government`s Pension Benefit Guaranty Corp.
To date, neither TWA nor its creditors have addressed the pilots`
concerns, union officials contend, and talks between union negotiators and representatives of the company and TWA`s creditors have reached an impasse.
Moreover, the creditors this week handed the union a ”take-it-or-leave-it ultimatum,” union officials said. Union officials said they planned to meet in St. Louis over the weekend to review the ”apparent final offer” of TWA and the creditors.
”It`s unrealistic that we would agree to a plan that leaves jobs unprotected and gives away our pension claims,” said William Compton, the master executive council chairman of TWA`s chapter of the pilots association. ”By failing to grant us job protection, what the creditors committee proposal asks us to do is subsidize a plan that would eliminate pilots`
jobs,” Berkley, the union`s spokesman, added. ”That`s a ludicrous position at this point.”
Efforts to reach a spokesman for TWA`s creditors were unsuccessful.
In a related matter, USAir officials told TWA`s creditors that they would not submit a proposal to buy TWA`s assets because they do not want to interfere with the airline`s negotiations between its unions and creditors.
A USAir spokeswoman said, however, that if TWA`s current reorganization effort fails, USAir would be interested in buying TWA`s assets.
Separately, Northwest Airlines said Thursday that it will raise fares in 900 markets Sept. 1, in part to match increases announced by American Airlines earlier this week. In addition, the St. Paul-based carrier said it will follow Delta Air Lines` lead and raise fares 5 percent across the board in other markets, contrary to what Northwest had announced Wednesday. It also said it will raise its reticketing charge to $50 from $25.
