Friday, February 14, 1997

No progress reported as strike deadline nears

By KATIE FAIRBANK AP Business Writer

WASHINGTON (AP) - American Airlines officials took a skeptical view of a compromise offer from the pilots' union as Friday night's holiday-weekend strike deadline approached. President Clinton urged both sides to "reach out to one another" and settle their differences.

Clinton, at a news conference Thursday afternoon, gave no indication whether he would exercise emergency powers to prevent pilots from striking at 12:01 a.m. Saturday. He was urged to do so by the airline's chief executive officer, Robert Crandall, and by mayors and some members of Congress from areas that would be particularly affected.

Although negotiations were scheduled to continue, both sides were preparing for a walkout.

The airline canceled most overseas flights so aircraft would not be stranded, and the board of the Allied Pilots Association planned a teleconference at the strike deadline.

At the White House, Clinton received a report from the Transportation Department estimating that the strike would cost up to $200 million a day and could strand up to 40,000 passengers.

The department also said it was prepared to temporarily assign American's landing slots to other carriers if a strike develops.

"We hope that that analysis of economic damage won't need to be a useful document," said White House spokesman Mike McCurry.

The president, who has emergency powers to intervene temporarily, urged both sides to reach an agreement. Clinton said the airline and the pilots union should "think about how they can reach out to one another in the best interest of the nation."

Hopes for a settlement rose early Thursday, when the union offered to have its pilots accept lower pay scales for operating jets on regional routes as long as the company accepted its other demands.

But American's parent company, AMR Corp., says it doesn't want American pilots to fly the new jets that have been proposed for regional routes. AMR wants its American Eagle subsidiary, with lower-paid pilots from another union, to fly the commuter jets.

The company did not directly reject the offer, but a spokesman suggested the pilots' plan would not work.

"In reality, those jets are going to be operated as American Eagle or they are not going to be operated," spokesman Al Comeaux said. "There are costs involved beyond pilot costs. We have to be competitive."

The regional jet issue has been a sticking point in negotiations for some time. Both sides agree the smaller routes are necessary for American to remain competitive, but they don't agree on who should fly the twin-engine jets that have up to 70 seats.

American mechanics, flight attendants and other workers all have higher salary ranges than their counterparts at American Eagle, a conglomerate of four separate small airlines funneling $1 billion in traffic to American Airlines.

The average American Airlines pilot makes $120,000 a year. The average American Eagle pilot makes about $35,000 a year.

The union wants 3 percent pay increases each August for the next three years and a 2 percent raise on Aug. 31, 2000.

The pilots also want stock options to buy 7.25 million shares at below-market cost and they want to phase out over four years a lower pay and pension scale for newly hired pilots that has been in place since 1983.

The company is offering a 6 percent raise over the life of the contract and options for three million shares of stock.

As the deadline neared, American canceled Friday flights to Japan, Central and South America and most of Europe. The only exceptions were flights to San Juan, Puerto Rico, and London. Airline officials said they had large enough operations there to provide security for the planes if they were grounded by a strike.