Labor tensions cited in USAir chief's exit

September 08, 1995|By Suzanne Wooton | Suzanne Wooton,Sun Staff Writer

The surprise decision by USAir Chairman Seth E. Schofield to retire could foreshadow a tough new stance by the airline in its efforts to reach critical, cost-cutting agreements with its labor unions.

According to several analysts yesterday, Mr. Schofield's departure was likely prompted by his own frustration -- and that of the board of directors -- with his failure to get some $500 million a year in labor concessions.

"This might be a not-so-subtle message from the board of directors to labor saying, 'We're making massive changes here, altering the way this company has been run and we expect the same from you,' " said Timothy F. Sieber, vice president of research for Aviation Systems Research, an industry consulting firm in Golden, Colo.

"USAir's made a lot of progress, but the road is still long," he said.

After climbing for two days, the company's stock remained unchanged yesterday at $10.625.

Wednesday's announcement about Mr. Schofield's retirement came just a day after the Arlington, Va.-based company said it finally expects to make a profit this year after six years of devastating losses tallying more than $3 billion.

Still, USAir's costs are the highest in the airline industry, raising questions about its ability to survive, particularly in the face of competition from discount carriers.

Other analysts say Mr. Schofield's resignation may simply reflect the 56-year-old chairman's reluctance to continue battling with the unions. "The departure was probably related in some fashion to the labor situation," said Philip A. Baggaley, an airline analyst for Standard & Poor Services in New York. "Perhaps it was a combination of his own thinking and that of the board's."

Earlier this summer, USAir called off its collective negotiations with labor unions which had been going on for more than a year. The negotiations fell through after the airline's flight attendants voted their package down and talks with pilots then stalled.

Mr. Schofield's low-key style "was more toward the conciliatory side," Mr. Baggaley said. "But one can't conclude that affected the negotiations."

The company now intends to negotiate separately with its unions as contracts come up for extension over the next 18 months. Talks with USAir's machinists union are expected to get under way soon. "Maybe rather than going back into battle he just decided 'enough,' " Mr. Baggaley added.

The Association of Flight Attendants for USAir yesterday said it was "stunned" by the announcement of Mr. Schofield's retirement, "particularly in light of the strong financial gains the company has made in recent months."

"We are hopeful that his departure will in no way interrupt the momentum the company has shown this year," said Carol Austin, president of the flight attendants union. But the union declined to speculate on whether the company might toughen its stance in future negotiations.

Representatives for three unions -- including the pilots, machinists and other ground workers -- could not be reached for comment.

Mr. Schofield rose through the ranks of the airline from a teen-age baggage handler and was well-liked by labor. In 1992, he won major concessions from the airline's unions, but those give-backs expired after one year and the deal proved too lit

tle for the financially troubled airline.

In announcing his retirement, Mr. Schofield gave no reason. But airline spokesman Richard M. Weintraub said the decision was "completely his [Mr. Schofield's] initiative. He had to have a lot of long talks with board members to make sure they agreed."

Regarding the breakdown in labor negotiations, Mr. Weintraub said:

"Everyone at the airline was disappointed when the negotiations collapsed so you can draw your own

conclusions about how a person who invested 18 months of his life might have felt."

Ultimately, he said, Mr. Schofield asked: " 'Is it more likely this will happen with someone who is fresh, someone who can build their own relationships and do it more quickly, more easily?' "

The most likely candidate inside the company to succeed Mr. Schofield is Frank L. Salizzoni. In March 1994, Mr. Salizzoni was named president and chief operating officer of the company, freeing Mr. Schofield to concentrate on the negotiations.

Some analysts, however, have suggested that the board might look outside, particularly if it wants to take a fresh approach with the union negotiations. A committee conducting the search is expected to meet soon, Mr. Weintraub said.

Mr. Schofield has said he will remain until a successor is named. His current base salary is $500,000, although he has taken a salary cut in the past year. He will receive an annual pension of $314,000, Mr. Weintraub said.

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