USAir unions cautious about new boss A warning for Wolf, along with welcome

January 18, 1996|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

Caught off guard by the decision to name Stephen M. Wolf as the new chairman of USAir Group Inc., union leaders expressed caution even as top airline officials assured them that Mr. Wolf had not been hired to get tough with labor.

Shortly before announcing the hiring of Mr. Wolf, USAir executives, including Chairman Seth E. Schofield, met late Tuesday with representatives of the pilots', machinists' and flight attendants' unions in Washington to tell them about the decision.

"The board did not want labor to view the employment of Mr. Wolf as adversarial or antagonistic to labor," said Perry Hayes, president of USAir chapter of the Association of Flight Attendants. "They hoped we would work in the spirit of cooperation."

While labor unions have promised not to precipitate a battle with the new regime at USAir, one warned yesterday that it would not tolerate attempts by the company to change the positive relationship that has developed between labor and management in recent years.

"We're not going to fire the first shot that would disrupt labor peace," said Bill Frieberger, assistant general manager of the USAir division of the International Association of Machinists and Aerospace Workers, in a recorded phone message yesterday. "But we of the union would respond to any encroachment by the company on our current relationship."

In the airline industry, Mr. Wolf, 54, is known as an aggressive executive who has engineered turnarounds at several airlines, including Republic and Flying Tiger. Along the way, however, he has antagonized labor.

"At Flying Tiger, he basi cally told [the employees] to cut a deal or he'd break it up or close it down and sell it off," said Jon Ash, managing director of Global Aviation Associates, a Washington, D.C., aviation consulting firm.

Similarly, many workers at United were bitter following the $5 billion employee-initiated buyout at United Airlines, which resulted in a 15 percent pay cut for workers while Mr. Wolf received $20 million.

Following that buyout in 1994, Mr. Wolf left United after seven years as chairman and chief executive officer.

Most analysts say Mr. Wolf will move quickly to ensure that the Arlington, Va.-based carrier, which handles half the passengers at BWI, continues the financial turnaround that it began in 1995 after six straight years of losses totaling $3 billion.

But some warned that a conflict with labor may be inevitable as USAir struggles to get its high costs under control.

"He may butt heads with the union," said Alex C. Hart, airline analyst for Ferris, Baker Watts, Inc. in Baltimore.

"But you probably do need a little heavier hand to try and make things work," Mr. Hart said.

Said Mr. Ash: "He's going in there and focus on a fairly limited number of very, very tough issues. The first and foremost problem they have is labor costs. Unless they solve that, nothing else will matter.

"Pilots have never been great fans of his, not that they are necessarily great fans of anybody. So I expect there's some trepidation there."

USAir pilots issued a conciliatory statement yesterday, saying they welcomed Mr. Wolf to the family and looked forward to working with him.

In efforts to return USAir to profitability, officials have cut $500 million a year in operating costs, partly by eliminating many unprofitable flights. But the airline failed to get the $2.5 billion in concessions over five years it wanted from its four major labor unions.

Last summer, after 16 months of negotiations with unions, the airline called off the talks, saying it would deal individually with unions as their contracts came up for negotiation. Failure to reach a deal with labor was a significant factor in Mr. Schofield's decision to retire.

Yesterday, the stock market responded well to the decision to hire Mr. Wolf. USAir shares closed at $14.50, up $1.875 on the New York Stock Exchange.

Officials at British Airways, which owns 24.6 percent of USAir, also reacted positively.

"We are delighted USAir has been successful in attracting an acknowledged airline expert," said John Lampl, a spokesman for the company in New York.

But he would not say whether the hiring would affect British Airways' decision about whether to further invest in USAir. Having invested $450 million, British Airways had been scheduled to invest another $200 million Jan. 21.

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