Back in the Imperial Headquarters a question hung in air, like the first hint of an incoming artillery shell. General, is buying National Airlines really a good idea?
But no one was brave enough to give voice to the question. No one within earshot of the chairman was clearing his throat and saying, “General, excuse me, but I think we’re going to lose our hat and ass if we go ahead with this.”
Seawell’s mind was made up. A fire was burning in the eyes of the Cold War gladiator, and anyone on the forty-sixth floor who had the slightest instinct for self-preservation was keeping his mouth shut.
So that’s what they did, all the general’s lieutenants. They kept their mouths shut and wore their WE HAVE THE URGE TO MERGE pins.
On January 7, 1980, National Airlines was merged with Pan American World Airways. It cost Pan Am $374 million. All 8,350 National employees came to Pan Am, less one. Part of the merger deal was that Bud Maytag would be a vice-chairman of the merged airline at an annual salary of $375,000. But now that the deal was done, Maytag said to hell with it. He had seen enough of Pan Am’s General Seawell to know he couldn’t work with him. Anyway, he was by now thoroughly fed up with the airline business. He took his $54 million and went home.
Francisco A. Lorenzo also went home. He felt obliged, at least publicly, to complain about how things had turned out. “Pan Am,” he told the press, “has bought politicians and lobbyists from coast to coast, from Maine to Florida.”
Privately, Frank Lorenzo could gloat. He was taking home $40 million. It was the easiest money he ever made.
Chapter Twenty-One
Orange Pukes and Blue Pukes
If nobody is happy, then it’s an equitable merger.
—Maxim of airline seniority list arbitration
Make National disappear.
That was the idea. General Seawell’s obsession to buy National Airlines was now supplanted by a burning desire to erase it from the planet. He needed to do this because that flaming orange sun—National’s logo—over Pan Am’s new equipment was a constant reminder that he might have committed an egregious blunder.
Only a few weeks after the merger the press was saying things like “Pan Am Overpays for National” and “Is National More Than Pan Am Can Swallow?”
What really ignited the general’s wrath was the name they’d taken to calling his purchase: Seawell’s Folly. “It made him furious,” said a former vice president. “That’s why he was in such a hurry to integrate National.”
There was only one thing to do: Get rid of those lurid orange National Airlines sun balls. Paint the whole damned mess Pan Am blue!
At the same time there were suggestions, some from his critics in the press, that it might be smart for Pan American to ease into the integration of the two airlines. Go slowly. Let National continue to be National for a while. Operate it as a subsidiary of the Imperial Airline. Let the employees and the public get used to the idea. It would save money and heartburn.
Seawell wasn’t having any of that. Get rid of that goddamn flaming orange logo. Without delay, all National’s airplanes were stripped and repainted in proper Pan Am livery. All uniformed ex-National employees—pilots, flight attendants, gate agents—were told to trash their old outfits and suit up in Pan Am uniforms. All ex-National flights were renumbered and fed into the Pan Am schedule.
But what about the pay scales? It was pointed out that the ex-National employees, who were historically spring-loaded to strike over any inequity, would probably slip right back into their George T. Baker pugilistic mode. National’s pay scales had always been lower than Pan Am’s. Now here they were, wearing the same uniforms and doing the same jobs on the same airplanes—for considerably less money than their Pan Am colleagues.
The general had a fix for that, too. He would make them forget all that crap. He would pay them to forget it.
And so all in one swoop, without incremental raises or timed increases, the ex-National employees’ paychecks were upped and their benefits packages expanded to match those of the Pan Am workers, most of whom themselves had just gotten a generous pay hike.
The cost of the National acquisition was already immense, nearly $400 million. Now it was soaring beyond half a billion dollars.
The other migraine headache that attended the merger was the airplanes. Thc National fleet bore little resemblance to the Pan Am stable of jets and had almost no compatibility. National flew 727s, which was okay because Pan Am did too, but it also had sixteen trimotor McDonnell Douglas DC-10’s. Only four months before the National buyout, Pan Am had bought its own fleet of trimotor jets—Lockheed L-1011 Tri-Stars.
It was a maintenance and supply nightmare. Previously, all of Pan Am’s airplanes were Boeing-built, and all its engines came from Pratt & Whitney. Pan Am’s new Lockheeds, which went into service in May 1980, had Rolls-Royce engines, a puzzling new British-built power plant Pan Am mechanics had never seen. The DC-10’s had yet another engine, built by General Electric, another unknown entity at Pan American. Both the trimotor jetliner models—Lockheed and McDonnell Douglas—were high-tech, state-of-the-art vehicles, but they were vastly different in design concept.
The cost of the acquisition ratcheted higher.
Salaries. Maintenance facilities. Spares. Offices and stations Pan Am didn’t need. The National price tag was inflating like a hydrogen balloon. Not only was Pan Am’s treasury dwindling at an eye-watering rate, the United States was being visited by yet another recession in 1980 and another plunge in overseas air travel.
It happened so quickly. On January 7, an instant before Chairman Seawell put his pen to the National contract, Pan Am had been an airline with deep pockets and few debts. Its success was a testament to the stewardship of William Seawell. Eight years before, when Seawell took over the chairmanship, Pan Am had been going broke. He had nursed it to record profitability. Seawell is doing a helluva job, reported the business press in 1978.
Now it was broke again.
General Seawell had accomplished his goal. He indeed had made National Airlines disappear. With it, he had also made nearly a billion of Pan Am’s dollars disappear.
What didn’t disappear was the low rumble out there, gradually swelling in volume. It was coming from the press, from the stockholders, from the directors. What the hell was happening to Pan Am?
And what also wasn’t going away was the catch-all explanation for Pan Am’s troubles: Seawell’s Folly.
It stuck. The general could curse and kick and glower with his Cold War gladiator’s eyes, but it wouldn’t go away.
The pilots—Pan Am and ex-National—eyed each other warily across the crew rooms. They were all wearing the same uniforms now, but that was their only common bond. They were like new stepchildren being forced to hug each other. They hated it.
Because National’s logo had been a flaming orange sun emblem and Pan Am’s logo was a blue globe-shaped ball, the two groups sorted themselves into dissimilar factions—the Blue and the Orange. The colors clashed.
On one side you had the smaller and more tightly knit group, called the Orange Pukes, who referred to the Pan Am pilots as the “blue bloods.” The implication was that the old, snooty Pan Am bunch were so inbred, with no new blood, that they had gotten a little queer in the head.
On the other side there were the Blue Pukes, who liked to call the National pilots the “pig farmers,” an inaccurate reference to their fondness for pickup trucks and chewing tobacco and their supposed good-ol’-boy ways.
Both appellations were insulting, of course, and deliberately so. The Pan Am bunch, when they were in their most blue-blooded mode, would fret endlessly about the sacred turf of the Skygods becoming soiled with pig effluvium.
To be sure, the National pilots weren’t all crackers. In fact, only a few were, but they, more than the others, reflected the airline’s distinctive persona. Unlike the Pan Am group, a minority of National’s captains had been military pilots. Most had learned flying as civilians, instructing and
charter flying and crop dusting and banner towing. A significant number, all hired in a cluster, were former Miami cops.
For half a century, Pan Am had flown the flag from Capetown to Moscow to Buenos Aires to Oslo. Now, suddenly, airplanes with the Pan Am blue ball were palmetto-hopping from Tampa to Pensacola to Tallahassee and across the hinterlands.
It was an audible culture shift. The dialect was changing from a Skygodly, Eastern, sometimes European, patrician inflection . . . to a crackerized twang.
Within days of the merger announcement in January 1980, the two pilot groups began their own negotiations. Each side, Blue and Orange, had granite-hard notions about the new seniority list. The Blue side insisted that the new seniority numbers correspond with length of time with the airline. Nothing else would do. First hired, first on the list. That was the only fair way. They even made up bumper stickers that appeared on cars, baggage, and lockers all over Pan Am property: SENIORITY BY DATE OF HIRE.
In the airline piloting profession, seniority was everything. Promotions, new assignments, vacations, monthly schedules—everything was dispensed according to the numbers. The pilot one number ahead of you on the seniority list would always receive his preference before you. And it would never change. There was no passing, at least not while you both worked for the same airline.
To the Orange pilot group, seniority by date of hire wasn’t fair at all. Pan Am was a much older airline than National in terms of age versus position. While Pan Am had not hired a new pilot since 1968 and had furloughed many since then, National was still hiring in 1978, even while the merger was beginning to take shape. National had captains who had been hired after the most junior pilot at Pan Am.
A youngish National captain summed it up: “It wasn’t our fault,” he said, “if someone was dumb enough back in the sixties to go to work for a shrinking company like Pan Am. Now it’s fourteen years later and they want our jobs.”
What the Orange pilots wanted was to be dovetailed into the Pan Am list. It meant seniority by ratio. You fit into the new, integrated seniority list at the same relative position you held on your previous list. Captains would remain captains. Copilots would remain copilots. Engineers stayed engineers. Each would have a new seniority number corresponding to the seat he occupied.
In such negotiations there was little room for compromise. Each of the negotiators knew what would follow if he went back to his own pilot group and reported that “in all fairness to the other side, I decided to give them your seniority numbers.”
He would be disemboweled and fed to fire ants.
Predictably, the negotiations stalled. The next step was mediation, which meant an outside labor mediator, chosen from a list from the Air Line Pilots Association, would try to bring the two sides to agreement. Just as predictably, mediation failed.
The final phase was arbitration. This meant that a mutually agreed upon neutral would listen to the case of each side. The neutral would decide for them how the seniority lists would be integrated. The two parties agreed that the arbitrator’s decision would be binding.
A neutral was chosen the way sandlot baseball teams choose up sides. They started with a list of candidates, and then the two sides, alternately, eliminated names until one was left.
For the Pan Am-National merger arbitration, a list of half a dozen professional labor arbitrators was drawn up. When they had eliminated all but one name, they came up with Lewis B. Gill.
Gill was an experienced labor mediator who had previously arbitrated the integration of the old Mohawk and Allegheny seniority lists. His purpose in a seniority list integration, as he saw it, was to protect the prospects of each group of pilots. Those prospects depended, in his view, on whether the airline was contracting or growing, and on whether pilots could have expected advancement or regression.
That particular argument, of course, was bad for the Pan Am bunch. Pan Am’s fleet had not grown at all since the early seventies, because of the massive seating capacity of the 747s, each of which replaced several smaller 707s. As a result, Pan Am’s pilot roster had contracted, and with it the promotion prospects of the junior airmen.
That was then, argued the Blue negotiators. This is now. We’re talking domestic expansion. In the newly deregulated market, Pan Am would acquire a fleet of smaller jets. Pan Am would need more pilots, and that would mean advancement.
Wait a minute, chimed in the National negotiators. We are the domestic expansion. This is what we’re here for. And our prospects for promotion have always been better than the old Pan Am guys.
The arguments went on. Sessions were held in New York, Philadelphia, Phoenix, and again in Philadelphia. Gill listened, and he asked for briefs on the anticipated fleet sizes of each airline had they not merged. Each side argued that its fleet size was growing, thus providing the prospect of advancement of pilots.
Shrinking or expanding? The argument went on for the rest of 1980 and into 1981. Finally, in March 1981, Lewis Gill announced that he had made his decisions about integration. He handed to the negotiators copies of his new Pan Am seniority list.
The first rough-printed versions of the Gill Award were posted on the crew room bulletin boards. The junior Pan Am pilots—first officers and engineers—looked for their names on the list. They weren’t where they should have been.
They looked further down the list.
And then further.
When they found their names, with several hundred National pilots’ names ahead of theirs, a single outpouring of opinion about the Gill Award reverberated like a seismic upheaval through the crew rooms: I don’t fucking believe it!
It had to be a joke. How could years and years of accumulated seniority instantly evaporate? Pilots hired in 1967 were suddenly junior to pilots hired in 1977.
Gill had devised a complicated ratio method. He decided to preserve the captaincies—and relative seniority—of the National 727 captains, most of whom were younger than and junior in longevity to their Pan Am counterparts. His reasoning was that the junior Pan Am pilots would, in any case, have expected to remain first officers—copilots—for a very long time, but they would graduate to a bigger airplane, the 747. And so, under his terms, they still would. But they would be first officers.
There was more. None of National’s flight engineers were pilots. The career starting point for a young National pilot was in the right seat—the first officer’s station—of a 727. And according to the Gill dictum of expectations, that’s where they would rightly remain. The older and grayer Pan Am flight engineers—who were also pilots— would stay right where they had begun more than a decade earlier, in the sideward-facing flight engineer’s seat.
And so at each of the crew bases—San Francisco, New York, Miami, Berlin—pilots stared at bulletin boards, jaw muscles working, fists clenching and unclenching while their disbelieving brains processed the unbelievable numbers.
Some, like Hans Bernick, who had been thirty-five when he was hired and who was still a junior first officer, quickly calculated that he would probably retire at age sixty still a first officer.
Rob Martinside, who was a more senior first officer, realized that he would not be graduating to the left seat of a 727 as he had expected. Those jobs were now reserved for more junior Orange captains. He would continue to be a first officer.
For engineers like Roger Bledsoe, who had been about to progress from the engineer’s seat to the first officer’s station, it meant he would be flying and yessirring and raising the landing gear for ex-National captains ten or more years his junior.
For First Officer Cliff Parker, the new list contained special irony. He had been a National pilot at the beginning of his career. He’d resigned when Pan Am hired him in 1966. Then it had seemed his great fortune to be plucked from puddle-jumping National Airlines to join mighty Pan American. Now his old National classmates—all captains by now—preceded him on the seniority list by nearly a thousand numbers.
Seawell’s Folly. The full meaning of the gen
eral’s purchase began to settle on the pilots. Everyone had agreed that Pan Am had to have a domestic route system. That was good for all parties—the company as well as the pilots. But it was becoming clear that Pan Am did not have to acquire an entire airline—planes, pilots, and pot scrubbers—to do it. Even if that was good for the company, which was already looking doubtful, it was a disaster for the pilots.
Once again it had come down to Them and Us.
A few days after the Gill Award was out, some fool showed up in the crew room at Kennedy wearing a WE HAVE THE URGE TO MERGE pin. It was supposed to be a joke. One of the pilots standing there at the bulletin board, reading the list and clenching his fists, took one look at the URGE TO MERGE pin and went crazy.
Before they could pull him off, the crazed pilot had done some surface damage to the pin-wearer’s sport coat as well as his lower lip. But under the circumstances, no one felt like making an issue of it. It was just a bad day for jokes.
Chapter Twenty-Two
The Crown Jewels
If the old Imperial Skygod felt any resentment or rancor about the way his airline was being managed, he kept it to himself. Juan Trippe left the board of directors in 1975, and in his waning years he did what no one had thought possible: he stayed out of Pan American’s affairs.
What did Trippe think of General Seawell’s slashing and swapping of Pan Am’s routes? How did he react to the overtures of the Shah of Iran? Was he pleased about Seawell’s capture of National Airlines and its domestic routes, a prize that had eluded Trippe for his entire career?
The old man wasn’t saying. He appeared at functions like the Wings Club banquets and Business Council meetings, where he accepted awards for his lifetime of accomplishment.
Skygods: The Fall of Pan Am Page 21
