Meanwhile, Pan Am was losing money by the bargeload, and Ed Acker knew of one sure place to get some of it back.
Ten percent.
The chairman was laying it on the line. Up front, he wanted a 10 percent giveback in salaries from all the airline’s employees. Such a concession would improve the balance sheet in the amount of some $160 million. Acker and his entourage made the rounds of the airline. He pumped hands and gave Texas-style pep talks, and soon he had the Acker Backers cheering and reaching for their wallets. Ten percent? Outa my paycheck? Well, hell, Ed, if that’s what it takes. . .
The heads of the five labor unions at Pan Am were not so quick to become Acker Backers. The unions represented 24,000 of the airline’s 33,000 employees. Acker was asking not only pay concessions but contractual rule changes that would increase the average productivity of the Pan Am worker. In the case of the pilots, this meant items like extended monthly flight time maximums, reduced vacation time, and longer daily flight time limits.
Throughout the autumn of 1981, negotiations went on between the unions and the company. Marty Shugrue, onetime new-hire flight engineer and furloughee, had by now risen to the job of vice president for personnel. With each union Shugrue carved out a new working agreement that would net a 10 percent reduction in labor costs.
In October an accord was reached. Four of the five unions—the Independent Union of Flight Attendants had cut a separate deal—agreed to the 10 percent cut and a wage freeze through the end of 1982. But in exchange they demanded—and received—an employee stock ownership plan that would amount to $35 million of Pan Am shares. To represent their block of stock, the unions were granted a seat on Pan American’s board of directors.
It was a unique arrangement. Pan American became the first of the thirteen major American carriers to seat a representative from its labor force on the board. After a noisy caucus, the union contingent chose the chairman of the Pan Am pilot’s union, a forty-three-year-old first officer named Bob Gould, to represent them on the board of directors.
The unions were becoming nervous. They had deep suspicion about the move, taken under Seawell’s chairmanship, to turn Pan Am into a holding company, of which the airline was one subsidiary, and the other was Pan Am World Services, a small but profitable maintenance and technical services supplier. Now the unions feared that Acker might spin Pan Am’s airline operation off to a new subsidiary—a low-cost, non-union airline.
The Acker honeymoon was brief—less than a year. A few weeks after the ink had dried on the pay cut agreement and the contract freeze was in place, details about Chairman Acker’s own contract appeared on a back page of the Wall Street Journal. For his first four months as chairman, C. Edward Acker was paid $416,667, which included a $250,000 lump for giving up his benefits as Air Florida CEO. His regular annual salary would be $350,000, with bonuses ranging from a minimum of $100,000 to a maximum of $750,000. In addition, he had received options on one million Pan Am shares, with his price locked at $2.77 a share.
An even more disquieting statistic concerned Acker’s predecessor, the Cold War gladiator. General Seawell, it was reported, had received $516,881 for his services in 1981, the year in which he was sacked as CEO. And for the next two years he would continue to be compensated $100,000 per year as a consultant.
Consultant? That one got a laugh all around the airline. Consultant for what? For how to convert a billion dollars to vapor?
There were more tidbits that stuck in the craws of the Pan Amers. In February, a few months after Acker joined Pan Am, it was quietly announced that Pan American was paying Air Florida the sum of $6.6 million for an option to lease six 737s at a “predetermined” rental for at least three years.
Workaday grunts’ eyebrows rose all the way to their hairlines. Hey, wait a minute. Wasn’t Air Florida Mr. Acker’s previous airline? And now he’s handing them six and a half million. . .?
Then another thought: 737s? Pan Am didn’t even operate 737s. Why was it spending a ton of money to lease an odd breed of airplane for its already mismatched fleet?
Because the chairman said so, of course. Acker had taken a look at the Berlin Operations with its fleet of fuel-inefficient trimotor 727s, and made a decision. We need smaller airplanes with two engines and two pilots. Just like we had at Air Florida.
And that was that. A $6.5 million deal was made.
Was Chairman Acker getting a cut? Surely not, but the troops seized on the story. The rumor of skimming would be just part of the growing myth of plunder that everyone figured had to be going on at Pan Am.
The 737 affair was, in fact, an example of Acker at work. That was Ed Acker’s strong suit: deal-making. He loved it, and over the years he had become very good at it. In the grim years ahead, it would be Acker’s deal-making, not his managerial ability, that would keep Pan Am alive.
But in 1981 the workaday grunts didn’t see that. Even if they had, they wouldn’t have thought any more highly of him. Ed Acker was opening a gulf between himself and his employees as wide as Texas.
A peculiar thing was happening. The pay cuts and the contract freeze were in place. The chairman did manage to trim a big piece off the airline’s overhead, just as he had promised—in the form of employees’ wages. But by some astonishing inversion of economic law, the airline was losing more money than ever before. In 1982, Ed Acker’s first full year as chairman, Pan Am racked up a loss that amounted to $485.3 million.
To the workers who had just given up a tenth of their paychecks, it was a joke, almost. Rounded off, the 1982 loss came to half a billion dollars. How could any company lose that kind of money and remain in business?
Huge losses had become so commonplace that most Pan Am employees no longer believed them. They knew it had to be some kind of bookkeeping sleight of hand. The losses were just on paper. The airline was supposed to lose money, right? It had to hide it from the creditors and the IRS.
Some believed the company was being looted. There was no way any airline could lose that much money. Somebody had to be stealing it. Regional managing directors, vice presidents, even their CEO, whom they were now calling “Fast Eddie,” were probably dipping into the till.
There were the “eyewitness” accounts: I heard firsthand from a passenger service agent who knows this purser who actually saw Acker and his wife with this suitcase full of, hell, a million, maybe two million in cash. They were sneaking it out on a flight to . . .
Such tales were outright lies, and most employees, in their less hysterical moments, knew it. But the stories fed their discontent. The tales became part of the mythology of a deeply troubled corporation.
What the embittered employees didn’t know was that Ed Acker wasn’t getting rich from Pan Am. Acker was already rich. He had made a tidy fortune from his previous ventures, including the profitable years at Braniff and Air Florida, and as president of Gulf United Corporation.
It hadn’t taken long for them to stop loving C. Edward Acker. It didn’t take much longer before they were hating him. The employees came to hate Ed Acker for the same reasons the soldiers of a retreating army hated their commanding general: they hated losing. Why doesn’t he do something? Why are we losing this goddamn war?
It was Acker’s own style that soured his relations with the troops. Ed Acker liked the good life, and he was never careful to hide the fact. He particularly liked the perquisites the Imperial Airline had always showered on the chief executive—the limos and red carpets and receptions in his honor. That was the way it had been since the boat days, when the original Imperial Skygod, Juan Trippe, journeyed around the empire in a manner befitting a celestial deity.
The problem was, the Imperial Airline wasn’t quite so imperial anymore, being a billion or so dollars in the red. And the troops out there on the line no longer thought it appropriate that the boss, who was demanding big sacrifices from them, comport himself like the Aga Khan .
To go with the success of his middle years, Ed Acker had taken a new, youngish wife.
Sandy Acker was blond and pretty and vivacious. Unlike the meddlesome Mrs. Seawell, Mrs. Acker smiled and left business to her husband.
When the Ackers traveled, which was frequently, they liked to be deposited right at the front doorstep of the Clipper Club, at the Kennedy Worldport. They would emerge, King Edward and his queen, from their tinted-glass limousine onto the plush carpet. Uniformed attendants scurried to fetch bags and open doors. Like visiting monarchs they would be escorted to their waiting jumbo jet.
Sandy Acker liked champagne. She especially liked to drink champagne while she and her husband rode on Pan Am airplanes. On one such occasion the Ackers were flying aboard a Pan Am 747 to Moscow. By the time the Clipper rolled up to the terminal, Mrs. Acker was ready for more. So she asked for a bottle to take along, carrying it under her arm while she trooped down the deplaning ladder.
Which was a mistake, at least for labor relations. The flight attendants stood there, mouth agape and eyes wide, watching the chairman’s wife committing an act for which they would lose their jobs. Taking anything—booze, food, cutlery—off a Pan Am airplane would get them instantly fired.
That such an act might offend, of course, never occurred to the chairman’s wife. For her part, she was gracious and friendly to the cabin crews on Pan Am airplanes. She just liked champagne.
But the story got around, adding weight to the legend. The truth no longer mattered, because by now the troops were willing to believe anything about the Ackers—that they were looting the treasury. . . building their Bermuda house with marble purloined from Pan Am stations. . . living the good life—too damn good—at Pan Am’s expense while the airline was doing a death dance.
The tall Texan had ridden into town in a swirling cloud of hope and optimism. The troops had wanted to believe. They wanted to embrace him like a savior. Right on, Ed! You lead, and we’ll follow.
They expected too much. Ed Acker wasn’t a Skygod who would lead them to new victories. Nor was he a visionary—a reincarnated Juan Trippe—who would again aim Pan Am at the stars.
Something else dawned that they had overlooked: Acker wasn’t a pilot. And that was something different. There had never before in Pan Am’s history been a CEO who wasn’t a pilot.
As vain as pilots tended to be, most understood that being an aviator maybe wasn’t a qualification for running an airline. It was probably a handicap, considering what they’d been through with pilots like Bill Seawell and Jeeb Halaby. Managing a corporation and flying an airplane were different job descriptions.
But Acker was letting it be known in a variety of ways that he wasn’t fond of pilots. He thought they were paid far too much for performing far too little service. He was tapping into a theme that had become popular with the CEOs of ailing airlines:
Pilots only work seventy-five hours a month and they make a hundred and eighty thousand a year. . .
Pilots make more money than the vice presidents of our company. . . .
Pilots are overcompensated and underworked. . .
And, of course, pilots are prima donnas. . .
The pilot group always had trouble refuting such accusations. There was just enough truth to them to open a breach between the pilots and the other employees. Pilots were the highest-paid of the unionized employee groups. And it was true that their actual flight time per month totaled only about seventy-five hours. It was difficult for pilots to convince the ground employees that in terms of time spent on duty and service performed, they did work every bit as much as mechanics or gate agents or vice presidents.
Okay, maybe they weren’t underworked. But were pilots really prima donnas?
Indisputably. It went with the job.
Chapter Twenty-Four
How Sweet It Is
The toughest thing about being a new captain is to keep from grinning all the time.
—Capt. Don Arneson, circa 1981
Prima donnas or not, the pilots didn’t think the job was what it used to be. They could still remember the glory days.
Martinside recalled what Vern Kennedy, one of his instructors, had told his new-hire class in San Francisco. “We have a deal with the baggage handlers all around the world,” Kennedy said. “They don’t fly airplanes, and we don’t carry bags.”
It was true. When you checked in for your trip at the crew complex, there were baggage carts marked with the numbers of the departing flights. You tossed your bag onto the right cart, and, magically, the bag was there waiting for you on the customs belt at your destination. From there it was transported by loaders, van drivers, bellboys, until you found it deposited in your hotel room.
In those days Martinside hauled an international-size, aluminum-shelled Halliburton. It contained a week’s clothes, reading material, snorkel gear, tennis racket, a mini-bar, jogging shoes, and other oddments. In the big Halliburton you could carry almost an entire wardrobe. You never knew what might be needed.
Over the years, things changed. The deal with the world’s baggage handlers was rescinded. For their part, the baggage handlers were keeping the bargain—they still didn’t fly airplanes—but the pilots were definitely carrying bags. It was just another part of the changing times—the budget-slashing, frill-cutting, giveback era. The world’s most glamorous airline was getting less glamorous.
Some blamed it all on the arrival of the 747. “It ruined our airline,” complained Jack Gaugler, a captain who, perversely, loved flying the jumbo. The airplane was wonderful, at least from a stick-and-throttle viewpoint. The trouble was that there were too damn many people in the act—not just the horde of passengers, but as many as twenty-some crew members on each flight. Gone were the small-crew amenities like having your own crew limousine, and bellboys running to fetch your bag. Now the entire crew of two dozen—pilots and flight attendants—waited at the airport curb for their crew bus, tired and scratchy, looking and feeling like migrant farm workers.
And they hauled their own bags.
It was in the late seventies that someone showed up with the first “wheelies,” collapsible carts on which you could stow your bags with bungees. Eventually the first rollaboard suitcases appeared, which you could tow along behind you. At first only the flight attendants rolled their baggage around on the contraptions. Pilots sneered at such things, continuing to lug their massive Halliburtons like real men, which is to say Skygods. “Wimp wagons,” they called them. But then realism and a few hernias began to change their attitudes. Before long it became a common sight—uniformed Skygods strolling down airport corridors, towing their wimp wagons behind them like U-Hauls.
One lost luxury from the old days was the hotels. Back in the glory days, Pan Am owned the Intercontinental Hotel chain, and that was where Pan Am crews stayed. The elegant Intercontinentals with their somber clerks and haughty doormen provided an appropriately grand accommodation for the Skygods.
But those days were gone. Now crews spent their layovers in Holiday Inns and Ramadas and Best Westerns where blocks of rooms at discounted rates were reserved for the airline crews.
If you were a pilot, that’s where you lived much of your life. You stood there on countless mornings, waiting at check-in desks, eyes red-rimmed from crossing five, six, maybe ten time zones, unshaven, wanting a shower and a beer and, most of all, sleep. You waited while a prim clerk told you you’d have to wait for a while longer because the rooms weren’t ready, and by the way, would you mind standing over there, a bit out of the way, so the real hotel guests, the ones paying full rate, could do their business? And after you fought back the compulsion to seize the little peckerhead by his neatly knotted cravat and yank him over the counter, you tiredly got out of the way and waited some more.
The hotel drill never changed. You schlepped your rolling bag onto the same whirring elevators, trooped down the same endless hallways, fought the same spring-loaded doors while you maneuvered your luggage into the room.
If it was one of the lesser destinations—Lisbon, Nice, Budapest— the room tended to be spacious. Bi
g beds, furniture, steeping baths, room to spread out. In the major capitals—London, Paris, Rome—you had a broom closet. When you opened the blinds to check the view, you saw the brick wall of the building next door. There was room to undress if you stood in the corner. There was the same little fold-out rack for your suitcase, with no place to fold it out. There were the same unstealable hangers in the closet that forced you to hang your clothes with the hangers still attached.
The first thing most pilots did was turn on the television. It didn’t matter what was on. The noise and flickering image filled the little cell and made you feel not quite so alone and fatigued. There was usually a mini-bar, and if you were in that beyond-tired, too-fatigued-to-sleep mode after an all-nighter across the ocean, you might have a beer. You drank this while you sat in a hot bath. And then you slept.
But not for long.
Ratatatatatat! Whang! Whang! Ratatatatat!
It sounded like the hammers of hell. The daytime world of London and Paris and Rome didn’t care that you’d been up all night. Nor did the hotel. Crews stayed in the cheap section—the airline rooms—which, invariably, was where the renovations were going on. Every Pan Am layover hotel in the Western world had renovations in progress, and they were timed to commence precisely when you put your head down on your pillow.
There was the standard call to the front desk and the usual argument with the manager about the noise, and, maybe, you could get another room if you wanted to get dressed again and move all the stuff you’d unpacked. Or, more often, you said to hell with it, stuffed plugs in your ears, put a pillow over your head, and went to sleep. More or less.
Skygods: The Fall of Pan Am Page 23
