Man Behind Pilot's Dispute: Crandall Made Airline No. 1

Legend has it that he once said he'd like to "fly this airline without pilots."

This week, the pilots told Robert Crandall he might have that opportunity, threatening to take their feud to the picket lines and ground the nation's largest domestic carrier.

On the surface, the labor dispute hinges on salary and the role of American's commuter subsidiary.

But much of the issue is personal.

With his gruff demeanor, oversized glasses, and deep forehead creases - the kind that come from years of glowering at people - Mr. Crandall doesn't look like a lovable boss.

He's not.

During his 16-years at American Airlines, Mr. Crandall has clashed with nearly every employee union. He's been especially tough on the 9,300 pilots, sometimes portraying them as overpaid and underworked.

With a strike deadline of midnight tonight, the company and union had agreed at press time to focus on a handful of disputed issues, not the entire contract - a sign that an agreement is possible. In recent days, travelers with tickets on American were scrambling to rebook flights with other carriers.

If American's pilots quit working tonight, they'll eliminate 20 percent of the nation's airborne passenger traffic. They'll also intensify a longstanding feud that threatens to cast a pall over an airline that, in financial terms, has been unusually resilient.

Wealth creator

"No CEO in the airline business has created more wealth for his employees than Bob Crandall," says Glenn Engel, an analyst at Goldman Sachs. "No group of pilots has enjoyed higher salaries, more stability, and better job growth."

Crandall, Mr. Engel notes, has spared his company from the wrenching mergers other airlines have endured and has secured the carrier a promising future by expanding international service and cutting a $6.5 billion deal to buy 103 Boeing planes at a discount.

Still, the feud refuses to die. "As much as [Crandall] does, he's no diplomat," Engel says. "He's got a flinty style that rubs the pilots the wrong way."

Pilots want an 11 percent raise over four years. They also want American to cancel plans to outfit its commuter arm, American Eagle, with jet aircraft.

In some ways, it would be surprising if the pilots walked out. They are the industry's best paid, with average salaries of $120,000 a year. Last year, the firm's profit-sharing program gave pilots bonuses of about $10,000 apiece.

Also, Crandall and president Donald Carty have taken a far more conciliatory tack this time around, in contrast to their aggressive tactics during a 1993 flight attendants' strike. Lately, Crandall has been talking about "cooperation" and offering to enter binding arbitration.

Besides, 40 percent of American's pilots voted to accept his contract offer last month. Some veteran pilots express dismay at the hard-line tactics of younger union members - many of whom were hired during the 1980s, when the airline cut salary scales.

Yet analysts say that the time is right for pilots to take a stand.

"The airline industry has been in the doldrums for so many years, and it's just now hitting five-star profit levels," says Louis Jurika, a Miami aviation consultant. In this boom-to-bust industry, he says, "it's understandable that pilots are out to get their share while the getting is good."

Ironically, this threatened strike comes at a time when many analysts believe the airline industry has matured substantially. New fare structures have kept flights full. Carriers have reaped rewards from their entrenchment in operational hubs. There is even talk of mergers.

Pioneering tactics

Many of these developments can be attributed to Crandall. His decision to buy efficient MD-80 jets in the late 1980s allowed the company to cut fuel costs. American's computer reservations system has become an industry standard for its ability to anticipate demand.

Crandall's penchant for maintaining a large supply of cash has helped the airline, and others that emulated it, cope with market fluctuations.

But some of Crandall's tactics have added to labor woes. American led the lobbying to switch to two-man cockpit crews. And he has tried to cut labor costs by furloughing pilots, reducing starting pay, and forcing senior captains to accept buyouts. Pilots were upset with his decision last year to drop hubs at San Jose, Calif., and Raleigh, N.C., and enter into marketing agreements there with discount carriers.

The outcome of this battle could determine whether Crandall is remembered as a great industrialist or a manager hobbled by his inability to connect with his charges. "[Crandall] took a company and turned it around and made it a leader," says Michael Boyd, an aviation consultant who has worked with the union. He says that unless Crandall dismantles the labor trouble, "his big accomplishments will be forgotten."