The 1983–85 Continental Airlines strikes were a series of strikes by Continental Airlines workers in the United States. Beginning in August 1983, Continental mechanics went on strike in protest over plans by Continental's new president Frank Lorenzo to slash wages and benefits. In September 1983, Continental filed for bankruptcy, firing most of its employees and voiding its collective bargaining agreements. In October 1983, the airline's pilots and flight attendants launched strikes of their own against Lorenzo's leadership. The strikes would last for over two years, during which Continental made extensive use of strikebreaking to maintain its operations and used the bankruptcy declaration to lead a significant re-organisation of its operations. In the spring of 1985, the mechanics and flight attendants called off their strike. The pilots would follow suit in October 1985. The strike was widely perceived as a victory for Continental's management and a significant defeat for the unions, although the management's tactics were controversial. David J. Walsh of Miami University has described the strike as "undeniably a low point for airline labor." The strike was one of the largest in the history of the aviation industry in the United States.
Background
In 1983, Continental Airlines was one of the major airlines in the United States. The airline was controlled by executive Frank Lorenzo, who had taken control of Continental in 1981. Lorenzo's takeover of Continental had been a hostile takeover, with the airline's previous management and employees attempting to enact an Employee Stock Ownership Plan (ESOP) to prevent the takeover, but failing when courts ruled that any ESOP needed shareholder approval. After the ESOP failed, Continental's president, Alvin Feldman, committed suicide. In 1982, Lorenzo merged Continental with his Texas International Airlines, and in early 1983, moved Continental's headquarters to the former Texas International headquarters in Houston, Texas. In the first two years of Lorenzo's leaderships, Continental workers agreed to a range of salary and benefits cuts, saving the company tens of millions of dollars in expenses annually. However, the company reported a loss of over $160 million in the first three fiscal quarters of 1983.
In 1978, the Airline Deregulation Act came into force in the United States, removing a wide range of federal government controls over the airline industry in the country, including over farse, routes, and the creation of new airlines. Deregulation led to significantly increased competition between airlines, with the industry further being disturbed by the early 1980s recession and the 1981 Professional Air Traffic Controllers Organization strike. These factors in turn led to a surge in labour disputes between airline managements and workers, as managements moved aggressively to rollback wages and benefits and to lower costs. However, according to Walsh, "in general, airline unions did not fare well in strikes during the 1980s. In contrast to the period before deregulation, carriers usually attempted to operate during strikes and sometimes actively provoked them. Permanent replacements were frequently threatened and sometimes used. A key factor affecting the outcomes of strikes was the degree of interunion support available."
Under American law, labour relations in the airline industry were regulated by the Railway Labor Act. The Act, first enacted in the 1920s, emphasised bargaining and arbitration in labour disputes, while minimising strike action, with the goal of preventing disruption to nationally-important transportation. Notably, the Act enforced a bargaining process between unions and management followed 30-day cooling-off period following the failure of the process, during which unions were not allowed to begin strike action. As well, unions could only strike over disputes deemed to be major disputes, there were less restrictions on unions' ability to take secondary boycotts, and management was less restricted on unfair labor practice (including being allowed to permanently hire strikebreakers).
Events Mechanics launch strike On 13 August 1983, Continental mechanics walked off the job, launching strike action. Jim Conley, a union spokesperson, told the press that it was "obvious the company wanted a strike. They started pulling things from the table and made things worse than they already were." John Peterpaul, another union official, pledged that the mechanics "will not be intimidated by the strong-arm method employed by Continental."
The mechanics' strike got off to a rocky start. Many of the former Texas International Airlines mechanics refused to join the strike, and Continental was able to use supervisory staff to replace those that did go on strike, allowing the airline's management to keep staffing levels relatively high. As well, both the airline's pilots and flight attendants unions refused to launch sympathy strikes.
Continental was able to maintain regular 85% of its usual flight schedules. After the first couple days of the strike, Continental management announced that it would hiring permanent replacements for the striking mechanics.
Bankruptcy declaration In mid September, Continental management sent a memo to the airline's pilots and flight attendants demanding additional tens of millions of dollars of additional pay and benefit cuts, saying that cuts were necessary to keep the airline alive. According to George Hopkins of Western Illinois University, the memo was "apocalyptic." The unions refused to accept the cuts. Lorenzo then issued an ultimatum to the pilots and flights attendants to accept the cuts, or else he would declare bankruptcy to enforce the cuts. The unions and management subsequently underwent several days of intense negotiations, with the unions indicating that they would be willing to accept cuts as long as they were carried out under the framework of the existing collective bargaining agreements and management saying that the full cuts were too urgently needed for drawn-out negotiations. As the expiry of Lorenzo's ultimatum drew near, top Continental executive Stephen Wolf suddenly quit, privately telling the unions that "I won’t be part of this."
On 24 September 1983, the airline filed for bankruptcy under Chapter 11, Title 11, United States Code. In its bankruptcy filing, the airline included only its domestic services, separating its international flights into a subsidiary, and claimed debts of $650 million against assests of $800 million. In the filing, the airline also claimed that that previous collective bargaining agreements had forced the company into substantial overstaffing and that "high labor costs were a critical part of the difference between very substantial losses and reasonable profits." The filing marked the first time in the United States aviation industry that an airline used Chapter 11 in an attempt to force labour concessions.
After filing for bankruptcy, the airline announced a re-organisation plan to turn the airline into a low-cost carrier serving a smaller number of routes. As part of the re-organisation plan, the airline temporarily suspended all domestic flights and immediately fired around two-thirds of its workforce. Remaining workers saw their salaries and benefits immediately cut to almost half of their pre-bankruptcy levels and their work hours increased by around 50%. Lorenzo pledged that "a carrier operating from superb facilities and with a long tradition of fine service will be able to achieve a unique niche in the nation's air transportation systems."
The declaration of bankruptcy was controversial. Many Continental workers and union officials perceived it as an attempt at union busting. ALPA negotiator Dennis Higgins accused the airline's management of "doing nothing more than trying to void their contracts." Lawrence Peter King of the New York University School of Law warned that previous court cases had found that using Chapter 11 to reject collective bargaining "represents misuse of the bankruptcy process."
On 27 September, the airline resumed domestic flights to 25 of the 78 cities it had previously served, offering tickets at discounted prices. The pilots and flight attendants union's initially told their members to work as usual as the airline resumed domestic flights.
Pilots and flights attendants join strike In the days following the bankruptcy declaration, Continental pilots and flight attendants quickly debated launching a strike of their own against the company's management. On 29 September, they voted in favour of striking. ALPA president Henry Duffy argued that a strike was necessary to prevent Lorenzo's practices from being emulated by other airlines, calling for government intervention into the state of the airline industry and saying that a strike was "a course of last resort. We think safety will be irreparably harmed as airlines continue to fail. We are frustrated. We have not been listened to." The airline's management, on the other hand, stated that it was prepared for a strike, saying that it had secured pledges from hundreds of pilots to cross any picket line.
On 1 October 1983, Continental pilots and flight attendants began walking off the job, launching strike action. However, like the mechanics strike, this strike also began sub-optimally, with a number of pilots crossing the picket line. Continental spokesperson Stephanie Roth told the press on the first day of the strike that "We couldn't be more pleased with the way things are going today. We are flying Continental pilots. Every pilot who is showing up is a union pilot," while Lorenzo stated that "What the pilots union is doing right now does not have the support of the rank and file nor does it have the support of the flying public." Judge Randolph Wheless Jr. also placed a temporarily injunction until the end of October to ensure that Continental's suppliers kept providing the airline with materials as it began bankruptcy reorganisation.
On the 10th day of the pilots strike, the airline began interviewing candidates in 11 different cities to cross the picket line and replace the striking pilots. Walsh has noted that "The strikes occurred during a period of high unemployment, including a glut of qualified pilots."
After two months, over 300 striking pilots had decided to break the strike and return to work. Stan Marshall, a pilot who crossed the picket line, wrote in the United Press International that he believed that the decision to strike "was based on too much emotion, was hastily decided, and I don't believe it was the way to handle the differences between management and labor," and that the airline's "survival in a deregulated environment depends on the current reorganization." Lorenzo personally phoned many of the strikebreakers to convince them to cross the picket line.
Legal battles On 11 October 1983, the three unions (the IAM, ALPA, and AFA) filed a petition to Wheless Jr. calling for the court to dismiss Continental's bankruptcy filing. The unions argued that the company's management had filed in bad faith, claiming that the company was not in enough financial difficulty and that it primarily wanted to bust the unions.
Testifying in mid-December 1983, Lorenzo claimed that "I did not want a strike" but that Continental had no alternative but to decrease labour costs, adding that "it would have been irresponsible to just simply let the entity run out of cash totally and completely." The company was represented by the Weil, Gotshal & Manges law firm.
The lawyer representing a committee of Continental creditors argued against the unions' petition, accusing the unions of "suggesting the mere existence of collective bargaining agreements prevents [Continental] from utilizing the bankruptcy code. I think that's extraordinary. [The unions] are trying to rewrite the bankruptcy act. It's so far-reaching it borders on being absurd."