FROM WOODEN WINGS

IX. A WOLF AT THE DOOR.

Finally the board announced in late November 1987 that Stephen Wolf, the Chairman and CEO of Tiger International, would become Allegis Corp.'s new Chairman. Wolf had acquired a reputation for slashing the salaries and pay of his employees at near-bankrupt carriers. In fact at Tigers, Wolf threatened to liquidate the carrier unless the pilots agreed to slash their pay. United was not financially troubled, but many expected he would try and wring concessions from the employees anyway. Mr. Wolf was invited to speak to the MEC at their January 1988 meeting in Kona, Hawaii. The day before Wolf spoke, the MEC invited Flying Tiger MEC Chairman Frank Maguire to share with the MEC his impressions of Wolf.

Maguire said that, in his view, Frank Olson probably stayed on as long as he did in order to set up conditions dictated by Stephen Wolf prior to Wolf's accepting the new CEO position. Maguire believed that the Allegis board was told by Wolf in mid-1987 exactly what culture should exist prior to his accepting the CEO duties. Maguire said his belief was based on methods Wolf used at Tigers.

"His scheme is to convince United employees that since United is shrinking in market share, you must accept his plan of initially small, but cumulatively large, concessions or face retrenchment. Your failure to go along will be blamed as the sole cause for all subsequent problems," Maguire said. "With Wolf, nothing happens by accident. He will try to do what Ferris failed to do-by the numbers," Maguire added. "You will want to believe his projection of humility and confidence. But in the end he will laugh in your face and hand you your head. Wolf is a thinker who has a good grasp of subtleties. He knows your frustrations, fears and insecurities and will try to turn them all against you at the right time."

Maguire predicted that Wolf will repeat at UAL his practices at Tigers by running off some management and making him a hero to some workers, and will offer a profit-sharing program that leaves a carrot dangling but keeps employees without any power on the board.

"He will use `Chairman's Conferences' and letters to imply a need for concessions without actually ever saying it," predicted Maguire. "He will isolate employee groups by playing on the emotions of envy. Any union response short of his unspoken demands to give the company concessions will be characterized as a `rejection of the company offer.'"

Maguire said he believed that UAL agreed to the IAM poison pills at Wolf's direction to weaken the ESOP, and that he will try to take on the AFA as an object lesson to the pilots, while telling the rest of the employees and the press how unnecessary this all is. Maguire said he believes Wolf will seek progressive pay and pension cuts to reduce cash outflow. "If the pilots give in, Wolf will up the ante and demand more," according to Maguire. He predicted, "Wolf will respond to union proposals by announcing that he is `personally saddened the union rejected the company offer.'" Finally, he reminded the MEC, "The louder Wolf screams, the better the job ALPA is doing."

"It was uncanny," said Jock Savage, Editor of San Francisco's ALPA publication The Bayliner. Maguire predicted fairly accurately what Wolf would say to the MEC the next day. Using Maguire's script, Wolf said the pilots would "have to take the leadership role" in turning around the company by giving concessions. Again, following Maguire's exact words, Wolf said that he wouldn't be able to grow the company unless his labor costs were lower.

After returning to the mainland, Wolf started his first round of "Chairman's Conferences." As predicted by Maguire, without actually ever saying it, Wolf made sure everyone clearly understood that he wanted concessions from them.

In 1988 United and ALPA agreed to permanently split the 737-200 and -300 fleets. It was a significant event, as the United pilot group was the first in the industry to achieve this success. Many pilots are under the impression that this agreement was an example of management and ALPA starting to finally work together. It was, sort of.

Ever since the Company had ordered the airplane, the MEC had been trying to get the company to split the 737 fleet because of the safety risk in requiring pilots to fly two so vastly different aircraft as a common fleet. Lloyd Barry did not agree. The MEC suspected that, as in some other questions of this kind, Barry did not see a safety problem if the solution cost money.

It quickly became apparent, however, that the pilots did not feel it was a safe operation. In late 1987 the MEC and the company conducted a joint safety survey of ORD-based pilots which showed that the pilots felt unqualified and unsafe flying the 737's in a mixed fleet. The company was surprised by the results, but didn't budge on their position. Finally, ALPA told management that if the company wasn't willing to seriously address these safety complaints, the MEC officers were prepared to go public with the survey results.

About this time 737 Capt. Jim Damron happened to make contact with Capt. Wes Bartlett in Denver. Bartlett, who had previously headed the 737 program during the -300 development phase, had been relieved as Fleet Captain and was now working in the 747 program. In their conversation Bartlett confided that he no longer believed the -300 was a safe operation. He strongly believed that it should be split and that he and the company had erred when they put the program together. Damron and Jim Leroy were able to have Wes commit his opinion to paper.

Dubinsky was then able to get a high level meeting with Mr. Wolf, Guyette, and Barry. Wes Bartlett attended the meeting and stated the reasons why the 737 fleet should be split. Considering the antipathy between Barry and ALPA, Bartlett's willingness to speak out was courageous. According to Dubinsky, Bartlett's advocacy was probably the straw that broke the camel's back. "Wolf announced, right there on the spot, to make the decision that the fleet would be split. He had been "convinced." Did we have a loaded gun? Absolutely! Would I have gone public if the company hadn't been reasonable? Absolutely! Did I threaten Wolf with going public? No, I did not. I think he understood the damage that could have been wrought had he chosen to fight us given all the evidence we had."

The event was significant in the industry. USAir soon split their 737 fleet as have others since the change at United. Once again it was the United pilots who were out on the point making major course corrections in the way this industry operates.