People Express ‘Managers’ Fear Changes in Takeover

NEWARK, N.J. — James Fortier works for People Express as a customer service manager. Despite his title, he is really a flight attendant, although now, with three years’ experience and a couple of pay raises under his belt, he spends most of his time on the ground training others.

But the 32-year-old Fortier, who holds a doctoral degree in psychology from Florida State University, is not sure how much longer he will stay with People Express now that it apparently is going to be taken over by Texas Air, the airline holding company that owns Continental Airlines and New York Air and is in the process of buying Eastern Airlines.

“I did not come to People Express just to be a flight attendant,” Fortier said Tuesday at Newark International Airport. “I came here with the thought of having a career, . . . to move up in the hierarchy of management. . . . Everybody is part owner here, has a little more pride in his work, . . . works harder. And (it) benefits the customers.”

Fortier is not alone in feeling uncomfortable by the proposed acquisition of low-fare, no-frills People Express by Texas Air, which was announced Monday. They are afraid that the egalitarian atmosphere fostered at People Express might disappear.

The airline has been, in effect, a rare business experiment.

None of People Express’ 3,600 workers are “employees.” All of them are “managers.” Newly hired personnel must purchase at least 100 shares of People Express stock, so everyone is an owner. To prevent boredom, no employee does the same job all of the time. Even pilots work in other areas--sometimes in the air, sometimes on the ground. A worker might fly as a flight attendant one day and work at the ticket counter the next.

The company has no secretaries. “If the phone rings, you answer it,” said Scott Cate, a pilot who also serves as one of the airline’s 46 general managers. “If you want to write a letter, you type it yourself.”

Donald C. Burr, chairman of People Express who founded the airline in 1981, has always said he did not want People Express just to be a commercial success. His purpose, he said, was “to create an environment which would enable and empower employees to use their creative energies.”

A Harvard Business School graduate, Burr felt that traditional layers of corporate authority smother individual initiative. He said once in an interview that there is a tacit prejudice against employees at many companies--the belief that they are unreliable or, as he put it, “guilty until proven innocent.” Such an attitude does not go unnoticed by employees and, he said, it fosters indifference, disaffection, even belligerence.

Morale at People Express has always been good.

“We’re pretty much a family,” said Ted Elias, a ground operations “team manager” who joined the airline a month before it began flying in April, 1981. “There’s a lot of camaraderie, a lot of mutual respect. At other airlines, the only way to get to the top is by clawing your way, stepping on the little guy.”

Elias, who was one of five team managers working Tuesday at Newark, where People Express has its headquarters, predicts changes under Texas Air.

“Business won’t be done the way it was,” he said. “I would think that a more structured environment would be instilled, which is something we have possibly been lacking.” He said People’s lack of structure “confused” passengers, who sometimes did not know who was in charge.

The cross-utilization of employes has been possible because the airline has no unions. Work at People Express is divided into four umbrella categories: people, finance and administration, marketing, and operations; then it is broken down into 13 specific functions such as accounting, administration and scheduling.

Although everyone is a “manager,” there are categories of authority and leadership. There are 14 managing officers who make up the top echelon. (Even Burr’s calling card reads “managing officer.”)

The managing officers are the equivalent to senior vice presidents at another company, People Express officials said.

Because its unusual management techniques foster higher productivity, the company says, it has been able to keep its costs, including salaries, lower than those of most other carriers, allowing it to maintain low fares. However, competition from larger carriers took its toll, and when the proposed merger was announced Monday some analysts said the company had enough cash to last only another 30 days. TEXAS AIR CORP.

Continental Airlines

New York Air

Eastern Airlines* * Acquisition pending

1985 traffic 43 billion revenue passenger miles 1985 operating revenue $6.7 billion Airports served 158 Aircraft 479 Daily departures 2,408 Employees 57,300

PEOPLE EXPRESS INC.

People Express Airlines

Britt Airways

Provincetown-Boston Airline

Frontier Airlines* * Not operating; has filed Chapter 11

1985 traffic 10.9 billion revenue passenger miles 1985 operating revenue $978 million Airports served 44 Aircraft 114 Daily departures 340 Employees 3,500