Ouch, looks like AMR is still in trouble>
AMR Unions Express Fury
Over Management Benefits
By SCOTT MCCARTNEY
Staff Reporter of THE WALL STREET JOURNAL
The disclosure Thursday of special payments for top executives at AMR Corp.'s American Airlines touched off a firestorm among employees and threatened to send the world's largest airline into federal bankruptcy court after all.
Retention bonuses and creation of a trust to protect executive pensions were disclosed in a filing AMR made Tuesday, just as three unions were wrapping up voting on whether to accept deep cuts in pay and benefits.
Workers now say they were betrayed. The Transport Workers Union, for one, threatened to refuse to sign a new contract that the company says it needs to avoid filing for bankruptcy-court protection. "I believe if our members had known this, it might have changed the outcome," said Jim Little, head of the union's air transport division. As it was, only 53% of TWU members voted for contract concessions.
On the ramp at O'Hare International Airport in Chicago, crew chief Joseph Szubryt, who recently made buttons saying, "For Your Future, Vote Yes," was dismayed. "This feels like a stab in the back," he said Thursday. "On the day we voted for all this stuff, giving up $10,000 a year when we only make $45,000 or $50,000, they disclose this? How the heck could these guys do that?"
Amid cost cutting and enormous losses, AMR's board last year agreed to spend an undisclosed cash sum to create a trust to protect supplemental pension benefits for 45 senior American executives. In addition, the board last year offered "retention bonuses" -- equal to twice base salary -- to American's top six executives if they stay with the troubled airline through January 2005.
Meanwhile, the company asked workers to swallow pay cuts of between 15.6% and 23% starting May 1, and to accept cuts in their own benefits and looser work rules. Most troubling, workers said, was that AMR didn't disclose the executive benefits until it filed its annual report on Tuesday with the Securities and Exchange Commission. The filing had been delayed while workers considered pay cuts, then was made within hours of the close of voting. "Knowledge of this outrage would probably have doomed any agreement, and rightly so," said John Ward, president of the Association of Professional Flight Attendants.
Union leaders also were infuriated by a statement made by American spokesman Bruce Hicks and reported in The Wall Street Journal Thursday (see article). Mr. Hicks said unions had been told of the executive compensation deals before ratification voting, as part of information given under confidentiality agreements. "Nothing could be further from the truth," said John Darrah, president of the pilots union at American, who found himself under attack from members when they thought he knew about the deals but didn't tell them.
American's other two unions said they hadn't heard a word about the benefits. "Any suggestion by the company that we were informed of this during the talks, or had any knowledge of it prior to opening The Wall Street Journal today, is simply a lie," said Mr. Ward of the flight attendants union.
Union leaders demanded that executives give up the bonuses and the pension trust. But that may not be easily done. Under terms of the trust, it appears that each of the 45 executives may individually have to relinquish rights to the funds before AMR could get the money back.
Managers and top executives are giving up $100 million of the $1.8 billion in worker savings. But the disclosure of extra benefits undermined those givebacks.
American's three unions have yet to sign the concessionary contracts and said they are consulting lawyers and studying their options. "The credibility of the company is at stake. This was supposed to be shared sacrifice," said the transport workers union's Mr. Little. |
