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The Honolulu Advertiser
Posted on: Thursday, April 17, 2003

American Airlines wins labor givebacks

By Angela K. Brown
Associated Press

FORT WORTH, Texas — American Airlines flight attendants have accepted $340 million in labor concessions, but the world's largest carrier still faces a tough environment where bankruptcy remains a possibility.

American Airlines completed a labor-concession package yesterday, but CEO Donald J. Carty said the carrier is "not out of the woods yet." The airlines' flight attendants were the last of the carrier's labor groups to approve wage and benefit reductions.

Associated Press

American's chairman and CEO, Donald J. Carty, praised the deals, but said the economy and other factors affecting business were beyond the company's control.

"I must caution, however, as I've said before — we are not out of the woods yet," Carty said after the results of the flight attendants' vote were announced yesterday.

The vote marked a reversal from a day earlier when flight attendants narrowly rejected the package of layoffs, wage cuts and reduced benefits. They were given an extra day to vote after some workers complained about trouble voting online and by telephone.

The Association of Professional Flight Attendants said 10,761 votes were cast for the concessions package and 9,652 against. On Tuesday, the package was losing by fewer than 500 votes.

"We are almost solely returning AMR to profitability under our concessions," said 26-year flight attendant Deborah Seale, who voted against the deal. "Management will get a 4 percent cut off the first $30,000 of their salary, and most of us don't even make $30,000 a year."

In news sure to spark anger among the rank-and file, American's parent, AMR Corp., financed a supplemental pension trust last year for its top 45 executives that protects part of their retirement income in the event of a bankruptcy filing, the Wall Street Journal reported today.

The perks — including bonuses of twice the base salaries for AMR's top six executives if they stay through January 2005 — were disclosed late Tuesday in the company's year-end financial filing with the Securities and Exchange Commission. The Journal said AMR would not disclose how much money the company put into the trust.

If flight attendants had rejected the labor cuts, AMR's board of directors was prepared yesterday to approve a Chapter 11 bankruptcy court filing to conserve cash and avoid credit payments of at least $50 million, company spokesman Bruce Hicks said.

American says it must cut annual costs by $4 billion — including $1.8 billion in spending on its 99,000 employees — to remain afloat and compete with low-cost carriers.

In earlier voting, pilots and ground workers approved their share of the concessions, saying they feared even deeper cuts if the company filed for bankruptcy.

Over the past two years, Fort Worth-based AMR has lost nearly $5.3 billion.