FORT WORTH - One day after American Airlines employees agreed to annual cuts of $1.8 billion, the cooperative spirit turned acrimonious Thursday as union leaders expressed outrage over newly disclosed perks granted to executives.

One angry union leader said if workers had known earlier about a pension trust created last year to protect executives' benefits in the event of a bankruptcy filing, they might have voted against the steep concessions intended to keep the world's largest carrier out of Chapter 11.

The executive perks, which included huge bonuses for a few top executives, were disclosed late Tuesday in a filing with the Securities and Exchange Commission. The filing was made after the scheduled end of voting on the concessions.

"We are appalled and just disgusted. It's the equivalent of an obscene gesture from management," said John Ward, president of the flight attendants union. Flight attendants initially rejected their share of the $1.8 billion cost-cutting plan but reversed themselves Wednesday after the company extended the original deadline.

James C. Little, leader of the ground workers union, said he was considering whether to withhold signing the concessions contract that his members narrowly approved.

"If members had known about these compensation agreements, there would have been a higher turnout of 'no' votes," Little said.

According to the SEC filing, the company's board agreed to fund 60 percent of the pension trust established for 45 top executives and it approved bonuses for six top executives if they stay through January 2005. The bonuses would be double each executive's pay.

American spokesman Bruce Hicks said the benefits were designed to retain top talent and were similar to deals offered by other major companies.

"Retention benefits are designed to keep key senior management who are constantly being wooed by other companies - other airlines and non-airlines," he said.

Chairman and Chief Executive Donald J. Carty could get a $1.6 million bonus, based on his 2002 salary of $811,000. Carty told workers last month that he would take a 33 percent pay cut to demonstrate management's willingness to make sacrifices for the company's good.

Few employees learned of the executive benefits until after they had approved concessions that call for pay cuts of about 16 percent for flight attendants and ground workers and 23 percent for pilots.

"It's pretty blatant to us that we found out about it after they disclosed it to the SEC. ... It was done intentionally that way to wait until after the voting process," said Little, the Transport Workers Union official. "This ... leaves the issue to us whether they were actually bargaining in good faith."

Hicks, the airline spokesman, said union leaders and their consultants were briefed about the executive benefits over the past several weeks, but under a confidentiality agreement that prohibited them from informing rank-and-file workers.

Little and Ward said they were given general information about executive compensation but denied being told about the bonuses and pension funding.

"The only thing we were told is that (Carty) wasn't going to receive any bonuses," Ward said. "We were not advised of anything like this."

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Source

American Airlines transport workers call for new vote

I-Chun Chen   Dallas Business Journal

A second major union at American Airlines Inc. on Monday called for a new vote on its wage concession agreement with the airline, even after the company said it has canceled a special bonus deal for its top executives.

The Transport Workers Union, which represents American's 35,000 mechanics and ground workers, said it wants to resubmit its $620 million wage concession agreement to its members for a revote.

"By failing to disclose to us that it had intended to provide special retention bonuses and fund its supplemental pension plan in bargaining, American was guilty of a material breach of its obligation to provide relevant information," said Jim Little, a senior member of the Transport Workers Union, in a statement on the union's Web site.

"The only way to assure credibility is to allow a full re-vote with the full membership knowledge of all relevant company actions," Little said.

In a press conference Monday, Don Carty, chairman of American parent AMR Corp., repeated his apologies for not explicitly describing the retention benefits earlier.

"I stumbled.... I made a mistake, and, of course, it was a big one," Carty said. "It was never my intention to mislead any one."

Carty said he met with union leaders on Monday to apologize in person and pledged to keep them briefed on all such matters in the future.

Despite Carty's apology, American's flight attendants union said it still plans to proceed with a revote of its $340 million concession deal.

"An apology does not change the fact that there was company interference in our balloting last week, nor does it change the fact that by withholding information about the bonuses and the pension trust, the company committed a material breach of its obligation to disclose all relevant financial information to us while we were in talks about the company's restructuring proposal," said John Ward, president of the Association of Professional Flight Attendants.

Ward said the APFA board will meet Tuesday to discuss the issue and to determine the specific process and timing of the balloting.

American's three major unions expressed anger at news last week of special pension plan for senior management that would protect a portion of the retirement income of its top 45 executives in the event of a bankruptcy filing. In addition, the airline offered its top six executives "cash retention" bonuses of twice their base salaries if they stay through January 2005.

The plan was disclosed after unions had already voted for $1.8 billion in wage concessions that would include massive layoffs, pay cuts and reduced benefits. American said the labor deals were needed to avoid a company bankruptcy.

Fort Worth-based American on April 18 canceled the bonuses, which it said were created more than a year ago, after the events of Sept. 11, when the industry was struggling and the company's board had serious concerns about its ability to retain senior management.

AMR stock fell 23 percent Monday to close at $3.85 on the New York Stock Exchange.