- The Washington Times - Thursday, April 17, 2003

DALLAS, April 17 (UPI) — Angry union leaders Thursday demanded to know why they were not informed about a plan for executive bonuses and retirement protection at American Airlines before their members approved concessions to keep the airline out of bankruptcy.

An official of the Transport Workers Union threatened to withhold his signature from the $620 million in concessions his members approved in a vote Tuesday, even if it led to American filing for bankruptcy.

James C. Little, director of the union's air transportation division, said in an online memo to members that the special pension trust is the "opposite of shared sacrifice" and calls into question the basis for the givebacks.

The Wall Street Journal reported Wednesday that American filed the plan with the Securities and Exchange Commission on Tuesday. The union members approved the concessions in votes announced Tuesday and Wednesday.

Union leaders said they didn't learn about the executive plans until Wednesday when the Journal reported the filing.

"We have signed no new agreement, and in light of the disclosure in AA's SEC filing, we must reconsider whether we will sign off, even if the consequence is a bankruptcy," Little told members.

Unions leaders said American failed to inform them about the plan that provides retention bonuses to top executives if they stay through January 2005 and protects a portion of retirement for 45 top executives if the company must file for bankruptcy.

Capt. John Darrah, president of the Allied Pilots Association, said members were "justifiably irate at the latest revelations" and that every American employee should question management's motives on executive compensation.

"From the very beginning of our discussions concerning cost savings, we stressed to management that both the sacrifices and the potential future upside must be shared between the employees and management," he said. "In light of the debate we had with management at the very end of negotiations concerning equity and upside sharing, we are particularly disturbed to see that both the sacrifices and upside potential appear utterly lopsided. That is unacceptable."

George Price, a spokesman for the Association of Professional Flight Attendants, told WFAA-TV the report of the executive funds was "simply outrageous" and that American executives should give the money back.

"To bring it out like this, for this to come out when it did, really does not bode well for trust within the company," he said.

The three major unions approved their shares of $1.8 billion in wage and benefit concessions that the company said it needed to avoid bankruptcy. Under the concessions, about 6,000 of the workers will lose their jobs and the others will accept wage cuts of 15 to 23 percent.

In a statement, American said the retirement plan could be "easily misconstrued" and that it was considered "conservative and responsible" and well below what other U.S. companies provided to their executives.

"Despite some reports, the company has not received any indication that its unions will not sign the agreements ratified by employees this week," the company added.

American said its senior officers are well below the 50th percentile of their peers in U.S. industry in terms of total compensation, including retirement benefits.

Don Carty, American's chief executive, is the fifth lowest paid CEO among the six top carriers and in total cash compensation for 2002 he ranks last, the airline stated, adding that his total compensation is down 88 percent. He hasn't received a bonus in two years and has declined a bonus for a third year, according to the airline.

American also announced Thursday it would immediately begin reducing the size of its management team by a further 5 percent, as announced earlier. The company already had cut 22 percent of its management staff since 2001.



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