- The Washington Times - Friday, April 18, 2003

FORT WORTH, Texas American Airlines created a pension trust that protected some benefits for dozens of top executives as it piled up record losses and made deep service and pay cuts in case the carrier went into bankruptcy.
The executives' deals, which included huge bonuses for a few, were disclosed in a regulatory filing late Tuesday after the scheduled end of voting on steep concessions by the airline's major unions.
Few employees learned of the executive benefits until after they had approved the last of $1.8 billion in annual wage and other concessions, which the world's largest airline said it needed to avoid bankruptcy.
Voting for the pilots and ground workers ended Tuesday morning. Flight attendants were given a one-day extension, and in a remarkable reversal accepted $340 million in labor concessions a day after narrowly rejecting them.
"We just got slammed with this. … We're looking into this right now," said George Price, a spokesman for the flight attendants union. He declined further comment.
Company spokesman Bruce Hicks defended the trust and said it was disclosed to union leaders and their consultants over the past several weeks but under a confidentiality agreement that prohibited them from informing rank-and-file workers.
"Retention benefits are designed to keep key senior management who are constantly being wooed by other companies," Mr. Hicks said.
Mr. Hicks said the extra pensions were similar to a supplemental plan for American's pilots, which he said also would be protected in bankruptcy. Ground workers and flight attendants, who make far less than pilots, have no such plan, he said.
According to the filing with the Securities and Exchange Commission by American's parent, Fort Worth-based AMR Corp., the company funded a pension trust for 45 top executives in October that protected some of their benefits even if the carrier filed for bankruptcy protection. The company did not indicate the cost of funding the trust.
In addition, the company offered its six top executives bonuses double their base salaries if they remain until early 2005. Among the executives in line to receive the bonuses is chairman and chief executive Donald J. Carty, who told workers last month that he would take a 33 percent pay cut. His salary in 2001 was $585,000.
Mr. Carty did not publicly discuss the bonus.
In the months since the trust was created, the company demanded pay cuts of 23 percent from pilots and 16 percent from flight attendants and ground workers, effective May 1.
And after the flight attendants' vote, American executives said that despite those hefty concessions, the carrier still faces a tough environment and bankruptcy remains a possibility.

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