- The Washington Times - Friday, April 18, 2003

American Airlines has other financial problems to confront before it can avoid bankruptcy, despite the $1.8 billion in annual labor concessions it has won from its major unions this week.
Don Carty, chairman of AMR Corp., parent company of American Airlines, said the airline's financial condition still is weak.
The labor concessions are less than half the $4 billion in annual cost reductions the company needs, which include additional reductions from lenders and suppliers.
The company lost $5.3 billion in the last two years from the combination of a weak economy, war, the September 11 terrorist attacks, rising fuel prices and overcapacity among airlines. The recent outbreak of severe acute respiratory syndrome, which can be transmitted through the air, is creating new woes.
American Airlines is not "out of the woods," Mr. Carty said.
A Standard & Poor's analysis of American Airlines yesterday reached the same conclusion.
"The savings [from the labor concessions] are material, though American would still have operating costs that are above those of some large hub-and-spoke airlines, such as Continental Airlines Inc., and well above those of low-cost airlines like Southwest Airlines," the report said.
Shares of AMR rose 77 cents, or 18 percent, to close at $5 on the New York Stock Exchange yesterday.
The company's employees do not share that optimism. "You've got a morale problem right now," said George Price, spokesman for the Association of Professional Flight Attendants.
The Fort Worth, Texas, airline must deal with the discontent of workers who agreed to wage, benefit and work-rule concessions to save the company from bankruptcy.
The 26,000-member APFA was the last holdout among three major labor unions to agree to the concessions. Their vote deadline was extended an extra day to let them reconsider their Tuesday rejection of the concessions.
The average salary for American Airlines' flight attendants is $32,000 per year.
The concessions will last until 2008 under the new agreements with unions for the pilots, mechanics and flight attendants.
Without the concessions, American Airlines officials said, they would have filed for bankruptcy immediately to avoid paying loan obligations due this week.
"There's not a lot of light at the end of the tunnel," Mr. Price said. "This is going to be protracted problem. The flight attendants have lost all faith in the company."
Other union members expressed similar disillusionment.
"It is clear that all of the unionized employees of American Airlines have had to make some extraordinarily difficult decisions during the past couple of weeks," the Allied Pilots Association said in a statement.
However, the alternative for the airline's 13,500 pilots was worse.
"It was clear that the bankruptcy process would prove even more onerous," the union statement said.
During Chapter 11 bankruptcy proceedings, a judge has the discretion to abolish labor agreements that are too costly.
Adding to the workers' discontent are revelations that the airline's top executives tried to protect their own pensions from bankruptcy by putting the money into a trust. The move was disclosed in a company filing late Tuesday with the Securities and Exchange Commission.
Few employees learned of the executive benefits until after they approved the last of $1.8 billion in annual concessions.
"Certainly I think it would have impacted the vote," Mr. Price said.
Voting for the pilots and ground workers ended Tuesday morning. Flight attendants were given a one-day extension, and in an unusual reversal accepted $340 million in labor concessions a day after narrowly rejecting them.

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