Workers May Ground Airline Deal

President Barack Obama on his arrival at Moscow's Vnukovo airport, Russia, Monday, July 6, 2009.
AP Photo/Mikhail Metzel
American Airlines, which dodged bankruptcy this week, finds itself in the middle of another firestorm as employees facing huge pay cuts reacted angrily to news that top executives were promised big bonuses.

That means the bankruptcy watch is back on, reports Charlie Hodges of CBS Radio station KRLD.

"This is simply outrageous," said George Price of the flight attendants union.

The executives' deal, which includes a pension fund that protected the benefits of top executives in case of bankruptcy, was disclosed in a filing with the Securities and Exchange Commission by American's parent, AMR Corp.

Few employees learned of the executive benefits until after they had agreed to $1.8 billion in wage concessions.

Leaders of all three of the airline's biggest unions say they are talking to lawyers to see whether they can prove that American negotiated the concessions deals in bad faith.

"It's the equivalent of an obscene gesture from management," said John Ward, president of the flight attendants' union, which rejected concessions — then approved them after the union and the company agreed to extend voting by one day.

Just Wednesday, the mood at American's Fort Worth headquarters was one of celebration after the union narrowly approved the concessions deals.

"We have all shared in the sacrifices necessary to restructure our costs, and I have every reason to believe that by working together, we will be successful in creating a leaner, smarter, more competitive airline," a beaming chairman and chief executive, Donald J. Carty, declared. Employees cheered.

By Thursday, James C. Little, the leader of the ground workers' union, was having none of the teamwork pep talk. Little suggested he may refuse to sign a labor-concessions agreement — even if that pushes the world's largest carrier into bankruptcy.

"American Airlines was not up front with us," he told KRLD

The TWU didn't like the concessions deal from the beginning, and suspended voting for a day because of contract wording issues.

In an interview, Little said that the union's 34,000 members at American might have rejected the agreement if they had known about the executive perks. He said he was talking to union lawyers about his next move. Pilots' union president John Darrah said he also was talking to attorneys.

According to the SEC filing disclosed late Tuesday, 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.

In addition, the company offered its six top executives bonuses double their annual base salaries if they remain until early 2005.

Carty, who has a base salary of $811,000, could get a $1.6 million bonus at a time when employees will still be struggling under huge pay cuts.

That was "quite disingenuous of this current management team," said pilots union spokesman Steven Blankenship.

Bruce Hicks, a company spokesman, said the retention benefits were a standard policy at many large companies to prevent senior executives from leaving. He also said the supplemental pension plan is similar to one for American's pilots.

Employees were also angered that the company delayed filing the SEC documents until the last scheduled day for employees to vote on the concessions deals.

The flap appears to have already worsened management-labor relations at a company famous in the industry for bad relations.

"People have this view of management. They don't deal fairly with their employees," said Ward, the president of the flight attendants' union. "You ask probing questions and they dodge the question or they provide limited information or just don't provide it."