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American ready for bankruptcy as vote deadline nears (merged)

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American ready for bankruptcy as vote deadline nears (merged)

Old 17th Apr 2003, 10:29
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You guys want the latest in the American Airlines "how to motivate your employees"?


The Security and Exchange Commission filing was delayed until after the unions voted.

In the filing, AA management stated that last October, they switched the retirement for 44 senior corporate officers into an irrevocable trust that cannot be touched in the event of bankruptcy or liquidation.

Great leadership, huh?


The Iraqi information minister couldn't make them look good.
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Old 17th Apr 2003, 12:11
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Thumbs up

Groaner: that info is educational. Your nickname sounds like me at 0600. Why did American's unions need to agree to six years without a partial "snapback" in wages?

The next person's comments were also enlightening, regarding the iron-clad retirements for AA's "leadership", or should we say instead, just for the working folks in cost management. The CEO at my company reacted in a defensive manner when a pilot asked him if he would also take a paycut-he pointed out that his pay package was a lot lower than that of Mr. Mullins, the Delta CEO.

LEADERSHIP? Many of this industry's so-called leaders believe that either you are one of the very few "special people", or you are one of the "unwashed masses", unworthy of having a solid retirement or competitive working conditions, even after two or three years. For example, many feel that we are simply barbarians, who are obstacles to their "Empire's" expansionary ambitions.

Pprunemeisters!

What is the icon for (their) utter contempt and arrogance??

Last edited by Ignition Override; 17th Apr 2003 at 12:31.
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Old 18th Apr 2003, 02:11
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I was appalled to find out that AA management takes every effort to keep non-working crew members out of first class. At TWA, we were encouraged to commute in FC and given Ambassador Club memberships to mingle with the members and engage in PR and to assist displaced pax.

I guess we're good enough to drive the plane but not good enough to mingle with the customers... TC
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Old 18th Apr 2003, 09:32
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Did everyone notice that the reason that we had to get the deal done before April 15th is that was the date that the latest cash grab would no longer be able to be hidden!

Turns out Management set up and funded a whole new pension plan for themselves this year!

Robin hood in the 21st century is management stealing from the employees.

Cheers
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Old 18th Apr 2003, 12:12
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American Airlines deal in jeopardy

Unions outraged by executive pension arrangements

By Jon Bonné
MSNBC



April 17 — The union that represents 35,000 American Airlines ground staff said Thursday it would not sign a deal to help save the ailing air carrier after finding out about a special arrangement that would preserve some top executives’ pensions even if the airline went bankrupt. The decision could force the airline to file for bankruptcy, which it had threatened to do earlier in the week if its unions did not agree to deep wage concessions.

“I AM DEEPLY angered and disappointed about the Company’s handling of this matter,” Transport Workers Union vice president James Little wrote in a letter to Donald J. Carty, CEO and chairman of AMR Corp., the airline’s parent company.
The pension arrangement, reported Wednesday by MSNBC.com, would preserve some payments for Carty and 44 of his top executives even if the airline were forced to file for Chapter 11. The payments would be transferred to an independent trust, where they would be taxable, but no longer considered assets of the airline.
The arrangement was revealed this week as unions for ground workers, pilots and flight attendants were voting to cut their wages and benefits by $1.8 billion — savings that the airline said were necessary to avoid bankruptcy.
Few employees learned of the executive benefits until after they had approved the benefit cuts.
“We have sacrificed deeply to enable American Airlines to avoid an immediate bankruptcy filing,” said Allied Pilots Association President John Darrah. “Unfortunately, it appears that management is not off to a very promising start at making the most of the reprieve the unionized employees have provided through our collective sacrifices.”
An American spokesman said Wednesday that the unions were informed of the arrangement during negotiations, but later corrected himself, saying the briefings covered executive retention but did not detail bonuses and pensions.
In his letter, Little wrote: “No official of our organization or consultant hired by us was briefed on any aspect of this program.”
Little also sent an urgent memo to all union members, telling them: “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.
“Unless the Company reforms itself on the issue of executive compensation, there is no basis to cooperate in its effort to survive,” he continued.
Carty had said that unless American’s unions approved the wage and benefit concessions this week, the company would immediately file for bankruptcy. He set Tuesday as the deadline, but AMR extended that one day when the flight attendants — who originally voted no by a close margin — revoted and approved $340 million in wage cuts for their 26,000 members.
“We are appalled and just disgusted. It’s the equivalent of an obscene gesture from management,” John Ward, president of the flight attendants’ union, said on learning of the pension arrangement. He said, however, it was too late to reject the pay cuts. “It’s done,” he said.
The arrangement was disclosed in a filing with the Securities and Exchange Commission on Tuesday. It was tucked into AMR’s annual report, filed as most union members completed their voting. The annual report also cited comments from Ernst & Young, American’s auditors, questioning whether the company could continue to operate.
The company also approved bonuses for six top executives if they stay through January 2005. The bonuses would be double each executive’s pay.


http://www.msnbc.com/news/901793.asp?0cv=CA01
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Old 18th Apr 2003, 14:07
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The REAL union goons have spoken.

Carty & Co. are just trying to pull up the ladder and protect themselves if anything bad happens. What did you expect? If he and Arpey still have chauffer-driven limos to get to/from work, would'nt you expect them to protect their multi-million dollar pensions?

All animals are equal; some animals are more equal than others.
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Old 18th Apr 2003, 15:46
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High salaries are only acceptable to shareholders if they are accompanied by high returns and high levels of corporate responsibility.

Golden parachute fat-cat greed is not.

No wonder the international stock markets are in such a state.....
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Old 18th Apr 2003, 16:04
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Question

A question

Lots of people on this board what to condemn AA for buying TWA. Today this looks a very bad deal. BUT if there had been no 9/11 would it still have been a bad deal.

If there had been no 9/11 the purchase of TWA would have been against the background of a weakening economy and therefor weakening airline market. But in all probability this would just have been the normal cyclical variation of the economy and the amplified effect this has on the airline sector.

I am certainly not here to act as cheerleader for airline management BUT I don’t think we should judge pre 9/11 decisions against the post 9/11 world. We need to live in the real world and sort out the mess of today but not delude our self’s that we could of should have planed for it.
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Old 18th Apr 2003, 20:58
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xyz_pilot,

If you look back in the months prior to 9/11, you'd see traffic was already falling off and the US economy was already slowing down significantly. (I know you've already pointed some of this out and no doubt of course 9/11 was a significant catalyst).
The giddy days of the Tech Boom were already vanishing and companies across the US were already slashing business class travel. The PAX load that fateful day of the airplanes that were used told something of the slowdown already happening.

There were signs prior to 9/11 that carriers like JetBlue were the way to go, low cost, no frills point to point. UAL and AA were/are business class airlines. When times are good they can hide their high costs by booming revenues, but like any business when they hit a downturn, that's when you can see how healthy they really are.

A recent history of Airline companies has shown some disatrous results after airlines have merged/amalgamated, PanAm and National being a good case study. People outside this industry don't realise how different employees' cultures are between different airlines and in the long run can prove very troublesome when trying to mesh them together, it's certainly not the main reason why airlines fail, but it doesn't help.
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Old 19th Apr 2003, 02:33
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What about all the good mergers?

DL-WA, BA-BEA and Airtran-ValuJet worked well.

Noone really knows how their career will turn out until they retire.

Last edited by B767300ER; 20th Apr 2003 at 03:33.
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Old 19th Apr 2003, 05:12
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American scraps executive bonuses

Union uproar forces changes in executive compensation

BREAKING NEWS
MSNBC STAFF AND WIRE REPORTS

April 18 — After sharp criticism from its rank-and-file, American Airlines dropped a plan Friday to award bonuses to top executives if they stay at the embattled airline until 2005.

THE BONUSES had caused an uproar among American employees, who earlier this week approved wage cuts and other concessions that the company said it needed to avoid bankruptcy.

The arrangement was revealed this week in a filing the company made with the Securities and Exchange Commission. The filing was submitted on the same day that unions for ground workers, pilots and flight attendants were voting to cut their wages and benefits by $1.8 billion — savings that the airline said were necessary to avoid bankruptcy.

Few employees learned of the executive benefits until after they had approved the benefit cuts.

“I have apologized to our union leaders for this and for the concern it has caused our employees,” Don Carty, CEO of American’s parent company AMR said in a letter to employees posted on the company’s web site.

“Those executives who have made the personal commitment to remain with American during this financial crisis, myself included, are not here solely for monetary reasons and we have all agreed to give up these retention payments in order to give our employees confidence in management’s on-going commitment to shared sacrifice.”
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Old 19th Apr 2003, 07:09
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Bonuses Gone, Shielded Executive Pensions Remain

American Airlines Dumps Executive Bonuses

Updated: Friday, Apr. 18, 2003 - 5:53 PM EST.

By DAVID KOENIG
AP Business Writer

DALLAS (AP) - After sharp criticism from its rank-and-file, American Airlines dropped a plan Friday to award bonuses to select top executives if they stay at the embattled airline until 2005.

But the world's biggest airline is leaving in place a supplemental pension plan for a broader group of top executives that would be protected even if American filed for bankruptcy.

** BIG SNIP **

The company also made a payment to partially fund a supplemental pension trust for 45 executives and shield those benefits in case of an AMR bankruptcy.

The company has never disclosed how much it put into the extra pensions.
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Old 19th Apr 2003, 07:15
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AA unions hoodwinked...again

Hmmm, the APA multi-million dollar fine should have been a wakeup call, apparently not.
Would appear that the AA management have done 'em in again.
If backruptcy had been filed, the management pension grab would undoubtedly have been negated by the federal bankruptcy court judge. These judges have very wide discretion in these matters...assets cannot be cast aside just for the purpose of declared bankruptcy.
The AA unions must have received very poor legal advice...not surprising...some of the members must think they know it all.
The guys on the executive floor must be laughing...all the way to the bank.
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Old 19th Apr 2003, 07:43
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Did the AA pilots union ever pay that fine ?
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Old 19th Apr 2003, 08:31
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So 411A, which is it. Either the AA pilots are way overpaid and should have taken the concessions...

or....

They are really stupid for going with the pay concessions to keep them out of Chapter 11. Which is it? It seems you have argued both sides.

It appears that no matter what the outcome you have something bad to say. It is starting to appear more and more like sour grapes about a group that you were never quite able to join.
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Old 19th Apr 2003, 08:31
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411A, did you leave your "Depends" on too long again?


You always seem to get a little fussy with a full pair.
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Old 19th Apr 2003, 09:53
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Similar to years ago...

dudly,
The short answer is, yes the pilots are way overpaid (but that seems to be changing), and no bankruptcy is not desired, but sometimes necessary.
IF the APA and other unions at AA had negotiated a reasonable contract just a few short years ago, much of the antagonism could have been avoided.
But they did not, so the AA management will, from time to time, exercise their authority....ala Enron.
Reminds me of the dismal labor relations at the old National Airlines in Miami years ago. Bud Maytag played the various unions against one another (especially ALPA) like a Stradivarius...and got away with it for many years. ALPA never caught on.
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Old 19th Apr 2003, 10:00
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It seems to me that the managements and the employee groups are currently walking a very fine high wire. The industry is obviously in deep distress from a whole conglomeration of factors. I think the industry was deregulated about 25 years ago or so, but it appears the final result of that deregulation might actually be in its final throws. For me buying an airline ticket, it has never been better. It appears for the employees, it has never been worse. Good luck to everyone no matter how the shakeout ends.
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Old 19th Apr 2003, 10:36
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From the "Sorry we got caught" department:

Letter from Chairman Don Carty to Employees

April 18, 2003

Dear Colleague:


I want to take this opportunity to apologize to you for any misunderstanding about the benefits made available to members of senior management. From the beginning, we made a commitment to shared sacrifice. And, at a time when we have all come together to, out of necessity, give up things to save this company, it is now more important than ever for management to continue to demonstrate that commitment.

Today, I want to let you know that all of our senior officers have given up all retention payments.

Throughout this restructuring process, our chief priority has been to communicate effectively with you, our employees, and it is clear that we have not done so. You have my personal apology. It was not my intent to mislead anyone.

These retention agreements were created a year ago in March 2002 when, after the events of September 11, the industry was struggling and our Board of Directors had serious concerns about our ability to retain our senior management in light of the potential loss of several key executives.

The goal was to give senior officers incentive to stay with the company when many were offered more generous packages to go elsewhere. But unlike some of our competitors, our top priority in this effort was to conserve our financial resources to help rebuild the airline. So we did not, like some other airlines, offer executives immediate cash bonuses or pay increases, and it's important to me personally that you know this.

Instead, the Board created these incentives through retention agreements that would have made payments only to those executives who committed to working for us for the long term. We did not give our senior executives a pay increase. In fact, I gave up my salary entirely for the last quarter of 2001, and my entire senior management team took voluntary pay cuts.

In addition, the Board decided to make an initial payment -- the first ever -- to partially fund the Supplemental Executive Retirement Plan (SERP) that you have read about in recent days. The SERP -- a common tool used in our industry and others -- was established back in 1985, but it was never funded, even as we continued to fund all other employee pension programs.

In simple terms, the SERP is designed to provide a pension benefit for the portion of compensation above IRS limitations that executives have already earned. Our funding did not add benefits or enhance the program, again in contrast to some of our competitors.

I have always committed to doing our best to fund the pension plans for our employees and their families, even as we lost money through difficult financial times. In fact, last year, our worst year ever, the company contributed more than $420 million to our employee pension plans. Any pension plan should be properly funded and my ultimate goal is to provide pension security for all employees, including the management team.

Despite our efforts, we have in recent years lost the services of an unprecedented number of key executives. In my discussions with union leaders during the active engagement process, I expressed my concerns about this, and our ongoing ability to retain the most effective members of our management team.

My mistake was failing to explicitly describe these retention benefits, and because of that, many employees felt they were kept in the dark. Please know that it was never my intention to mislead you. I offer you my sincere apology, as I have to our union leaders.

I am proud of my management team and the work they have done to share the sacrifice and help get our airline back on good financial footing.

The executives who have made the personal commitment to remain with American Airlines have clearly not done so for monetary reasons alone, as all have already taken substantial cuts in overall compensation. Our senior management team is clearly committed to the secure future of this airline. As you may know from the most recent Flagship News, I had already committed to defer the retention payments until we believed the company would be profitable again. Today's commitment goes far beyond that as all senior officers, including me, continue to share in the sacrifice by completely giving up their retention agreements.

This is a trying time for our airline, and I ask your confidence in the fact that we are all sharing in the sacrifices necessary to build a more secure future. I thank all of you for your goodwill, good faith and hard work.

Our efforts to work together to restructure our costs have demonstrated to me and the world, once again, the caliber and commitment of the people of American Airlines.

Together, we will again prove to our competitors and our customers that American Airlines is in this business for the long haul.

Sincerely,

D. J. Carty

American Airlines

CONTACT: Corporate Communications of American Airlines, +1-817-967-1577,
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Old 19th Apr 2003, 12:10
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411A,

Another clueless and somewhat addled post from someone who acts if he some knowledge of the dilemma.

Facts: Last contract (1997) gave something like 7% raises over 9 years. figure the CPI over the same period.

Since 1983, in constant dollars, AA pilot salaries were down 22% even before the latest cuts.


As stated elsewhere in these forums, AA unions could never match the cash burning that management has done.



411A, you never got hired at a US major, go kick your dog and stop babbling about subjects you know nothing about.




P.S. Please elaborate on your extensive experience cruising at FL450
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