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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 19th Apr 2003, 15:56
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And the Stradivarius plays on...

Just announced that the flight attendants have notified that they will cast votes again (or retract the last count) ...bunkruptcy 'round the corner?

Sooner or later the payroll burden at AA will head even lower, as it must, if the company is to survive. I matters not what the employees think they are worth, pilots included. They should take a clue from the folks at US Air...like it or not.
The cabin crew however may have different ideas.

Last edited by 411A; 19th Apr 2003 at 16:08.
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Old 20th Apr 2003, 01:29
  #42 (permalink)  
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Flight attendants scrap deal with American

Union calls new vote on news of executive bonus plan
Saturday, April 19, 2003 Posted: 4:05 AM EDT (0805 GMT)

AMR Chairman Don Carty apologized for not telling unions about the executive bonuses until after they voted.

FORT WORTH, Texas (CNN) -- Outraged by news that troubled American Airlines had planned to give its executives bonuses, flight attendants rescinded their approval of wage cuts and plan to vote again, a union official said late Friday.

No date for the new vote was set. Wednesday, the flight attendants agreed to more than $10 billion in wage concessions over six years. The airline had said it would file for bankruptcy protection if the union did not approve the cuts.

Thursday, one day after approving the cuts, the union learned that in October, American had granted 45 of its officers special supplemental retirement benefits that would be out of the reach of creditors if the company were to file bankruptcy, said John Ward, president of the Association of Professional Flight Attendants [APFA].

"This taints the agreement that was ratified just two days ago in a wrenching process for our members," Ward said in a statement. "Every APFA member -- those who voted for the agreement and those who voted against it -- are outraged by this action, as am I."

In addition, the company divulged that it had approved cash retention bonuses to its top six executives in March 2002, Ward said.

American Airlines said Friday that its top management had canceled the bonus plans.

"I sent a letter to CEO Don Carty today condemning both the [Supplemental Executive Retirement Program] and the retention bonuses, and expressing my outrage that the company had indicated to the press that the union groups had been briefed on these programs," Ward said Friday.

He said he received a letter from Carty apologizing for failing to fully brief the flight attendants.

"So much for 'fair sharing' of the pain of the company's restructuring," Ward said in his letter to Carty. "So much ... for a new company 'openness.'"

The Allied Pilots Association voted Tuesday to take concessions to avoid bankruptcy and said it also was outraged by the revelation.

The pilots union accepted Carty's apology Friday.

American told its unions that wage cuts were necessary to prevent a bankruptcy filing.
"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," Carty said in a letter to employees.

He apologized "for any misunderstanding about the benefits made available to members of senior management.

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

Steve Blankenship, a spokesman for the Allied Pilots Association, said the pilots "appreciate the gesture ... it's a move in the right direction."

But, he said, "Trust has been violated."

Because the retirement benefit represents one already earned, in some cases over a period of 17 years, American said the initial payment to the fund remains in place. It did not say how much money was in that payment. The retirement program was set up in 1985 but not funded until October.
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Old 21st Apr 2003, 12:27
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Ok, there are many contradictions or ironies at work in the US industry. It would probably be really bad if many of our top executives left, were they to be offered much higher pay/benefits at another airline. We are very fortunate to have had some of them. My company could be in serious trouble if the corporate offices had only a revolving door for job turnover.

On the other hand, why do some airlines have to either threaten Chapter 11, or announce thousands of extra lay-offs, and at the same time let news leak out which announces large bonuses?

Are these reports to the SEC necessary at such times? How callous can our leaders be, when thousands of family providers (at just one airline) have already been told not to come back to work?!
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Old 21st Apr 2003, 13:13
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--- HUBRIS ---
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Old 21st Apr 2003, 21:59
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The bonus program (otherwise known as "pay for showing up program") was scrapped.

The pension program was kept with excuses about it being created in 1985. This is what started the firestorm. The problem is that it was a positive benefit change for them at a time while they were persuading us to join them in making massive "sacrifices to save the airline.

I don't think it is an issue of class warfare or pay envy, but an issue of honesty, integrity and leadership.

To put it another way, the S.S. AMR is taking on water badly and the crew has been convinced by the officers to bail furiously. After the life jackets have been air-dropped just for the officers, the bailing has slowed noticeably.
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Old 21st Apr 2003, 22:47
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"F Carty, F Bush, F Bin Laden, F Hussein, and most of all F all those pussy ass consumers that cower under their coffee tables afraid to get on a jet." Raas767

Well Raas, insults like that just confirm why this "PA consumer" who flies weekly won't be flying AA anytime soon. No wonder SWA is doing well....
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Old 22nd Apr 2003, 11:32
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I agree with Raas767's main points.

How many US consumers, who now avoid flying more than before 9/11 (whether for business or personal reasons), are killed each week in car accidents?

Do any newspaper/CNN headlines describe the horrible carnage, or does it not "make good copy"?
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Old 22nd Apr 2003, 17:21
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Does anyone else here actually think that it might be a good idea if American did actually go under? Obviously, this is no fun for the employees, but is it not clear that the US has at least one too many major carriers?

Now, I know we will hear "September 11th", "war in Iraq" as excuses, but in fact all these airlines were in the brown and smelly way before sept 11th so that is just a smokescreen.

SWA can make a profit - but maybe they are just efficient to start with? Does anyone know if SWA have had a handout, by the way?

European rules forbide handouts to airlines - yet European airlines have also had to face the effects of the economic downturn. However, under the cover of these "special circumstances", the US industry has been bailed out to the tune of several billion dollars.

Now - if one airline goes down the toilet, those passengers get shared around and everyone else's load factors go up.

Sometimes the medicine tastes nasty - but it is needed to cure the patient.
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Old 22nd Apr 2003, 20:01
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When I pay (or in AA's case, would potentially pay) somebody to provide me a service- I don't expect them or their employees to say "F you." I don't neccessarilly fly in order to provide another individual with an income or employment, I fly to get somewhere I need to be. And I pay for it. So the airline is not doing me a favor- it's running a service business.

But thanks, now I have 2 data points and can draw my line....

BTW- purchased 2 Southwest Airlines roundtrips yesterday, might buy 1 or 2 more today.
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Old 22nd Apr 2003, 21:47
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OldAg84 is quite correct of course.
Airlines exist to provide air transportation to their customers (a very basic idea), something that some folks at the pointy end seem to have forgotten...or never knew.
Airline managements exist to provide organization and lead the company to profitability, for the shareholders.
Sometimes however, airline managements tend to 'double dip'...a bad idea. Nearly always they are found out.
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Old 23rd Apr 2003, 13:26
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Lightbulb close, but no cigar.

411A is almost correct except that:

"Airline managements exist to provide organization and lead the company to profitability, for the shareholders. "

Should read:

"Airline managements exist to provide organization and lead the company to profitability so they can pay for labour costs, etc, and still be in business tomorrow."

As for the shareholder? Well, in effect, you pays your money and you takes your chance. Shares can go up, shares can go down, but owning a tiny little piece of the pie doesn't make the pie answerable to you.
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Old 23rd Apr 2003, 14:29
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No XL5, the company is owned by the shareholders and works for their benefit. They are mostly the large financial institutions who invest to make money to pay pensions and dividends etc. They expect returns on their capital and are not charities. Companies do not exist for the benefit of the employees even pilots I'm afraid, though of course they are blessed with the wisdom of Job and can walk on water.
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Old 23rd Apr 2003, 15:28
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Click Here For Link

From the Dallas Morning News editorials page:

American Airlines: Something foul in the air


American Airlines executives give capitalism a bad name.

Under fire, AA chief Donald J. Carty has canceled the executive bonus program that became public after employee unions voted to accept major job and salary cuts to save the airline from bankruptcy. But he's sticking by a heretofore undisclosed plan to protect the pensions of 45 senior executives in case of bankruptcy this, even though management won concessions from workers in part by warning them they could lose their pensions in case of bankruptcy. This is disgraceful.

Irate union members are threatening to back off the deals they agreed to last week, even if that means the world's largest air carrier goes broke. After being misled and manipulated by management, who can blame them? We supported union ratification of the airline's rescue plan, as the least bad option for a corporation whose survival is vital to the Dallas-Fort Worth economy. And we still do, out of concern for families of American workers, who stand to suffer worse if the company goes under. We urge the unions to do the same. That said, if outraged unions push American over the brink, the fault will be with the airline's brass, who expected the rank-and-file to make sacrifices they weren't prepared to make and who didn't have the decency to be honest about it.

While not remotely in the same category as the pinstriped scoundrels who ran Enron and Tyco, Mr. Carty and his crew nevertheless join the growing ranks of business leaders who have betrayed the trust of workers and shareholders by putting their personal welfare above that of the company. The American people don't mind folks prospering, as long as they do so fair and square. That some of this country's corporate elite treat this principle with contempt adds insult to the pain thousands of jobless people and small investors hammered by the stock market are now enduring.

In a weak economy, this also creates a potent political issue. Republicans, traditionally the party of business, are particularly vulnerable on this issue. President Bush knows well that his father, victorious in Iraq, lost the White House because of mishandling the economy. He cannot afford to be silent when corporate leaders abuse the good faith of ordinary Americans. If Mr. Bush lets this slide, that something special in the air next election season is likely to be the smell of an economically distressed electorate gone sour.
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Old 24th Apr 2003, 01:01
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Thumbs down

Looks like Carty could be ousted as soon as friday. Time will tell if he screwed up these concessions for his own personal gain.
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Old 24th Apr 2003, 01:50
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AMR could dump Carty: Dallas paper
By Jennifer Waters, CBS.MarketWatch.com
Last Update: 9:46 AM ET April 23, 2003

NEW YORK (CBS.MW) -- Shares of American Airlines parent AMR jumped better than 12 percent in the early going Wednesday after a Dallas newspaper reported that Chief Executive Don Carty could get the ax.

The AMR board is set to meet via conference call Wednesday morning to hammer out a plan to salvage the carrier's concession agreements with its three key unions. The directors are likely to discuss Carty's fate, the Dallas Morning News reported.

Carty also is expected to be the No. 1 topic in a meeting Thursday.

Although there is no formal motion before the 12-member board, the newspaper said a source close to the board and the company said the debacle that's taken shape following contentious talks with unions has diminished Carty's credibility among some board members.

The displeasure comes after leaders of the mechanics and flight-attendants unions said they would revote on whether to accept deep cuts in pay, pensions and other work rules that were aimed at keeping the country's largest airline out of bankruptcy.

After hours of on-again, off-again talks, the unions agreed late last week to the plans, only to find out hours later that AMR senior executives would receive bonuses for sticking with the financially precarious company and that those executives' pensions were protected under trusts separate from the company. The executive perks were disclosed in a filing with the Securities and Exchange Commission.

The outcry from unions was fast and furious, something Carty acknowledged in a public apology Monday he did not expect. Claiming he was "enormously naive" about employee reaction to the perks, he canceled the bonuses. The pension plans, however, are intact.

"Some members of the board felt as betrayed as labor-union members," said the paper's unnamed source, according to the published report. "The board was told by the CEO that labor was fully informed of the details."

AMR officials were not available for comment. Spokesman Bruce Hicks refused to respond to the Dallas paper's report, labeling some of the speculation currently afloat as "quite ludicrous."

Former Chief Executive Robert Crandall told the cable channel CNBC that if called, he was not interested in serving.

AMR is expected to report a huge loss in its first-quarter earnings release Wednesday.

Jennifer Waters is the Chicago bureau chief for CBS.MarketWatch.com.
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Old 24th Apr 2003, 11:42
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Hicks had made a public statement that was an outright lie when he said that the unions had been told about the bonuses and pensions.

This left the union heads in an unteneable position. Eventually the lie was proven and he retracted the statement, but the fire was already buring when all that gasoline was poured on it.

If Carty isn't dumped then the airline is finished.

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Old 24th Apr 2003, 13:56
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Carty will be finished, and AA will survive, albeit a much smaller version if 2 other unions vote against concessions.

They're not out of the woods---yet.
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Old 24th Apr 2003, 20:58
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Raas767 has avalid point, maybe he could have put it better!

It is a valid question to ask why US consumers, en-masse, deserted the airlines. I mean really, what was the point in that? Why wouldn't US citizens travel to Europe? Where's the risk?

I mean here in Ireland, travel to the US stayed at near normal levels post 9/11.
This is of course exactly what these terrorists want, to terrorise US citizens and hit the powerfull US economy.

We must not let them win.
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Old 24th Apr 2003, 23:11
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Thumbs up

Jolly green, correct....unfortunately, Bin L. knew his target well - he's really knocked the stuffing out of people who thought they were safe and remote from the troubles of the M.E.

I read a report the other day that it could take a new generation for US travellers to get their confidence back...ouch. The study said 66% of those interviewed in US had no intention of ever travelling abroad again.

Old Age 84 has a valid point, too. The number of times I've cringed at the arrogant, condescending and at times, down right rude, attitude of some of our front-line staff here in AA I hate to count. I always rush in to try and make amends. The staff usually reply "it's management's fault" when I query them, which is rubbish - NEVER EVER take it out on the travelling public. I always tell myself " this couple could be on their honeymoon; is it my right to try and ruin it for them? No. And all for the sake of a smile and some basic politeness."

I strongly believe that the new CEO needs it both ways from staff: I'll give no cr@p if my passengers don't have to take any cr@p from staff. It's what makes SWA tick...

I also believe that the new CEO, whoever it may be, once he's stabilized the ship needs to take a swift kick up the pants to some of our grumpiest front line staff, particularly in DFW, where they're notorious. We can't afford any baggage now, everybody is going to have to pull together.
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Old 24th Apr 2003, 23:57
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Reminds me of what Giscard d'Estaing said of Jacques Chirac......."He could have the jar open in front of him, the spoon in his hand, jam all over his face - and if you asked him, "Are you a jam eater?", he would say "What is jam?"
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