American Airlines’ unions upset over bonuses

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FORT WORTH, Texas — Labor officials say executives with American Airlines’ parent company, AMR Corp., shouldn’t be taking bonuses when the airline is losing money and has performed poorly on a varie

FORT WORTH, Texas — Labor officials say executives with American Airlines’ parent company, AMR Corp., shouldn’t be taking bonuses when the airline is losing money and has performed poorly on a variety of fronts, including delays and customer service.

They compare the upcoming bonuses to $165 million in payouts financially troubled insurance giant American International Group gave to executives after receiving federal bailout money.

The airline’s bonuses, based on AMR’s stock performance during the past three years, will be much smaller than previous payouts because company shares have fallen steeply in the past year.

Company officials accused union leaders of hyping the stock program to give them leverage during current contract talks with all three of the airline’s unions, the Fort Worth Star-Telegram reported Sunday.

“This is simply another PR stunt to try and force the company into making decisions favorable to union interests,” said Missy Latham, an AMR spokeswoman.

“The reality is that the union has put forth a number of proposals that would add billions of dollars in costs and inject unnecessary financial uncertainty to our operations,” she said.

Labor leaders say employees are still working under reduced wages from a 2003 concessions deal that cut $1.6 billion in annual costs and kept American, a unit of Fort Worth-based AMR Corp., out of bankruptcy.

“If you compare us to AIG, American’s executives took bailout money from the employees in 2003, and they’ve rewarded themselves with millions of dollars in bonuses ever since,” said Scott Shankland, an American pilot and spokesman for the Allied Pilots Association. “And in the meantime, the airline is doing terrible.”

The annual payments go to about 1,000 of American’s top managers and executives, and are distributed in company stock.

The value of the awards will be derived from the stock’s closing price on April 15, and also on how AMR’s stock performed during the past three years compared with other airline shares. From 2006 to 2008, AMR’s stock finished fourth among other major airlines, which reduces the payments.

AMR’s stock price has declined by more than 65 percent during the past year, and was affected by high oil prices last summer and, more recently, by the slumping economy.


If the number of shares distributed is similar to past years, the entire payout would be worth less than $8 million this year, according to a union estimate. The total was $160 million in 2007.

David Roscow, a spokesman for the Association of Professional Flight Attendants, said the smaller bonuses haven’t lessened employee anger.

Latham said criticism of the bonuses is meant to deflect attention from the fact unions, particularly pilots, are asking for steep raises and contract improvements at a time when the company is losing money.

Pilots have asked for 50 percent raises as well as enhancements to benefits. The average pilot at American earns about $130,000 annually, according to the Airline Data Project at the Massachusetts Institute of Technology.