AA CEO apologizes to angry workers


Staff member
American CEO Apologizes to Angry Workers

Monday April 21, 9:22 pm ET

DALLAS (Reuters) - The head of American Airlines made a big mistake by not properly informing the carrier's workers of executive compensation plans, he told a hastily called news conference on Monday as unions threatened to vote again on already-ratified concession pacts aimed at staving off imminent bankruptcy.

"I stumbled," said Don Carty, the chairman and chief executive of American parent AMR Corp. . "I made a mistake.... I am sorry."

American's three major unions have expressed outrage at news last week of special pension funding -- that would be paid even in bankruptcy -- for senior management. The plans included in a federal filing came out just as workers agreed to deals that would slash pay for most groups by 15 percent to 23 percent and bring thousands of layoffs.

"We're still on the precipice of bankruptcy," Carty said, adding he had not talked to unions about plans two of them announced to vote again on the concession plans aimed at saving American $1.8 billion a year in labor costs.

"The precariousness of our financial condition simply can't sustain any action that would delay or prevent the consensual restructuring measures from taking place on schedule," Carty said.

Carty has said that in bankruptcy, the carrier would seek an additional $500 million in labor-cost cuts and there would be several thousand more lay-offs.

The carrier, which narrowly avoided bankruptcy last week when unions approved the deals, said it would file for Chapter 11 protection if any one of the unions voted against the cuts.

Market players saw the fight over the executive perks as sending the company deeper into dangerous territory and they sent AMR shares tumbling by 23 percent to close at $3.85 in active trade on the New York Stock Exchange (News - Websites), where it was the percentage loss leader.


The union that represents about 34,000 mechanics and ground workers at American Airlines said on Monday it wanted a new vote on the concession pact it ratified last week.

"American was guilty of a material breach of its obligation to provide relevant information," said Jim Little, a senior member of the Transport Workers Union, in a communication with members on the union's Web site.

"The only way to assure credibility is to allow a full revote with the full membership knowledge of all relevant company actions," Little said.

The Association of Professional Flight Attendants, which represents about a quarter of American's 100,000-strong work force, has already called for a new vote on the concessions deal it signed, saying its ratification Wednesday had been tainted by revelations of the executive compensation packages.

"Sorry or not, APFA intends to proceed with a revote of our membership on the company's restructuring proposal," said union president John Ward.

Standard & Poor's said it may still cut its ratings on AMR and its American Airlines unit because the controversy over executive pay threatens the company's turnaround plan.

The legality of any moves by the unions to rescind last week's votes remains an open question, at present, but Carty said "legally, we believe we've got ratified agreements."

Carty also tried to make a point that his pay was low compared with his counterparts at other airlines. He said the fight over executive compensation was a result of his failure to communicate, rather than a reflection of the unbridled greed that has called the ethics of America's CEOs into question.


"This is a classic 'Catch 22' for American Airlines. If it does not find a way to compensate its top executives for the substantial risks they are taking and the very hard work ahead, many will resign from the company," said William Alderman, president of aerospace investment firm Alderman & Company.

"On the other hand, in guaranteeing compensation or benefits for high-wage-earning executives, it becomes nearly impossible for the airline to contemporaneously win cost reductions from its unionized workers -- cost reductions that American needs for survival," he said.

The perks that have aroused the anger included bonuses for six top executives if they stayed with the company and funding for a special pension trust that would be paid to the airline's top 45 executives, even if the carrier went bankrupt.

American has said that these plans have been around for some time, were common among major companies and were needed to keep top executives on board.

American tried to quell the anger of labor groups last Friday by saying it had voluntary canceled retention plans put in place more than a year ago to keep its key executives.

Carty in a letter to employees on Friday offered apologies for not properly informing employees about the executive compensation plans, but did not apologize for the plans themselves.
"This is a classic 'Catch 22' for American Airlines. If it does not find a way to compensate its top executives for the substantial risks they are taking and the very hard work ahead, many will resign from the company," said William Alderman, president of aerospace investment firm Alderman & Company.

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Let 'em go. They obviously suck at their jobs. Considering the company is on the brink of bankruptcy why would the company want to retain these fools? Why is it all these execs scream about "retention" for people who CAN'T DO THEIR JOBS?

If a pilot, a Mechanic, a Gate Agent or whatever fails in their job they are let go forthwith. Why do execs get special treatment?

Oh yeah, they're the ones making the rules! I forgot. Silly me.
What a crock of [expletive deleted]! The Wall Street "experts" say that AMR needs to keep their "talented" executives with these retention plans and if they don't give them these things, they'll quit.

Oh, you mean the "talented" executives who have steered their company right to the edge of bankruptcy? What kind of "talent" is required to do that?

The thing is, these so called "talented" executives will be able to reap the rewards of a pickup in travel due to an improving economy and they'll get to tout how smart they were. In reality, all they did is ride the wave and they didn't do squat.

Yet they'll still get a hell of a lot more than the so called "overpaid" employees.
no kidding!

the thing is - sure, they'll resign if they don't get what they want...

but WHERE will they go?? where can they go to find another high paying salary at this point in time? we're in a down economy people... that should speak for itself...

they won't leave - they can't afford to leave right now until our economy starts booming again and people start hiring again...

I'd say - if they want to go, then go... cuz they sure haven't helped much in keeping the company above ground, as we're seeing...

I also think that yes, they "gave up" the bonus's and now I hear that Don Carty resigned - but whose going to take his place? another board member, of course!! this could all be a setup with Don Carty being the scapegoat - there are 44 other executives/board members included in this entire scheme...

what they need to do is in the final run to win the votes of the employees and for the employees to actually TAKE concessions - GET RID of the special pension cuz that's what this is all about.. the execs can easily run the company in the ground and come out laughing cuz they still get PAID and the 'honest" employee gets screwed!!

just take the whole kit and kaboodle out of the equation and you'd have possibly (?) happier workers??? It just may be too late for that though...

that's just SAD!!!
Carty resigned this evening.

Yummy. Bring in the rebuilding squad, while everyone else avoids the major reason they are in trouble, and offers better and more expensive food on flights