This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ American Airlines Unions Vote on Concessions April 15, 2003 By EDWARD WONG The three major unions at American Airlines said yesterday that they would conclude voting on concessions by this morning and try to get results to the company before 11 a.m. in Texas. That is the deadline that American, based in Fort Worth, Tex., has set to get a vote tally. If the votes are not counted by then, or if any labor group votes down concessions, then the company will file for bankruptcy-court protection "very soon," said Bruce Hicks, a company spokesman. American, the world's largest carrier, is trying to get its workers to ratify agreements for $1.8 billion in labor cuts. To get those agreements, American threatened its unions with imminent bankruptcy, saying it could ask for the power to void union contracts if it had to file for Chapter 11 protection from creditors. In late March, American, a unit of the AMR Corporation, was working on putting together $1.5 billion in financing to keep its operations going while in bankruptcy. Yesterday, the company had virtually concluded talks with four lenders for a loan in that amount, said a person in the finance industry who had been briefed on the discussions. Citibank, a unit of Citigroup, would provide $750 million, with the remaining $750 million split equally among Citibank, J. P. Morgan Chase, Merrill Lynch and the CIT Group. Citigroup is taking the lead because it issues the credit card linked to American's frequent-flier program. The loan could be increased to $1.75 billion if all the lenders agreed to it, the person said. "Whenever the company's ready, it's there," he said. The Allied Pilots Association said yesterday that it would conclude voting this morning rather than yesterday, as it had planned, but still expected to meet American's deadline. The pilots are voting on $660 million in cost cuts. The union had been asked by the American Arbitration Association, which is organizing the phone vote system for all the unions, to extend the voting time, said Gregg Overman, a union spokesman. The association had received a lot of calls from workers asking for details on the voting process, he added. The pilots have the greatest incentive of the three unions to avoid going to bankruptcy court, partly because their lucrative pension plan would likely be radically altered or eliminated in a Chapter 11 restructuring. This happened to the pilots at US Airways, which emerged from bankruptcy-law protection last month after entering court last August. But there are pilots who are vehemently opposed to the concessions. Three pilots filed a complaint yesterday morning in federal district court in Fort Worth to halt the voting, arguing the union had not disclosed enough information about the new contract. In the afternoon, Judge Terry R. Means denied the request and said that extending the voting time would push American to file Chapter 11. He said a bankruptcy filing would have a "devastating effect" on the local and national economy. Mr. Overman, the spokesman for the pilots' union, said that the union had put enough information on its Web site to educate voters. On the Web site of the Transport Workers Union, which represents 34,000 employees at American, a union leader urged members to vote in favor of $620 million in concessions. "Upon rejection, we will be in bankruptcy court dealing with a far harsher proposal with far more jobs and benefits lost," James Little, director of the air transport division, said in a letter. The T.W.U. represents eight different labor groups at American, including about 16,000 mechanics and 16,000 baggage handlers. The mechanics were the last of those groups to agree tentatively to concessions in the final week of March. They are the most militant of the T.W.U. workers, and there are worries at American that they - like the mechanics at the UAL Corporation's United Airlines - could vote against concessions and push the airline closer to a bankruptcy filing. The Association of Professional Flight Attendants, which represents 19,000 workers, said yesterday that voting at its union would finish by 10 this morning Central time. In late March, American reached tentative agreements with all its work groups on $1.8 billion in annual concessions, as part of a total of $4 billion in cost cuts that Donald J. Carty, the chief executive, has said is necessary to avoid bankruptcy. Of the $1.8 billion, $660 million would come from the pilots, $340 million from the flight attendants, $620 million from the T.W.U. workers, $80 million from agents and representatives and $100 million from management. The cuts would include layoffs of 2,500 pilots, about 2,000 flight attendants and 1,400 or so ground workers. Most workers would have to take wage cuts starting May 1 of 16 percent to 17.5 percent off current base salaries. The pilots would take a 23 percent cut in the first year, with that lessening to 17 percent in the second year. In most cases, there also would be changes to benefits and work rules. Workers would get to take part in a profit-sharing plan and stock options, so compensation would be more closely tied to the company's performance. "I think there will be a rush of people voting at the last minute, based on the last, best information they're able to develop," said Robert W. Mann, an industry consultant based on Long Island. "It's a very difficult choice. It's a classic Hobson's choice. There's no real palatable option." Northwest Plan Criticized By Reuters The mechanics union at Northwest Airlines said last night that the carrier's recent cost-cutting proposals were unjustified. The Aircraft Mechanics Fraternal Association said in a statement that the airline's proposal, delivered yesterday afternoon, calls for $173 million in additional yearly labor cost savings over seven years. It also calls for an additional 1,000 layoffs, a 16.7 percent reduction in base pay for mechanics, a 10.6 percent pay cut for cleaners and custodians and elimination of a 4 percent pay raise scheduled for May 2004, the union said. Officials at Northwest had no immediate comment. http://www.nytimes.com/2003/04/15/business/15AIR.html?ex=1051412429&ei=1&en=bcbb66d2e52d268a HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company