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 \----------------------------------------------------------/ Pay-Cut Deadline Extended at American April 16, 2003 By EDWARD WONG American Airlines said yesterday that it would extend until this afternoon a voting deadline on $340 million in concessions from its flight attendants' union. The move came after the union pushed American closer to a threatened bankruptcy filing, failing by a narrow margin yesterday to approve the cuts. American's two other major unions, the Allied Pilots Association and the Transport Workers Union, said yesterday that their members had voted in favor of concessions. American, the world's largest airline, is desperately seeking to obtain labor concessions worth $1.8 billion, and has said it is prepared to file for bankruptcy protection if it is unable to win them. All three unions finished their votes yesterday morning. The rejection of concessions by the flight attendants was a narrow defeat for American. Of 19,151 members who voted, 9,842 - or a little more than 51 percent - refused to accept the cuts. Company officials and the Association of Professional Flight Attendants then reached an agreement to extend the voting period until 5 p.m. today in Fort Worth, where American is based. They said union members would be able to change their telephoned votes, something that had not previously been allowed. Members of the two other big unions had been allowed by union leaders to change their votes during the entire process. In a hot line message to employees yesterday, Donald J. Carty, chief executive of AMR, American's parent company, suggested that the flight attendants' inability to change votes after their balloting began on April 1 might have accounted for the narrow defeat yesterday of the cost-cut package. Last Friday night, the pilots' and flight attendants' unions agreed to a plan offered by American that would provide for annual wage increases up to 4.5 percent starting in 2006, if American's credit rating substantially improved. Mr. Carty said American would be able to stave off a bankruptcy filing through this afternoon because it had made a payment yesterday of millions of dollars on a loan. But American will have to pay several million dollars more today, he said, and if the flight attendants do not vote for the cuts, "we are regrettably left with no alternative but to file immediately for bankruptcy." The outcome of yesterday's vote by the flight attendants did not surprise many industry experts. In the last week, many analysts said the voting would be too close to call. The flight attendants also have the lowest average salary of the three big labor groups. If they agree to a new six-year contract, they would take a pay cut of 15.6 percent starting May 1. There would also be changes in their benefits and work rules, and about 2,000 flight attendants would be laid off. One flight attendant based in the New York area said her salary was already so low that she found it completely unreasonable for American to be asking for deep cuts. Flight attendants at American have a long history of conflict with management. In 1993, the union conducted a five-day strike just before Thanksgiving. President Bill Clinton nudged the two sides back to the negotiating table, and they worked out terms of a new contract in late 1995. "Management had underestimated mistrust in the rank and file before," said Glenn D. Engel, an analyst at Goldman, Sachs. "It's an issue of trust." The vote at the Transport Workers Union yesterday was also close, but it tipped in favor of American. More than 53 percent of members voted for concessions totaling $620 million. The two largest work groups in that union - the roughly 16,000 mechanics and 16,000 baggage handlers - voted for the cuts by margins of 1 to 3 percentage points. About 1,400 ground workers would be laid off under the new contract. The pilots' union said 6,998 pilots, or 69 percent of those voting, agreed to concessions worth $660 million. The pilots, who have the highest salaries, would take the biggest pay cuts with a 23 percent reduction for one year starting May 1 and the cuts decreasing to 17 percent in subsequent years. About 2,500 pilots would be laid off. Mr. Carty has said that if American goes into bankruptcy, creditors will probably expect the company to squeeze out a further $500 million in annual savings from labor. Last week, union leaders told company executives that members were finding the length of the new contracts - six years - and the annual wage raises in them - 1.5 percent starting May 1, 2004 - onerous. American declined to change the terms of the agreements, but offered a 4.5 percent conditional wage increase that was accepted by all three unions last week. The first sign of significant dissent at the flight attendants' union became evident on Monday night, when the union asked executives to allow it to extend voting for a week, saying that members had not been adequately informed of the contract terms. The company turned down the request. By noon yesterday, the pilots and ground workers had announced the results of their voting. The flight attendants said instead that their board was meeting to go over the results. That meeting adjourned in midafternoon, and the union put the vote tally on its phone hot line and Web site within an hour. "These are certainly difficult votes," said Darryl Jenkins, director of the Aviation Institute at George Washington University. "It's like asking a tenured professor to teach undergraduates again. I'd rather slit my wrists." American has lined up $1.5 billion to $1.75 billion in financing to keep operating if it files for bankruptcy, said a person in the financial industry who had been briefed on the discussions. The four lenders would be Citigroup, J. P. Morgan Chase, Merrill Lynch and the CIT Group. Citigroup would take the lead because it issues a credit card tied to American's frequent-flier program. It would provide $750 million of the loan in a separate package tied to the credit card, and the rest would be doled out equally by the four lenders, the person said. American would be able to draw down $250 million of the loan immediately, he said. Of that, $50 million would come from Citigroup's separate package, and the rest from the pool provided by all four lenders. The airline would probably make any bankruptcy filing in New York, he added, because the court there is used to handling large bankruptcies such as those of Enron and WorldCom. A bankruptcy filing by American would be the largest in aviation history. http://www.nytimes.com/2003/04/16/business/16AIR.html?ex=1051526132&ei=1&en=b2e41ca88a224b33 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