American Airlines shielded executives pensions from bankruptcy

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American Airlines shielded executives pensions from bankruptcy

FORT WORTH, Texas (AP) =97 One day after American Airlines employees agreed=
=20
to annual cuts of $1.8 billion, the cooperative spirit turned acrimonious=20
Thursday as union leaders expressed outrage over newly disclosed perks=20
granted to executives. One angry union leader said if workers had known=20
earlier about a pension trust created last year to protect executives'=20
benefits in the event of a bankruptcy filing, they might have voted against=
=20
the steep concessions intended to keep the world's largest carrier out of=20
Chapter 11. The executive perks, which included huge bonuses for a few,=20
were disclosed late Tuesday in a filing with the Securities and Exchange=20
Commission. The filing was made after the scheduled end of voting on the=20
concessions.  "We are appalled and just disgusted. It's the equivalent of=20
an obscene gesture from management," John Ward, president of the flight=20
attendants' union, said. Flight attendants initially rejected their share=20
of the $1.8 billion cost-cutting plan but reversed themselves Wednesday=20
after the company extended the original deadline. James C. Little, leader=20
of the ground workers' union, said he was considering whether to withhold=20
signing the concessions contract that his members narrowly approved. "If=20
members had known about these compensation agreements, there would have=20
been a higher turnout of 'No' votes," Little said.

According to the SEC filing, the company's board agreed to fund 60% of the=
=20
pension trust established for 45 top executives and it approved bonuses for=
=20
six top executives if they stay through January 2005. The bonuses would be=
=20
double each executive's pay. American spokesman Bruce Hicks said the=20
benefits were designed to retain top talent and were similar to deals=20
offered by other major companies. "Retention benefits are designed to keep=
=20
key senior management who are constantly being wooed by other companies =97=
=20
other airlines and non-airlines," he said. Hicks said the extra pensions=20
were similar to a supplemental plan for American's pilots, which he said=20
would also be protected in bankruptcy. Ground workers and flight=20
attendants, who earn far less than pilots, have no such a plan, he said.=20
Chairman and chief executive Donald J. Carty could get a $1.6 million=20
bonus, based on his 2002 salary of $811,000. Carty told workers last month=
=20
that he would take a 33% pay cut to demonstrate management's willingness to=
=20
make sacrifices for the company's good. Carty did not publicly discuss the=
=20
bonus he could get in 2005.

Few employees learned of the executive benefits until after they had=20
approved concessions that call for pay cuts of about 16% for flight=20
attendants and ground workers and 23% for pilots. "It's pretty blatant to=20
us that we found out about it after they disclosed it to the SEC. ... It=20
was done intentionally that way to wait until after the voting process,"=20
said Little, the Transport Workers Union official. "This ... leaves the=20
issue to us whether they were actually bargaining in good faith." Hicks,=20
the airline spokesman, said union leaders and their consultants were=20
briefed about the executive benefits over the past several weeks =97 but=20
under a confidentiality agreement that prohibited them from informing=20
rank-and-file workers. Little and Ward said they were given general=20
information about executive compensation but denied being told about the=20
bonuses and pension funding.
"The only thing we were told is that (Carty) wasn't going to receive any=20
bonuses,"



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