Union leaders at American Airlines are furious after learning of lucrative executive pay deals that were being struck as workers agreed to $1,8-billion in pay cuts and concessions.
The dispute puts the future of the world’s largest airline back in doubt. Union officials threatened not to sign the agreements that members voted to back this week.
Management has warned that without the concessions, the airline, which says it is losing $5-million a day, would be forced to file for Chapter 11 bankruptcy protection.
The unions discovered the executive compensation deals in a filing with the securities and exchange commission on Tuesday night as the union vote took place.
A trust fund has been set up for the top 45 executives to protect their pension plans in the event of bankruptcy. Cash retention bonuses have been put in place for the top six executives of twice their base salaries to keep them in their jobs until 2005.
Jim Little, a senior member of the Transport Workers’ Union, said the package could derail the rescue plan. He said failure to disclose the package during negotiations was a ”material breach of its obligations” to provide relevant information. ”We must reconsider whether we will sign off, even if the consequence is bankruptcy,” he said.
Pilots agreed to cuts of $660-million, mechanics and ground workers $620-million and flight attendants $340-million.
John Ward, president of the Association of Professional Flight Attendants, said: ”It’s the equivalent of an obscene gesture from management … especially after the gut-wrenching decision thousands of … union employees … made in just the last two days”.
The airline has lost $5,3-billion in the past
two years. — Â