The show must go on

While CEO’s impose to their workers drastic salary cust ,they take care to protect their own interests: disgusting!!

DAVID KOENIG
Associated Press

FORT WORTH, Texas – One day after American Airlines employees agreed
to annual cuts of $1.8 billion, the cooperative spirit turned
acrimonious Thursday as union leaders expressed outrage over newly
disclosed perks granted to executives.

One angry union leader said if workers had known earlier about a
pension trust created last year to protect executives’ benefits in the
event of a bankruptcy filing, they might have voted against the steep
concessions intended to keep the world’s largest carrier out of
Chapter 11.

The executive perks, which included huge bonuses for a few, were
disclosed late Tuesday in a filing with the Securities and Exchange
Commission. The filing was made after the scheduled end of voting on
the concessions.

“We are appalled and just disgusted. It’s the equivalent of an obscene
gesture from management,” said John Ward, president of the flight
attendants’ union. Flight attendants initially their rejected their of
the $1.8 billion cost-cutting plan but reversed themselves Wednesday
after the company extended the original deadline for voting.

James C. Little, leader of the ground workers’ union, said he was
considering whether to withhold signing the concessions contract that
his members narrowly approved.

“If members had known about these compensation agreements, there would
have been a higher turnout of ‘No’ votes,” Little said in an
interview.

On the union’s Web site, Little said members must reconsider signing
the concessions deal “even if the consequence is a bankruptcy.”

According to the SEC filing, the company’s board agreed to fund 60
percent of the pension trust established for 45 top executives and it
approved bonuses for six top executives if they stay through January
2005. The bonuses would be double each executive’s pay.

American spokesman Bruce Hicks said the benefits were designed to
retain top talent and were similar to deals offered by other major
companies.

“Retention benefits are designed to keep key senior management who are
constantly being wooed by other companies – other airlines and
non-airlines,” he said.

Hicks said the extra pensions were similar to a supplemental plan for
American’s pilots, which he said would also be protected in
bankruptcy. Ground workers and flight attendants, who earn far less
than pilots, have no such a plan, he said.

Chairman and chief executive Donald J. Carty could get a $1.6 million
bonus, based on his 2002 salary of $811,000. Carty told workers last
month that he would take a 33 percent pay cut to demonstrate
management’s willingness to make sacrifices for the company’s good.

Carty did not publicly discuss the bonus he could get in 2005.

Employees did not learn of the executive benefits until after they had
approved concessions that call for pay cuts of about 16 percent for
flight attendants and ground workers and 23 percent for pilots.

“It’s pretty blatant to us that we found out about it after they
disclosed it to the SEC. … It was done intentionally that way to
wait until after the voting process,” said Little, the Transport
Workers Union official. “This … leaves the issue to us whether they
were actually bargaining in good faith.”

Hicks, the airline spokesman, had said union leaders were briefed on
the new perks over the past several weeks but later corrected himself,
saying that the briefings covered senior executive retention but did
not detail the bonuses and pensions.

“The only thing we were told is that (Carty) wasn’t going to receive
any bonuses,” Ward said. “We were not advised of anything like this.”

Little said he asked union lawyers to study whether he could refuse to
sign the final paperwork on a concessions deal that will cost ground
workers $620 million a year.

John Darrah, president of the pilots’ union, which approved $660
million a year in concessions, said he too was talking to lawyers and
had asked management to rescind the perks.

“The world spotlight is on (management) with a crucial decision on
compensation, the way it’s been on the employees,” Darrah said.

Ward, whose flight attendants agreed to $340 million in annual
givebacks, held out little hope of canceling the employees’
ratification of concessions.

“It’s done,” Ward said of the cost-cutting agreements.

Analysts said the episode would further damage American’s already
troubled relationship with employees.

“This puts a huge amount of pressure on AMR to come clean with details
of how and why this was done, and possibly even to change it,” said
Michael Miller, an aviation-industry communications consultant.

On Thursday morning, AMR shares continued to enjoy a bounce from
employee ratification of concessions, and they rose to nearly $6,
before giving up some of the gain. In trading on the New York Stock
Exchange, the shares closed at $5, up 77 cents, or 18 percent.