- Dec 21, 2002
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WHAT OTHER FOND MEMORIES DO YOU HAVE OF AA IN 2003?
04/25/2003 - Updated 12:45 AM ET
Carty resigns as 2 unions agree to new concessions
By Dan Reed, USA TODAY
FORT WORTH — AMR's board forced chief executive Don Carty to resign Thursday, but after a day of stormy meetings, the world's biggest airline was still on the precipice of a bankruptcy filing.
Read more below
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News Stories New American CEO 'up to task'
Focus shifts to AMR's board team
CEO Carty resigns
Workers in limbo; morale 'horrible'
AA promotes man who made fateful Sept. 11 call
Canadian Carty had rough ride at American
AMR posts 'dreadful' $1 billion first-quarter loss
Shares of AA parent company plunge
Some AA workers to vote again on concessions
AA protects execs as workers asked to make steep cuts
CEO: Concessions don't mean AA is in the clear
AA pilots, ground workers OK concessions
American offers bonuses in 2006 in bid for support
AA shrinks May schedule, postpones service
AA defends smaller pay cuts for management
Stock options to ease pain of concessions at AA
American Airlines presses creditors
AA cuts 2,500 pilot jobs
AA gets $1.6B in labor concessions
Two airlines scramble to fix money problems
Airlines predict war could cost them $10B
Airline chief asks employees to make sacrifices
AA cuts international flights due to war
American quietly seeks bankruptcy funding
--------------------------------------------------------------------------------
Gerard Arpey, AMR's president, will succeed Carty as CEO. Edward Brennan, an AMR director and former Sears chairman, will serve as chairman of AMR's board.
But late Thursday evening, the fate of the airline — and a crucial package of labor-cost savings worth $1.8 billion a year that AMR says is needed to avoid bankruptcy court — was once again in the hands of its flight attendants union.
Last week's ratifications by all three American unions had been threatened by Carty's decision not to fully disclose details of executive compensation plans to workers before voting was completed. When the details became public, all three unions began backing off on their endorsements of the concessions.
Thursday, AMR offered the unions better terms but on the condition that they not send the new contracts back to members for a vote, which could take weeks. AMR needs the savings desperately now because of weakening travel demand and financial obligations it must meet in the weeks ahead.
The airline's pilots union and the Transport Workers Union, which represents mechanics and ground workers, agreed to the new terms, but the flight attendants union, which initially rejected and then approved the original concessions last week, was still debating the company's new terms Thursday night. Leaders of the flight attendants are scheduled to reconsider the company's terms at 8 a.m. CT today and have asked the company to delay a bankruptcy filing until after that.
John Darrah, president of the Allied Pilots Association, said in a message posted on the union's Web site around 5:20 p.m. CT that his board had authorized him to sign the contract concessions approved by union members last week, with some agreed-upon modifications. He emphasized that the pilots' agreement was contingent on both the TWU and the Association of Professional Flight Attendants also agreeing to the deal.
Almost simultaneously, Jim Little, head of the TWU at American, posted a letter to his members on the union's Web site, saying the same thing. "We and the pilots are prepared to go forward," Little wrote, after explaining the changes to the concessions.
"There is only one rational decision which can be reached," he added. "Revoting the ratified agreements will mean a bankruptcy, with far more layoffs, worse pay and working conditions. Pensions and health care will be in immediate jeopardy. We will not be taking our chances in bankruptcy — we will be guaranteeing a worse future for our members."
Little said that by honoring last week's ratification vote, the modified deal will shorten the contract by a year and "maximize our chances for undoing concessions no one wants. Moreover, if there is a bankruptcy, we will have provisions in place protecting us from attempts to secure further concessions."
To secure the union's approval of the concessions deals voted on last week, AMR's board agreed to several modifications:
The length of the contracts was shortened to five years, or until April 30, 2008. Previously, the contracts were to run five years and eight months, until Jan. 1, 2009. Airline contracts don't end. They become amendable at a set date, while existing terms remain in effect.
Either the unions or the company can move to reopen contract negotiations two years early, in April 2006, effectively reducing the contract's length to three years.
Unions can seek to renegotiate one contract item of their choosing during a 30-day period that begins May 15. However, total value of the contracts cannot change. Disputes on those points can be settled by arbitration.
Terms of an incentive pay plan added as a deal sweetener earlier this month to coax union members to approve the concessions will also be applied to management. Employees will be able to earn larger pay raises if American reaches "reasonably achievable" operational and financial goals. The plan is in addition to profit sharing and stock-option plans included in the concessions approved last week.
Little also said management has committed to the unions — and the four House members who helped facilitate the final talks that led to Thursday's deal — that there are no further executive compensation matters that have not been disclosed.
"Based on these considerations and on the commitments made (Wednesday), our union will honor last week's vote in order to protect our members," Little said. "We must do everything in our power to limit exposure of our contracts and our members in bankruptcy proceedings. Those who would do otherwise are clearly motivated by reasons other than the welfare of the members."
The makings of a potential deal allowing American to skirt a Chapter 11 bankruptcy filing began to come together Wednesday during a marathon meeting at a Dallas/Fort Worth International Airport hotel between Carty and other American officials. The meeting had been arranged by Rep. Martin Frost, D-Texas, whose district in nearby Arlington and Fort Worth is home to hundreds of American employees.
Frost was joined by three House Republicans from north Texas, Pete Sessions, Joe Barton and Michael Burgess, in serving as meeting facilitators. Sessions told reporters that the union leaders and Carty all agreed that avoiding bankruptcy was imperative. But by early afternoon, the politicians had all left the meeting, frustrated at the inability of the parties to reach a compromise that would keep the airline out of bankruptcy.
By evening, AMR's management suggested they could sell the company's board on a shorter contract length if unions would give up their insistence on revoting. One potential problem was whether American lenders would agree.
Leaders of the pilots union, which had decided not to revote but to withhold their president's signature from the deal, said they thought they could sell such a deal to their board members. TWU leaders, who had announced indefinite plans to revote, expressed confidence that both their local presidents and TWU national officers could be persuaded to accept such a deal.
But flight attendants leaders were split on the idea, with President John Ward insisting that the concessions had to be put back out for another vote.
On Thursday morning, AMR board member and former U.S. senator David Boren was quoted in the Tulsa World as saying he would move at the board's meeting at Dallas' posh Wyndham Anatole Hotel that Carty be replaced as CEO. "Mr. Carty has lost the credibility and trust necessary to effectively lead the company through challenging times," Boren said.
At midmorning, Frost told a CNN reporter that he believed there was a basis for a deal in place but that management and leaders of all three unions still had to sell the deal to their respective boards.
A senior pilots union official, however, said Frost was optimistically over-reaching. The flight attendants leaders, particularly Ward, were still not on board, the pilots union official said.
In midafternoon, the AMR board sent word to APFA that it had to have an answer by 4:30 p.m. CT, or they would vote to put the company into bankruptcy reorganization.
Around 3:30 p.m. CT, the APFA board voted to turn down the deal. The AMR board was informed a few minutes later. Within minutes, though, members of APFA's executive committee began moving to override the union board's decision to reject the deal. A call was made to the AMR board, asking for more time. Shortly after 4 p.m., AMR board members adjourned, having voted to file for Chapter 11 bankruptcy unless the APFA decision was reversed.
An hour later, both TWU's Little and the pilots union's Darrah posted the messages on their Web sites saying that they had agreed to the deal but the agreements were contingent on APFA joining them. The twin announcements increased the pressure on APFA, which was being painted as the party responsible for possibly putting American into bankruptcy.
Meanwhile, at APFA headquarters in Euless, Texas, about five miles from AMR's Fort Worth headquarters, the scene was chaotic.
One person close to the APFA talks said many of the board members who were in the room for the conference call were in tears, while others were "stressing out."
Members of the union's powerful executive committee argued that the decision to accept the AMR board's proposed deal rightfully belonged to them, not the union's board.
The person close to the situation said that executive committee members argued that by putting the decision into their hands, the company could be saved from bankruptcy reorganization and the union's board members, also the elected leaders of the union's various locals, could be shielded from taking the blame from members opposed to the deal.
For Carty, 56, his ouster may end a career spanning more than 20 years at AMR. He has been chairman and CEO since 1998.
Arpey, 44, was promoted to president a year ago. Arpey got his first airline job as a part-time baggage handler for Delta. He has spent his entire professional career at American.
04/25/2003 - Updated 12:45 AM ET
Carty resigns as 2 unions agree to new concessions
By Dan Reed, USA TODAY
FORT WORTH — AMR's board forced chief executive Don Carty to resign Thursday, but after a day of stormy meetings, the world's biggest airline was still on the precipice of a bankruptcy filing.
Read more below
--------------------------------------------------------------------------------
News Stories New American CEO 'up to task'
Focus shifts to AMR's board team
CEO Carty resigns
Workers in limbo; morale 'horrible'
AA promotes man who made fateful Sept. 11 call
Canadian Carty had rough ride at American
AMR posts 'dreadful' $1 billion first-quarter loss
Shares of AA parent company plunge
Some AA workers to vote again on concessions
AA protects execs as workers asked to make steep cuts
CEO: Concessions don't mean AA is in the clear
AA pilots, ground workers OK concessions
American offers bonuses in 2006 in bid for support
AA shrinks May schedule, postpones service
AA defends smaller pay cuts for management
Stock options to ease pain of concessions at AA
American Airlines presses creditors
AA cuts 2,500 pilot jobs
AA gets $1.6B in labor concessions
Two airlines scramble to fix money problems
Airlines predict war could cost them $10B
Airline chief asks employees to make sacrifices
AA cuts international flights due to war
American quietly seeks bankruptcy funding
--------------------------------------------------------------------------------
Gerard Arpey, AMR's president, will succeed Carty as CEO. Edward Brennan, an AMR director and former Sears chairman, will serve as chairman of AMR's board.
But late Thursday evening, the fate of the airline — and a crucial package of labor-cost savings worth $1.8 billion a year that AMR says is needed to avoid bankruptcy court — was once again in the hands of its flight attendants union.
Last week's ratifications by all three American unions had been threatened by Carty's decision not to fully disclose details of executive compensation plans to workers before voting was completed. When the details became public, all three unions began backing off on their endorsements of the concessions.
Thursday, AMR offered the unions better terms but on the condition that they not send the new contracts back to members for a vote, which could take weeks. AMR needs the savings desperately now because of weakening travel demand and financial obligations it must meet in the weeks ahead.
The airline's pilots union and the Transport Workers Union, which represents mechanics and ground workers, agreed to the new terms, but the flight attendants union, which initially rejected and then approved the original concessions last week, was still debating the company's new terms Thursday night. Leaders of the flight attendants are scheduled to reconsider the company's terms at 8 a.m. CT today and have asked the company to delay a bankruptcy filing until after that.
John Darrah, president of the Allied Pilots Association, said in a message posted on the union's Web site around 5:20 p.m. CT that his board had authorized him to sign the contract concessions approved by union members last week, with some agreed-upon modifications. He emphasized that the pilots' agreement was contingent on both the TWU and the Association of Professional Flight Attendants also agreeing to the deal.
Almost simultaneously, Jim Little, head of the TWU at American, posted a letter to his members on the union's Web site, saying the same thing. "We and the pilots are prepared to go forward," Little wrote, after explaining the changes to the concessions.
"There is only one rational decision which can be reached," he added. "Revoting the ratified agreements will mean a bankruptcy, with far more layoffs, worse pay and working conditions. Pensions and health care will be in immediate jeopardy. We will not be taking our chances in bankruptcy — we will be guaranteeing a worse future for our members."
Little said that by honoring last week's ratification vote, the modified deal will shorten the contract by a year and "maximize our chances for undoing concessions no one wants. Moreover, if there is a bankruptcy, we will have provisions in place protecting us from attempts to secure further concessions."
To secure the union's approval of the concessions deals voted on last week, AMR's board agreed to several modifications:
The length of the contracts was shortened to five years, or until April 30, 2008. Previously, the contracts were to run five years and eight months, until Jan. 1, 2009. Airline contracts don't end. They become amendable at a set date, while existing terms remain in effect.
Either the unions or the company can move to reopen contract negotiations two years early, in April 2006, effectively reducing the contract's length to three years.
Unions can seek to renegotiate one contract item of their choosing during a 30-day period that begins May 15. However, total value of the contracts cannot change. Disputes on those points can be settled by arbitration.
Terms of an incentive pay plan added as a deal sweetener earlier this month to coax union members to approve the concessions will also be applied to management. Employees will be able to earn larger pay raises if American reaches "reasonably achievable" operational and financial goals. The plan is in addition to profit sharing and stock-option plans included in the concessions approved last week.
Little also said management has committed to the unions — and the four House members who helped facilitate the final talks that led to Thursday's deal — that there are no further executive compensation matters that have not been disclosed.
"Based on these considerations and on the commitments made (Wednesday), our union will honor last week's vote in order to protect our members," Little said. "We must do everything in our power to limit exposure of our contracts and our members in bankruptcy proceedings. Those who would do otherwise are clearly motivated by reasons other than the welfare of the members."
The makings of a potential deal allowing American to skirt a Chapter 11 bankruptcy filing began to come together Wednesday during a marathon meeting at a Dallas/Fort Worth International Airport hotel between Carty and other American officials. The meeting had been arranged by Rep. Martin Frost, D-Texas, whose district in nearby Arlington and Fort Worth is home to hundreds of American employees.
Frost was joined by three House Republicans from north Texas, Pete Sessions, Joe Barton and Michael Burgess, in serving as meeting facilitators. Sessions told reporters that the union leaders and Carty all agreed that avoiding bankruptcy was imperative. But by early afternoon, the politicians had all left the meeting, frustrated at the inability of the parties to reach a compromise that would keep the airline out of bankruptcy.
By evening, AMR's management suggested they could sell the company's board on a shorter contract length if unions would give up their insistence on revoting. One potential problem was whether American lenders would agree.
Leaders of the pilots union, which had decided not to revote but to withhold their president's signature from the deal, said they thought they could sell such a deal to their board members. TWU leaders, who had announced indefinite plans to revote, expressed confidence that both their local presidents and TWU national officers could be persuaded to accept such a deal.
But flight attendants leaders were split on the idea, with President John Ward insisting that the concessions had to be put back out for another vote.
On Thursday morning, AMR board member and former U.S. senator David Boren was quoted in the Tulsa World as saying he would move at the board's meeting at Dallas' posh Wyndham Anatole Hotel that Carty be replaced as CEO. "Mr. Carty has lost the credibility and trust necessary to effectively lead the company through challenging times," Boren said.
At midmorning, Frost told a CNN reporter that he believed there was a basis for a deal in place but that management and leaders of all three unions still had to sell the deal to their respective boards.
A senior pilots union official, however, said Frost was optimistically over-reaching. The flight attendants leaders, particularly Ward, were still not on board, the pilots union official said.
In midafternoon, the AMR board sent word to APFA that it had to have an answer by 4:30 p.m. CT, or they would vote to put the company into bankruptcy reorganization.
Around 3:30 p.m. CT, the APFA board voted to turn down the deal. The AMR board was informed a few minutes later. Within minutes, though, members of APFA's executive committee began moving to override the union board's decision to reject the deal. A call was made to the AMR board, asking for more time. Shortly after 4 p.m., AMR board members adjourned, having voted to file for Chapter 11 bankruptcy unless the APFA decision was reversed.
An hour later, both TWU's Little and the pilots union's Darrah posted the messages on their Web sites saying that they had agreed to the deal but the agreements were contingent on APFA joining them. The twin announcements increased the pressure on APFA, which was being painted as the party responsible for possibly putting American into bankruptcy.
Meanwhile, at APFA headquarters in Euless, Texas, about five miles from AMR's Fort Worth headquarters, the scene was chaotic.
One person close to the APFA talks said many of the board members who were in the room for the conference call were in tears, while others were "stressing out."
Members of the union's powerful executive committee argued that the decision to accept the AMR board's proposed deal rightfully belonged to them, not the union's board.
The person close to the situation said that executive committee members argued that by putting the decision into their hands, the company could be saved from bankruptcy reorganization and the union's board members, also the elected leaders of the union's various locals, could be shielded from taking the blame from members opposed to the deal.
For Carty, 56, his ouster may end a career spanning more than 20 years at AMR. He has been chairman and CEO since 1998.
Arpey, 44, was promoted to president a year ago. Arpey got his first airline job as a part-time baggage handler for Delta. He has spent his entire professional career at American.
Way To Go!!! (I wish I had bought more)
