Flight attendants reject new proposal


Mar 7, 2003
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Flight attendants reject new proposal/Carty resigns
By Cynthia Wilson Post-Dispatch
updated: 04/25/2003 09:30 AM

Former American Airlines chairman and CEO Donald J. Carty.
(David Adame/AP)
The leaders of American Airlines'' flight attendants rejected on Thursday night a revised contract offer that the troubled carrier said was needed to keep it from filing for bankruptcy protection, perhaps as early as today.

Although the board of the Association of Professional Flight Attendants turned down the deal, the executive committee was seeking to overturn the decision, a source familiar with the situation told The Associated Press on condition of anonymity.

A Dallas television station this morning quoted a spokesman for the pilots'' union as saying the flight attendants had agreed to the latest concessions, but there was no official word from the attendants'' union.

Thursday''s rebuff by the attendants came just hours after Chairman Donald J. Carty resigned in a bid to salvage $1.6 billion in employee concessions and keep the company afloat.

The airline said all three of its unions would need to agree to new deals reached Thursday afternoon for the company to remain solvent.

In turning down the carrier''s offer, the flight attendants union cited concerns about the length of the proposed agreement, the lack of incentives and specific items our members found more problematic than others.

With Carty out, American Airlines announced that its president, Gerard J. Arpey, would take on chief executive duties, while board member Edward A. Brennan would become executive chairman of AMR Corp., American''s parent company.

Carty''s resignation was meant to calm angry employees who called for his ouster after learning details of retention bonuses and pension guarantees for the airline''s top executives. The employees learned of the bonuses and guarantees only after they''d voted to approve cuts in their own wages and benefits.

American put $41 million in the pension plan for 45 executives. The pensions would be protected even if American files for bankruptcy.

American canceled the bonuses after the unions voiced strong objections, but the pension plans remain.

Carty repeatedly apologized to employees, but the unions representing flight attendants and some ground workers threatened to vote again on the concessions - a process that could take 30 or more days - while the pilots refused to sign off on their deal.

American, which on Wednesday reported it lost $1.04 billion in the first quarter, said it needed the concessions to avoid filing bankruptcy.

The airline, based in Fort Worth, Texas, has a hub at Lambert Field.

Reaching new deals

American hoped it had moved a step closer to salvaging the union deals early Thursday when Texas congressmen Martin Frost, Joe Barton, Mike Burgess and Pete Sessions helped broker new deals that shortened - to five years from six - the length of the contracts and would allow members to negotiate new terms in three years, said James Little, a director of the Transport Workers Union.

American also agreed to increase employee wages each year by up to 10 percent if the company achieves certain operating performance goals. The company also agreed to make one change in each union''s contract after May 15.

The Transport Workers and the Allied Pilots Association, which represents American''s pilots, said they would accept the latest deals, with some conditions. On Thursday, both unions signed off on agreements approved last week by their members.

But American will only honor the deals if all three unions accept, and none of the unions vote again on the contracts, Little said.

In our view, there is only one rational decision which can be reached, said Little. Revoting the ratified agreements will mean a bankruptcy, with far more layoffs, worse pay and working conditions.

We will not be taking our chances in bankruptcy - we will be guaranteeing a worse future for our members, Little said. Honoring last week''s votes will allow for a shorter agreement and maximize our chances for undoing concessions no one wants.

American''s future

Some news services reported Thursday evening that American was preparing to file bankruptcy as early as today.

Had the flight attendants accepted American''s latest offer, all former Trans World Airlines flight attendants remaining on American''s payroll would be laid off within a year.

By accepting Carty''s resignation and agreeing to the deals, American''s board hopes to save the airline from bankruptcy and rebuild the trust with labor damaged by the last week''s events.

Arpey, the new chief executive, promised to work to rebuild trust in American''s management throughout the company and he vowed to do his best to lead American through these extraordinary times and restore confidence of all employees in their great company.

I will continue to lead by example, Arpey said. Actions, of course, speak louder than words. And you can expect me to ensure my actions are consistent with the high standards we set for all employees of American Airlines and American Eagle.

Carty, in resigning his positions, praised his successors and said the appointments of Brennan and Arpey would begin to build a bridge back to the path that promised a new culture of collaboration, cooperation and trust.

Arpey became American''s president and chief operating officer a year ago. He previously served as the company''s executive vice president-operations and senior vice president-finance and planning. He also formerly served as chief financial officer.

Brennan is a retired chairman, president and chief executive of Sears, Roebuck and Co. He has been a member of American''s board for more than 17 years.

Speculation had abounded this week that Carty would be replaced by Robert L. Crandall, his predecessor and mentor. Crandall, now retired, had indicated a willingness to return to the airline if asked.

In trading Thursday, shares of AMR rose 24 cents to close at $4.04.

Reporter Cynthia Wilson:
E-mail: [email protected]
Phone: 314-340-8159
They ought to call it the Post-Rehash. Very little new here.

Although it does mention the Pilots'' union spokesperson saying the F/A''s have agreed to the contract.