From the APA



POSTED 3/8/03
>From The APA
On Tuesday, the second day of last week''s Winter BOD meeting, AMR Chairman of the Board Don Carty addressed the APA Board of Directors. With him were AMR President Gerard Arpey, VP of Flight Bob Kudwa and VP of Employee Relations Jeff Brundage. Not withstanding the entourage, this was a one man show. It was not the first time I have interacted with Mr. Carty, but the first in this venue. While we signed confidentiality agreements that prohibit us from divulging specific financial information, I would like to make some general comments so the membership understands what we are dealing with. In no particular order, his comments are as follows.
The meeting was in an executive or closed session with the APA Board of Directors and National Officers. The atmosphere was cordial, yet at times there were some very pointed questions. In short, I was not impressed. Mr. Carty was somewhat arrogant and as uncompromising as ever. The overall tenor of his message was: You can give it to me outside of bankruptcy—notice I did not say to avoid bankruptcy—or I can take it from you in bankruptcy. His exact words were, we could restructure consensually or in bankruptcy.
Mr. Carty was questioned about the corporate culture he has been promising to improve since his first day as CEO. He not only offered nothing to address what we all know is an underlying problem with the corporation, he dismissed our characterization. It appears once again he is willing to work with the employees only if they choose to do what he tells them. The topic of executive compensation and management perks was brought up. Mr. Carty lamented that all his senior executives are leaving the corporation and even mentioned an offer both he and Mr. Arpey had from another carrier. He asked if any of us would like to be a supervisor. There was a prolonged silence and then he said he tries to find inexpensive perks to entice employees to bid the trip. The irony of course is you shouldn''t have to entice someone to do the job, they should want it because they enjoy it. It was lost on him that an improved corporate culture has the potential to save the company money. A BOD member mentioned numerous corporate expenditures like stadium naming rights and construction projects. His concerns were summarily dismissed. There was a complete denial by Mr. Carty of any poor management decisions and in fact he derided the efforts at other airlines as inferior to those undertaken by his management team. It reminded me of the way some people get ahead in the military or civilian job market. Some outperform their peers, while others put down their peers to make themselves look good.
Several members of the BOD questioned him about the corporation advocating a rewrite of the RLA and its involvement in CESTA. His staunch opinion is there has to be a better way to negotiate labor contracts. Again the irony was lost on him that only AMR seems to have perpetual difficulty negotiating labor contracts. He was unrepentant in his belief and has NO intention to stop lobbying for reform of the RLA. Clearly he wants to limit our ability to bargain back any changes made to our contract. His recalcitrance highlighted the importance that unilateral snap back triggers must be integral to any relief package.
He commented that the when it comes to the one airline concept that APA should be careful what it asks for. My read is he has no intention of working out a Scope solution that could help mitigate furloughs for our pilots. Why should he negotiate when it can be rewritten in bankruptcy unilaterally?
The BOD looks at any potential relief package as an investment in the company that should generate some return for the pilots WHEN things turn around. Mr. Carty said he couldn''t guarantee any payback for the pilots, which I understand--there are no guarantees in life. But the underlying message was that there would not even be a mechanism offered whereby the pilots would have even a possibility to earn a return on their investment. He said quite candidly there were no [stock] options available. A majority of the membership has informed us they are willing to do what it takes if it can prevent bankruptcy, but want the ability to recoup their investment when the company recovers. Don Carty does not agree.
The fine that resulted from Judge Kendall''s contempt finding was brought up in the context that pilots may soon be doing something to relieve the financial pressure on the corporation. In return, the company must find a solution to a problem putting financial pressure on APA. Doesn''t seem fair that AMR should be able to wipe the slate clean while APA continues to struggle under the financial burden of the fine. Mr. Carty pointed his finger to many different constituencies (wall street, vendors, and shareholders) and said the fine is out of his control. So as he did throughout the entire Reno debacle and its aftermath, he appears unwilling to put the issue behind us. Like rewriting the RLA, he wants to retain the leverage the fine gives him.
When queried about the time line and why the corporation didn''t come to the employees sooner, we got the same song and dance about trying to fix problems with operational solutions first before hitting up the employees for concessions. The BOD brought up the ratification process outlined in the Constitution and Bylaws Article XIII and Policy Manual Section 9.07 that APA has to go through if we reach a tentative agreement. Mr. Carty hinted that membership ratification might not get us there in time. I got the sense he thought it was our problem and was yet another indication of what his definition of collaboratively is. While I don''t see any sentiment what so ever on the BOD to bypass the membership, the corporation will definitely put pressure on APA to do so at the eleventh hour.
To sum up: Mr. Carty wants to restructure your pay, work rules, benefits, and pension; can''t do anything about the fine; doesn''t want one airline; won''t back off of CESTA; can''t provide options; won''t consider a board seat; doesn''t think the corporate culture is in need of repair; and insists changes to our cost structure must be permanent. Did I leave anything out.... Oh yea, he needs it now.
Without getting into a lengthy debate over negotiating strategy or tactics, my opinion is Mr. Carty thinks he has not only APA, but all the employees, by the short hairs and is engaging in brinksmenship. Because he perceives he has the leverage, he has no desire to craft a truly collaborative solution and seems inclined to intimidate the employees with the specter of bankruptcy to accept his solution which is being portrayed as a bipartisan effort. My overall sense was he is not the slightest bit apprehensive of bankruptcy as he and his management team and their compensation packages would survive unscathed. He may actually want to go there to finish with these messy employee problems once and for all.
Captain Scott Abbott
ORD Vice Chairman
It's a shame that it's going to take bankruptcy to get rid of Carty, and an even bigger shame that he could care less and will just smirk and wave on his way out the door, pockets filled with self-awarded millions and perks.

Tsk Tsk