More Arpey


Dec 21, 2002
Pilots' Union President Blasts AMR Chief
Wednesday August 2, 6:59 pm ET
By David Koenig, AP Business Writer
Pilots' Union President Blasts AMR Chief Over Pay Raise

DALLAS (AP) -- The president of the pilots' union at American Airlines blasted the CEO over a recent pay raise, and accused management of failing to work with labor to fix the struggling carrier.
American's parent, AMR Corp., disclosed in a regulatory filing last week that Chairman and Chief Executive Gerard Arpey's pay would jump 23 percent to $650,000 from $526,650. Arpey and several other executives also received benefits related to stock-based compensation


"Regrettably, the concept of shared sacrifice and shared reward is now dead," union President Ralph Hunter said in a memo to pilots. "Despite their protests to the contrary, senior management abandoned 'Pull Together/Win Together' when they succumbed to temptation and rewarded themselves ahead of everyone else who made American Airlines' recovery possible."

"Pull Together/Win Together" is Arpey's slogan for labor-management peace and part of his plan for turning around the nation's largest carrier. He has included union officials in confidential briefings on the company's financials, and a spokesman said the officials were told of Arpey's raise before it was disclosed to the Securities and Exchange Commission.

The spokesman, Roger Frizzell, said AMR's board raised Arpey's pay after comparing his salary to those of executives at similarly sized companies and other airlines. Arpey rejected pay raises in 2004 and 2005, although he got a 1.5 percent increase given to all employees.

Frizzell said Arpey had done a strong job and that executive-compensation issues are to be expected.

The dispute over Arpey's pay is playing out against the backdrop of contract negotiations scheduled to begin in September. A company official said last week that it was too early to say whether pilots would get raises.

AMR nearly fell into bankruptcy in 2003, but has returned to profitability. Two weeks ago, it posted its best second quarter in eight years.

The flap over Arpey's pay is the latest tear in labor-management harmony at Fort Worth-based American.

Employees were outraged this year to learn that about 1,000 managers would get cash bonuses -- three executives were to get more than $1 million each -- as a reward for a run-up in AMR's stock price.

In protest, leaders of the flight-attendants' union pulled out of a labor-management program to find cost-saving measures. The company's board tried to defuse the situation by changing the bonus plan to make most of the payments in stock instead of cash.