TWU Notifies AMR - May Not Certify Vote


Aug 20, 2002
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AMR Union Threatens to Withhold Certification of Vote

By Ann Keeton
Dow Jones Newswires
CHICAGO -- A disclosure in AMR Corp.''s (AMR) annual report that American Airlines executives established a special pension fund that could survive in bankruptcy may put at risk new cost-cutting contracts just ratified by the airlines three labor unions, an official of the Transport Workers Union of America told Dow Jones Newswires Thursday.
The carrier failed to mention the pension fund during recent contract negotiations, said James Little, director of the Air Transport Division of the Transport Union Workers of America. He added the union regards American''s failure to timely disclose the fund''s existence during bargaining as a material breach of its obligations to provide relevant information.
The carrier had said it needed to cut labor costs by $1.8 billion annually to avoid an immediate bankruptcy filing.
Union membership, including mechanics and other ground workers, ratified the contract by a narrow margin. Mr. Little said the contract still has to be signed off by him and the international head of the TWU before it is official.
In a letter to union members Thursday, Mr. Little said, Unless the company reforms itself on the issue of executive compensation, there is no basis to cooperate in its effort to survive.
He also told Dow Jones Newswires he won''t sign off on the new contracts until he consults with union lawyers and the company.
I believe if our members had known this, it might have changed the outcome, said Mr. Little. The TWU approved contract concessions by only a 53% to 47% margin. The credibility of the company is at stake. This was supposed to be shared sacrifice.
Union leaders at American were furious that executives protected some of the pension income last year and were awarded retention bonuses shortly before workers were asked to agree to $1.8 billion worth of concessions to keep the company out of bankruptcy reorganization.
Leaders of both the TWU and the Allied Pilots Association say they were never briefed on the enhanced benefits to top American managers, and are livid over a company statement to The Wall Street Journal that they had been told in advance of ratification voting.
Company spokesman Bruce Hicks said Thursday he had understood the unions had been briefed in advance of ratification voting on the compensation issues that were disclosed in the annual report, filed Tuesday with the Securities and Exchange Commission, but that he was double-checking. I''m still trying to get a final answer, he added.
APA President John Darrah said Mr. Hicks'' original statement that union leaders had been told of the management changes, but under confidentiality agreements, was false since the union learned of the compensation issues with the SEC filing. Nothing could be further from the truth, he said of American''s statement.
American delayed filing its annual report with the SEC, then delivered it Tuesday as voting on tentative agreements was supposed to wrap up. The pension guarantees, which protect retirement income for 45 top American executives in the event of a bankruptcy, and the bonuses of two times base salary for the top six American executives were reported Thursday by the Journal.
The timing is wrong, said Mr. Darrah. If they were going to do something like this, they should have made it clear before. He went on to say all management told the APA about executive compensation was that Chairman and Chief Executive Donald J. Carty would take a 33% cut in pay, and other executives would see their pay cut 17%.
Pilots and ground workers approved the tentative contract agreements on Tuesday, but flight attendants rejected the concessions by 533 votes.
The Association of Professional Flight Attendants asked that voting be reopened because of voting difficulties and a union decision to not allow members to change votes, even as contract terms were changing last week. With a new vote, the concessions were approved Wednesday by about 1,000 votes, and AMR averted what the company said would have been a bankruptcy filing Thursday morning.
In Mr. Little''s letter, which he said he was sending to management at AMR, he wrote, The concession our members barely ratified the other day were based on the premise of shared sacrifice and calls into question the basis of each of our contracts. We have signed no new agreement, and in light of the disclosure in AA''s SEC filing, we must reconsider whether we will sign off, even if the consequence is bankruptcy.
In a statement Thursday, John Ward, president of the Association of Professional Flight Attendants, called the executive fund a slap in the face to every working person who wears an AA uniform. He called for the money-grab to be rescinded immediately.

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