American Airlines' unions time protests to management bonuses
07:31 PM CDT on Wednesday, April 18, 2007

By DAVID KOENIG
The Associated Press

DALLAS -- Leaning on crutches, Kelli Hughes, a Boeing 737 captain for American Airlines, said she was so angry over bonuses for company executives that a broken heel wasn't going to stop her from marching in a union protest.

"They said this was going to be 'shared sacrifice, shared gain,' but it's not happening," Hughes said. "We're the only company that's not giving back to the employees."

Hughes and several hundred other American employees protested Wednesday against the company's payment of stock to nearly 900 managers. The unions estimate the payments, based on Wednesday's closing price of shares in parent AMR Corp., were worth $170 million.

Wednesday's rally outside AMR headquarters was the latest in a series of events organized by unions to pressure the company for better pay — contract negotiations with pilots started recently, and talks with ground workers and flight attendants are expected to begin by early next year.

On Tuesday, flight attendants carried picket signs at airports around the country — the union says 4,000 workers took part. And the Transport Workers Union, which represents mechanics and baggage handlers, is making AMR the rationale for Congress to pass legislation letting shareholders vote on executive compensation.

The bonuses are a reward for the 133 percent increase in AMR's stock price from 2004 through 2006. Chairman and Chief Executive Gerard Arpey will get about $7.5 million, according to union calculations. The company declined to provide figures, saying it would disclose details in a regulatory filing this week.

Arpey defended the payments, saying managers had received less compensation in years when AMR's stock did poorly.

Arpey said a rising stock price helps all employees by making it possible for the company to contribute to its pension plans, provide retiree health benefits and avoid layoffs.

For the first time in years, AMR is setting aside money for profit sharing — the company pays out 15 percent of American's pretax profit above $500 million. But employees point out that Continental Airlines Inc. paid employees $111 million in profit sharing in February.

Arpey also said that American's union workers are sharing in AMR's gains because they got 38 million stock options in 2003.

Those stock options — designed to help soften the blow of pay cuts ranging from 15 percent to 23 percent — are now worth $1 billion, if employees didn't sell them too soon, company officials say.

Ralph Hunter, president of the pilots' union, said many of his members had to sell their stock to meet living expenses. Management's bonus program, based on revolving three-year cycles, "is the gift that keeps on giving," he said.

American's three unions are gearing up for negotiations on new contracts to replace the concessionary deals signed in 2003, and they hope to parlay anger over management bonuses into a better deal for their members.

James C. Little, international president of the Transport Workers Union and before that a longtime TWU leader at American, said Arpey "probably earns every penny he gets. A lot of CEOs make more money than he does."

But Little said managers shouldn't get bonuses before rank-and-file workers do.

"I see this as an issue beyond American Airlines alone," he said. "It goes to executive compensation in general. The gap (between executives and workers) is getting wider and wider."

Some workers use stronger terms to describe their anger at management over the bonuses, which caused a ruckus last year but involve much bigger payouts this year.

"I can't believe how arrogant they are about this," said Dallas-based pilot Rusty Brown. "They think it's going to blow over, but it's not."