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AA’s workers are miffed – 3.27.07

Associated Press
Ahead of the Bell: AMR Corp.
Associated Press 03.27.07, 8:12 AM ET

American airlines' workers are miffed about stock bonuses being awarded five top executives at the recovering carrier, according to a published report.

The New York Times reported Tuesday that the combined $21 million in stock payouts to be paid April 19, including shares valued yesterday at about $7.5 million for Gerard J. Arpey, chief executive of parent AMR Corp. (nyse: AMR – news – people ), angered pilots still smarting over pay concessions made during more troubled times.

The newspaper said the bonuses "are the subject of angry countdowns on two employee Web sites and can be precisely calculated based on the stock price at the moment on a third employee site."

The crux of the issue is that pilots and other workers are still flying at reduced wages, while executives are getting perks now that the carrier is healthier than it was after the airline slump following the 2001 terrorist attacks.

American is talking with the pilots' union now, and will begin contract negotiations with the Transport Workers Union, which represents mechanics and other ground workers, in November. The flight attendants' union is slated to begin talks early next year.

Because it did not file bankruptcy as several other airlines did in recent years, American has higher labor costs than most of its competitors. But its turnaround to profitability and improving finances also means it can't threaten bankruptcy while seeking concessions in contract negotiations, as it did in 2003, the Times said.

Fort Worth-based American, like other airlines, tends to pay executives less than big companies in other fields, however, the newspaper said, but workers tend to view their bosses' pay in terms of their own, not other companies' leadership.

The flight attendants' union president told the paper the issue could be a major problem. "I really do feel American and its unions could be headed toward a collision," Tommie Hutto-Blake said.

The executive stock bonuses are based on AMR's stock price roughly from the start of 2004 to the end of 2006, when it rose to $30, from about $13. The Times said the bonus program also pays out more if shares outperform those of other airlines. With Delta and Northwest Airlines (other-otc: NWACQ.PK – news – people ) in bankruptcy, and other airline stocks not rising as rapidly as AMR's, the company ranked first during that period.

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