Posted on Wed, Apr. 11, 2007

Exec bonuses rile American's ground workers

By Trebor Banstetter

Star-Telegram Staff Writer

American Airlines and its ground workers union launched an advertising blitz Tuesday touting the success of their efforts to bring in outside maintenance contracts, even as the union expressed its discontent for a slate of management bonuses.

Newspaper ads began appearing in several cities including Fort Worth, Dallas, Chicago and St. Louis, saying the airline and the union have a "groundbreaking business relationship" that has helped transform its costly maintenance bases into profit centers.

Meanwhile, union leaders blasted American's executives for rejecting a proposal to distribute more stock options to workers. Officials with the Transport Workers Union of America said airline executives are enriching themselves with lucrative stock-based bonuses while leaving employees behind.

"The employees are seeing the executives getting these megabonuses, and they're thinking, 'What about us?'" said Jim Little, international president of the union, which represents American's mechanics, baggage handlers and other ground workers. "We believe the employees should share in the gain."

Last month, union officials asked the Fort Worth-based airline's board of directors to consider issuing additional stock options to employees. Union leaders argued that recent stock offerings had diluted employee options that were issued in 2003.

They also said that union concessions approved four years ago helped fuel a jump in American's stock price and the company's return to profitability last year.

On Monday, the airline rejected the proposal, a move union leaders called hypocritical.

"This is an absurd result which cannot be defended or justified on any level and certainly violates any notion of shared gain," union officials told members in a letter sent after the rejection. "We certainly comprehend 'sharing in the gain,' and we're not getting any, period."

American has been roundly criticized by unions for its pilots and flight attendants over the bonuses, which are slated to pay out as much as $200 million to about 900 top managers and executives. Gerard Arpey, American's chief executive, is scheduled to receive a stock bonus worth about $7.6 million valued at Tuesday's prices.

Pilots and flight attendants are planning marches and rallies next week to protest the payouts.

But the broadside from TWU officials came as the airline is attempting to showcase its improved relationship with that union through the ad campaign. By working with its mechanics to lower costs and improve efficiencies, American has protected union jobs and generated $95 million from outside maintenance contracts last year. It hopes to gain up to $175 million this year.

"We're transforming ourselves into a world-class maintenance provider," airline spokesman Roger Frizzell said. "We're changing the way we do business, and it's a tremendous story in the making."

Frizzell said the ads, jointly developed by airline and union officials, will also run in airline trade publications this summer. He's hopeful they will help generate more business for the maintenance centers.

Little said union members remain proud of their efforts on the maintenance front despite the anger over executive bonuses.

"We've had some major accomplishments," he said.

Still, "these bonuses make me wonder if the company is going to stay fully committed," he said. "They're creating some adversarial issues that they don't need right now."

The union is scheduled to start contract talks in the fall. Its current agreement will become amendable in 2008.

Little said the bonuses "will most certainly" affect contract negotiations. "It's going to be hard for them to justify rewarding themselves if they don't want to share," he said.

Shares of AMR Corp., American's parent company, (ticker: AMR) closed at $32.24 in trading Tuesday, down 88 cents.

Trebor Banstetter, 817-390-7064 [email protected]