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4.13.11 – (LAA) – APFA Indictment of AMR Executives – Charges Six, Seven, and Eight

Special HotLine Update

APFA Indictment of AMR Executives – Charges Six, Seven, and Eight

Wednesday April 13, 2011

Today, the mass of charges presented in APFA’s indictment against AMR’s top five executives crosses the half way mark with the announcement of counts six, seven and eight. These three charges focus on the corporate losses they’ve produced and the personal profits they’ve pocketed. Charges nine through eleven will be announced tomorrow and the remaining three charges on Friday; then itís time for the Flight Attendants to deliberate and vote on each of the fourteen counts.

The ability for Flight Attendants to render a verdict will begin at noon (Central) on Friday, April 15 and end at noon (Central) on Tuesday, April 19. The complete list of charges leveled so far can be found at

This indictment is more than an expression of anger against the executives rewarding themselves with millions of dollars in bonuses while refusing to recognize the sacrifices Flight Attendants have made. This is not a one-trick-pony that will cease once AMR executives claim this year’s bounty of executive bonuses. After the April 20 verdict of the Flight Attendants is announced, APFA will ratchet up our campaign and take the indictment and verdict to AMR’s Board of Directors, its 100 top institutional investors, its principal vendors and Wall Street analysts. Then, assuming a guilty verdict, we take it up another level and demand the removal and replacement of the executives who have brought our airline to itís knees while lining their pockets with undeserved bonuses.


CHARGE SIX: For Transforming American Airlines from Being the Leader in the Industry to Being Its Laggard

Over the past six years, the executives have allowed American Airlines to lose $1.7 billion in operating losses while the leadership of American’s principal competitors generated an average operating profit of $1.3 billion. This gap in performance was most pronounced in 2010 when American was the only large U.S. carrier to lose money. That year, as American was suffering a $471 million net loss, its competitors were producing an average net income of $992 million.

CHARGE SEVEN: For Ensuring that This Year American Airlines Continues†To Be the Laggard rather than the Leader in the Industry

It is anticipated that the executives, in 2011, will not erase this wide margin between failure and success. Instead they will perpetuate it by once again declaring a substantial loss while other airlines, notably United, Delta, Southwest and USAirways, achieve significant gains. According to the consensus forecasts of Wall Street analysts (as of April 1, 2011,)† American’s four major competitors will enjoy an average profit of $869 million while it experiences a loss of $413 million.

CHARGE EIGHT: For Adopting an Executive Pay Formula that Generates†More than $25 Million in Personal Profits†for Every $1 Billion in†Corporate Losses

While the public demands that executive pay be tied to performance, the American Airlines executives brazenly reject this nexus. Instead, they endorse a relationship where abysmal performance warrants outrageous pay. With possibly a few notorious exceptions, no other executives of a major U.S. corporation have taken so much in compensation and delivered so little. The spread between American’s past six year net loss of $4.7 billion and the executives’ pay of approximately $100 million is undoubtedly one of the worst examples of pay being divorced from performance.

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