Apr. 7--American Airlines Inc., citing the recession and its own problems, told its nonunion employees Monday that the air carrier is freezing hiring and general pay increases for 2009.
Jeff Brundage, American's senior vice president of human resources, told employees in a letter that the recession "has left organizations across the country facing unprecedented decisions about business, workforce, spending and overall operations."
"American is no different, as we are experiencing a decline in revenue, a decrease in bookings, lower demand for cargo services and increasing costs for such items as pension expense and medical insurance," he said.
In addition, "we are also faced with the fact that companies of all types, including our own, are having a tough time borrowing money right now, given the turmoil in the financial markets," Brundage wrote.
The company has been granting general 1.5 percent pay increases to union and nonunion employees since 2004, with the unions getting the increases in contracts they signed in 2003 as American was trying to stay out of bankruptcy.
However, the last contractual pay increase came on May 1, 2008, and Brundage's announcement Monday confirmed that there'll be no general increase this May 1 for about 19,000 nonunion employees, including agents, reservation representatives, planners, management and support staff employees.
Employees may still get pay raises if they get promotions or move into jobs that have a higher pay rate. Exceptions to the hiring freeze "for critical business needs" will require approval by a senior vice president, American told employees.
American is in contract talks with its three major unions, the Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union, all of which are seeking pay raises that would recover some or all of what the employees lost in the 2003 concessions.
Parent AMR Corp. will report first-quarter financial results April 15. A consensus of analysts is that AMR will lose $1.52 a share in the first quarter, or just under $425 million, excluding special items and one-time charges. For the full year, analysts expect a 17-cent loss, or about $47 million.
AMR shares rose 28 cents to close at $4.03 Monday.
Leaders of two unions at American Airlines have objected to stock-based bonuses that executives of the money-losing carrier are due to receive in April.
Chairman and Chief Executive Gerard Arpey and every other U.S. employee of American Airlines will get a salary increase.
Labor and management united to save the airline then; but those moves have led to a wider gap between them
The three unions representing American's employees want to make up for double-digit wage and benefit cuts back in 2003, when the company was on the brink of bankruptcy.