Carrier makes union an offer

Sep. 18--American Airlines has offered an unusual deal to its mechanics and ground workers that would extend their contract with pay increases that are tied to company performance.

If union leaders agreed to the proposal, it would be a significant victory for American, whose relations with its three major unions have deteriorated over the past few years. All three contracts open for changes in May, and American has already been negotiating with pilots for a year, with little progress.

A contract extension with ground workers now would give the airline some breathing room to focus on pilots and flight attendants. It could also maintain good relations with the Transport Workers Union. It has worked closely with management in recent years to improve productivity at maintenance bases, including one at Alliance Airport in Fort Worth. It's been instrumental in an effort to make money by working for other airlines. The combined efforts have added hundreds of millions of dollars to American's bottom line.

The proposal, made late last week, stems from an August meeting between Gerard Arpey, American's chief executive, and Jim Little, the TWU's international president. At the meeting, Little told Arpey that union members are willing to continue collaborating with management, but only for some type of additional compensation, according to sources familiar with the negotiations.

Little followed up with a letter to Arpey outlining his concerns, and Arpey responded with a letter in which he said he is committed to maintaining their collaboration.

"As a result of a letter from Little to Arpey, the company approached the negotiating committee with a proposal to explore the possibility of seeking non-traditional compensation, and a possible contract extension," union officials told members in a message. Labor leaders said they have appointed a committee to examine the proposal during the next two weeks.

TWU officials declined to comment beyond the message. But in an interview with the Star-Telegram in June, Little said: "I think it's important for us to see some incentives for the direct savings we've put into the company. This is going to help with American's growth, so it's good for everyone."

Little said he continues to support Arpey, despite executive and management stock bonuses that have angered employees in recent years. "I think he still has the corporation's and the employees' best interests at heart," Little said.

Airline officials also declined to comment. They issued a statement attribu- ted to Mark Burdette, American's vice president of employee relations, in which he said the airline and the union "have agreed to a series of facilitated meetings over the next couple of weeks to discuss a limited number of issues."

Details of the proposed compensation package were unclear, although sources indicated that they could be tied to productivity improvements and revenues from outside maintenance contracts.

"We know we're putting money in their pockets," Little said in June.

At the time, he also said members wanted "full restitution" of wages and benefits lost in 2003, when the union approved steep pay cuts to keep the airline out of bankruptcy.

The deal also includes a possible two-year contract extension, sources said.

That would let the airline focus on the more contentious pilot and flight attendant talks before negotiating a new contract with ground workers.

Pilots said they were not interested in a contract extension.

"Our pilots agreed to deep concessions in 2003 to help keep American Airlines out of bankruptcy, and they watched management rake in huge bonuses in the last couple of years," said Gregg Overman, a spokesman for the Allied Pilots Association. "Now it's our pilots' turn to enjoy the fruits of the airline's recovery."

TWU officials said they are continuing to prepare for formal negotiations, which are scheduled to begin in November, despite the offer. Flight attendants will begin talks before May, although no meetings have been scheduled. Officials with the Association of Professional Flight Attendants couldn't be reached for comment.

Shares of AMR Corp., American's parent (ticker: AMR), closed at $23.64 in trading Monday, down 39 cents.

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Trebor Banstetter, 817-390-7064

tbanstetter@star-telegram.com

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