Continued outrage over a management bonus plan at American Airlines has spurred pilots to shelve a plan that would have allowed changes in work rules to increase productivity and save the company money.
The board of the Allied Pilots Association, which represents the airline's 13,000 pilots, voted last week to halt any work-rule changes unless the bonuses are canceled. Any boosts to productivity should be negotiated in formal contract talks, the board decided.
The decision is a significant blow to the airline's drive to improve labor relations. Ralph Hunter, the union's president, championed the productivity plan last year, and airline executives used it as an example of how labor and management were working together to reverse American's fortunes.
But that was before news of the bonus program was widely disseminated. That plan, which will award bonuses to 1,000 top managers and executives, was greeted with anger and derision by many employees.
"It still really boggles the mind," said Denny Breslin, a pilot and union spokesman. "You haven't made a profit, you just lost nearly three-quarters of a billion dollars, and you're giving yourselves bonuses?"
American officials said they will continue working with union-represented employees despite the setback.
"There are a myriad of working-together initiatives that are continuing," said Lisa Bailey, a spokeswoman. "We are still holding joint meetings. A lot of work is going on."
The pilots board had initially approved negotiating productivity improvements in November. At the time, Hunter and others argued that fuel costs and heavy competition in the airline industry demanded that pilots work more efficiently.
Work-rule changes would not have resulted in wage or benefit cuts. But they could increase the hours pilots work each day and slow career advancement for some.
American's three unions filed a grievance over the bonus issue, claiming that they violated provisions in their contract. Both sides are presenting arguments to an arbitrator this week.
If the bonuses remain intact, it's likely that any productivity gains for pilots will have to come from formal contract talks. The current contract expires in 2008, but negotiations could begin as early as May.
The bonuses are tied to the stock price of AMR Corp., American's parent. Under the plan, eligible managers will receive a payout based on the April 19 stock price.
The bonuses are hefty because American's stock price more than doubled in the past year.
Under Monday's closing price for AMR shares (ticker: AMR), the total value of the bonuses would be about $96 million.
The bonus plan was initially approved in 2003. The company disclosed some details of the plan in filings with the Securities and Exchange Commission. But most employees first learned of the program in January in a letter from Jeff Brundage, the airline's senior vice president of human resources.
And it wasn't until a conference call two weeks later that airline executives disclosed the bonuses' total value. The payouts range from about $2,000 for the lowest-level managers to about $1.9 million for Dan Garton, the airline's senior vice president of marketing.
Gerard Arpey, American's chief executive, is not enrolled in the bonus plan, although he could be eligible for a similar bonus next year if American's stock price continues to perform well.
The size of the awards has many pilots rankled, Breslin said, particularly given the hefty concessions workers approved in 2003.
"They're taking money out of the treasury while we're working under steep pay cuts or, for those who were furloughed, not working at all," he said.
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Continued outrage over a management bonus plan at American Airlines has spurred pilots to shelve a plan that would have allowed changes in work rules to increase productivity and save the company...
Pilots at American Airlines are seeking an across-the-board pay raise and more control over scheduling as the two sides begin early contract talks.
According to the unions, the payouts violate a provision in their 2003 contracts that puts restrictions on cash bonuses to managers or executives.
According to the unions, the management payouts violate a provision in their 2003 contracts that puts restrictions on any cash bonuses to managers or executives.