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Fri, Apr 04, 2003

For Some, American Cutbacks Will Hurt A Lot Less

American Defends Smaller Cutbacks For Management

If it can be said anyone is going to make out better than the average bear in the severe cutbacks looming for American Airlines, it appears to be management. Now, company executives are defending job and salary cuts for executives that are much less severe than those faced by pilots, flight attendants and mechanics.

Comparing The Numbers
  • Management: AA plans to cut about $100 million from management costs by eliminating 5 percent of the 12,000 jobs and trimming salaries by between four and 15 percent.
  • Pilots: Pilot compensation would drop 23 percent on May 1.
  • Flight Attendants: 15.6 percent wage cuts.
  • Mechanics: Wages of mechanics would be slashed 16 percent
  • Baggage Handlers: 15.6 percent wage reductions.
Management: We've Already Taken Big Hits

A company spokesman defended the more-modest cuts for management employees, noting that they have gone without raises and bonuses for the past two years.

Pay for American's management employees lagged industry averages while the company's flight attendants and ground workers have been at the top of industry pay scales and pilots have been near the top, said spokesman Bruce Hicks.

"We have always kept at the industry average, very lean and very efficient ... but this puts management even further below average," Hicks said Thursday.

The Fort Worth-based airline has already reduced management by 22 percent since the Sept. 2001 terrorist attacks, he said.

The first $30,000 of their salaries will be reduced by 4 percent, the next $30,000 by 7 percent, the next $30,000 by 10 percent and for amounts over $90,000, 13.5 percent. Chairman Donald J. Carty said this week he would take a 33 percent cut from his $585,813 salary, and officers' pay would be cut 17 percent.

American and its three major unions reached tentative agreements Monday on deals to cut more than $1.6 billion in annual labor costs, the bulk of an estimated $1.8 billion reduction in overall labor spending. Airline officials said they would have to file for bankruptcy without the deals.

Union officials defended the deals, warning of even deeper pay cuts and more layoffs if American went into bankruptcy.

Lay-Offs Too

Under the tentative agreements, about 2,500 pilots, 2,400 flight attendants and 1,100 to 1,400 ground workers likely will lose their jobs. Remaining employees will work longer hours and get less vacation.

The deals call for $660 million in cuts from pilots, $620 million from ground workers and $340 from flight attendants.

Union employees have until mid-April to approve the plans, which also would give workers stock options worth a 24.3 percent equity stake in the airline, plus profit sharing once the company reaches profit targets.

A group called Pilots Defending the Profession has started an organized campaign against the deal, saying it might not keep American out of bankruptcy.

The group said in a Web site posting Thursday that the pilots union gave up too much without getting partial ownership of American or seats on its board of directors.

As devastating as the cuts are, the airline has said it would lay off a total of 3,900 flight attendants - 1,500 more than what is proposed in the concessions plan - if it files for bankruptcy, said Association of Professional Flight Attendants spokesman George Price.

In that case, the company has said it would use Latin American flight attendants who are paid much less than their U.S. counterparts, Price said.

"That means we could lose American jobs to foreign nationals," he said.

FMI: www.aa.com, www.apapdp.org

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