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Flight attendants scrap deal with American

Union calls new vote on news of executive bonus plan

AMR Chairman Don Carty apologized for not telling unions about the executive bonuses until after they voted.
AMR Chairman Don Carty apologized for not telling unions about the executive bonuses until after they voted.

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FORT WORTH, Texas (CNN) -- Outraged by news that troubled American Airlines had planned to give its executives bonuses, flight attendants rescinded their approval of wage cuts and plan to vote again, a union official said late Friday.

No date for the new vote was set. Wednesday, the flight attendants agreed to more than $10 billion in wage concessions over six years. The airline had said it would file for bankruptcy protection if the union did not approve the cuts.

Thursday, one day after approving the cuts, the union learned that in October, American had granted 45 of its officers special supplemental retirement benefits that would be out of the reach of creditors if the company were to file bankruptcy, said John Ward, president of the Association of Professional Flight Attendants [APFA].

"This taints the agreement that was ratified just two days ago in a wrenching process for our members," Ward said in a statement. "Every APFA member -- those who voted for the agreement and those who voted against it -- are outraged by this action, as am I."

In addition, the company divulged that it had approved cash retention bonuses to its top six executives in March 2002, Ward said.

American Airlines said Friday that its top management had canceled the bonus plans.

"I sent a letter to CEO Don Carty today condemning both the [Supplemental Executive Retirement Program] and the retention bonuses, and expressing my outrage that the company had indicated to the press that the union groups had been briefed on these programs," Ward said Friday.

He said he received a letter from Carty apologizing for failing to fully brief the flight attendants.

"So much for 'fair sharing' of the pain of the company's restructuring," Ward said in his letter to Carty. "So much ... for a new company 'openness.'"

The Allied Pilots Association voted Tuesday to take concessions to avoid bankruptcy and said it also was outraged by the revelation.

The pilots union accepted Carty's apology Friday.

American told its unions that wage cuts were necessary to prevent a bankruptcy filing.
American told its unions that wage cuts were necessary to prevent a bankruptcy filing.

"These retention agreements were created a year ago in March 2002 when, after the events of September 11, the industry was struggling and our board of directors had serious concerns about our ability to retain our senior management in light of the potential loss of several key executives," Carty said in a letter to employees.

He apologized "for any misunderstanding about the benefits made available to members of senior management.

"My mistake was failing to explicitly describe those retention benefits, and because of that, many employees felt they were kept in the dark," Carty said. "Please know that it was never my intention to mislead you. I offer you my sincere apology, as I have to our union leaders."

Steve Blankenship, a spokesman for the Allied Pilots Association, said the pilots "appreciate the gesture ... it's a move in the right direction."

But, he said, "Trust has been violated."

Because the retirement benefit represents one already earned, in some cases over a period of 17 years, American said the initial payment to the fund remains in place. It did not say how much money was in that payment. The retirement program was set up in 1985 but not funded until October.


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