American Airlines Doles Out Bonuses Despite $375 Million Loss: Unions
American Airlines is bleeding money, and its unions say they are subsisting on peanuts in coach while corporate executives sip champagne in first class.
On Wednesday, the AMR Corporation, American's parent company, announced it lost $375 million in the first quarter of 2009.
Meanwhile, American Airlines executives will receive $6.5 million in stock-based bonuses this year, with bonuses doled out over the past four years totaling $300 million, according to the Allied Pilots Association. The union based the information on AMR's filings on Wednesday with the Securities and Exchange Commission.
"A bonus is supposed to be paid for a job well done," says union spokesman Captain Sam Mayer in an interview with the Huffington Post. "You've got a company bleeding money, consistently trailing just about every other carrier -- where's the performance?"
AMR is mired in negotiations with all three of its unions, and while the $6.5 million is not huge -- smaller than previous bonuses and doled out to over 900 people -- the unions are seizing on it to cast company executives as feeding at the trough while workers' wages languish.
In a statement to the Huffington Post, American Airlines spokeswoman Missy Latham says the company hasn't paid a cash bonus since 2001, and that it's payouts are small.
In addition to salary and short-term incentive pay, we compensate our leadership with long-term incentives, such as options, deferred shares and performance shares, which take three to five years to vest and their value to the individual is solely based on the company's performance. Our executive pay is designed to offer median pay when compared to positions in and outside the airline industry.
The value of any shares granted under the Performance Share Plan won't be known until they vest, but it's expected this year's plan will pay out significantly below the value targeted by the AMR Board in 2006. The declined value of these shares demonstrates the downside of at-risk compensation and serves as an illustration of our compensation philosophy that tightly links pay to company performance and shareholder interest.
Several hundred members of the Transport Workers Union -- mechanics, bag handlers, folks who clean planes -- protested Tuesday outside the company's corporate headquarters in Fort Worth, Texas. They brought giant novelty bonus checks made out to company executives, then canceled the checks by tearing them up, the Star-Telegram reported. The union also went viral, creating an online game in which players match checks to corporate executives. A cartoon of Gerard Arpey walks off with the biggest moneybags at the end.
While the government hasn't given any funds to American Airlines, the unions are working to give the company the AIG treatment.
In 2003, the groundworkers, flight attendants, and pilots unions saved the company from bankruptcy by agreeing to $1.62 billion in annual concessions. The bonuses are "infuriating to anybody out there who a took the cuts and is struggling on a day to day basis," says Bobby Gless, assistant director of the air transport division of TWU.
"American did receive a bailout. It received a bailout from its workers. They're taking a bonus on the backs of the workers instead of taxpayers."
A union spokesman says that a worker who made $12 an hour a decade ago is now down to $8 or $9. For example: union member Gloria Rodriquez, 64, who has cleaned plane cabins for American for the past 17 years, says she currently makes $9 an hour. She worries that her wages aren't keeping pace with rising cost of living in Los Angeles, where she says she rents a single room for $450 a month from a family that put an ad in the newspaper.
"The amount of money I have now is not enough to live," Rodriquez says. "I told the company maybe I'm going to be homeless."
Rodriquez says she's got family in L.A. but doesn't want to burden them.
"I am a person who likes to live with my effort with my own hands," she says. "I don't like to be dependent with anybody. I can't stand that. I am a working person. I don't want to live with my family. They have their own problems."
Bobby Gless says TWU doesn't want much. While the pilots union wants 50 percent pay increases, the TWU is asking for increases 6%, 4% and 3% over the next three years, the Wall Street Journal reported.
"We're asking for moderate increases to help our members keep up with cost of living," he says.
AMR's stock climbed 18 percent Wednesday after the company's announcement of its first-quarter losses was better than industry analysts had expected. The company also boosted its profile when it announced new planes on Monday, and a memo leaked Wednesday indicated that the company wouldn't go forward with furloughs because of recent flight-booking activity (Arpey said the memo "was not intended to be Wall Street guidance").
"It always seems there's something right before the day the stock matters to their pockets," Gless says. "I'd love to see what the percentage comes out to with their salary compared to the bonuses."