American Airlines to Pay Severance
Under fire from its unions, AMR Corp.’s American Airlines has agreed to provide severance pay and health benefits to thousands of employees who will lose their jobs in the wake of the Sept. 11 terrorist attacks.
The airline will use a portion of the $900 million in direct federal aid it will begin receiving today to provide the layoff benefits, spokesman Al Becker said Thursday, adding that details of the special program will be worked out in the next few days. The company still cannot afford to honor union contracts fully, he said.
“We remain an airline that is struggling for our survival,” Becker said. “We need to continue to make a lot of difficult decisions.”
Fort Worth-based American, the nation’s largest air carrier, plans to cut 20,000 jobs because of decreased demand for air travel. Layoff notices will begin arriving today and will take effect immediately, Becker said.
On Saturday, a day after Congress passed a $15-billion airline bailout package, American told employees that it would invoke an emergency clause in union contracts and withhold normal severance pay and benefits. Typically, those benefits would include two to four weeks’ pay and 90 days of health coverage.
The decision caused an outcry among employee unions, some of which vowed to challenge the airline in court. Though they welcomed the latest announcement, several said they still want the contract to be honored.
The Assn. of Professional Flight Attendants, which represents 26,000 American employees, said the company is obligated to offer leaves of absence and job sharing before laying off employees. Such a program would “possibly eliminate or substantially reduce the need for furloughs and thus would be the humanitarian way to proceed,” said association President John Ward in a letter to members.
The Transportation Workers Union, which represents 32,000 American Airlines mechanics, dispatchers and other workers, have a no-furlough clause in contracts covering workers hired before 1995.
“The company agreed to it in good faith, and I think it should be honored unless they sit down with us and work out some sort of alternative,” TWU Vice President James Little said. “We’re willing to do certain things, but the company’s not sitting down with us.”
The U.S. airline industry was struggling before the attacks; now several are close to bankruptcy. Most major carriers have announced job cuts of about 20%, but their provisions for laid-off workers have ranged widely.
Several carriers, including Continental Airlines Inc. and Delta Air Lines Inc., said they will provide severance according to their unions’ contracts.
Northwest Airlines Corp. said this week that although it was disregarding the severance requirements of its labor contracts to save money, it will give limited relief packages to 5,500 union and 1,000 management workers who will lose their jobs.
Under the plan, unionized Northwest workers will receive up to six weeks’ pay depending on their years of service. Unionized workers also will get medical benefits and flight privileges through Dec. 31.
Workers were pleased by the company’s extension of health benefits, said Bobby De Pace, president of District 143 of the International Assn. of Machinists and Aerospace Workers.
But the relief pay is substantially less than the severance displaced workers are entitled to under their contracts, De Pace said. What’s more, he said, Northwest also is ignoring the required two weeks’ notice of layoffs.
“You get your layoff notice today and must exercise your seniority today,” De Pace said. “If you don’t make the cut, you don’t get two weeks’ pay. You are done, then and there. Bingo.”
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Staff writer Lisa Girion contributed to this report.
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