Unions at American Riled

Despite apologies from the head of American Airlines, two of the carrier’s major unions said its members would vote again on a pay-cut package designed to keep the company out of Bankruptcy Court.

Riled by management’s plan to offer lucurative executive bonuses and pension benefits as rank-and-file employees are being asked to slash their pay, the transport workers union said late Monday on its Web site that it would have a new vote.

That follows a decision Friday by the Assn. of Professional Flight Attendants that its members would reconsider their share of the wage and benefit cuts American has said it needs to avoid bankruptcy.

American’s chairman and chief executive, Donald J. Carty, repeated his apologies from last week about the perks, which were revealed after the airline’s three main unions agreed to $1.8 billion in annual concessions.

“I made a mistake, and of course it was a big one,” Carty said at a news conference Monday at the airline’s Fort Worth headquarters.

“Sorry or not, APFA intends to proceed with a revote of our membership on the company’s restructuring proposal,” said union president John Ward.

The labor unrest prompted investors to sell shares of AMR Corp., American Airlines’ parent, down 23% on the New York Stock Exchange. AMR shares fell $1.15 to close at $3.85. The shares jumped 52% last week, as American edged back from the brink of bankruptcy.

Some labor law experts said the unions could have valid cause for conducting new elections because the company did not disclose bonuses and payments to a pension trust for top executives while it negotiated with unions for pay cuts.

The bonuses were rescinded, but the company won’t try to recover the undisclosed amount it paid to fund the pensions.

Gregg Overman, spokesman for the Allied Pilots Assn., told Bloomberg News the pilots’ union board had a two-hour telephone conference call to discuss the bonuses and the company’s decision to shield part of the executives’ pensions from creditors if the airline files for bankruptcy protection. He declined to say whether his union is considering a new vote.

In public, American has acted as if the flight attendants’ election is settled. Company officials say they have a ratified contract that takes effect May 1 and have declined further comment.

Even if American’s actions were legal, some legal experts said, they put the company in a bad light just as it appeared to have avoided a bankruptcy filing. “The American executives have put their entire corporation at risk,” said Charles Craver, professor of labor law at George Washington University.

American spokesman Bruce Hicks said the company was not considering rescinding the pension payments, which were made to protect the benefits in case the airline filed for protection under Chapter 11 of the U.S. Bankrupcy Code, as are the pensions of other employees. AMR also won’t ask executives to return money from a trust.

AMR is scheduled to report first-quarter earnings Wednesday, and analysts predict it will post an $800-million loss.