American Air Union Steps Up Pay Battle Against CEO
02 April 2009 - 4:28PM
Dow Jones News
American Airlines faces a fresh controversy over executive pay
after one of its largest unions on Thursday revived a campaign
against Chairman and Chief Executive Gerard Arpey.
The Transport Workers Union of America is backing a series of
ads that feature an online game inviting users to guess Arpey's
annual compensation.
The move opens up a fresh front amid long-running employee
grievances over executive compensation at American, which steered
clear of bankruptcy protection in 2003 with the help of employee
concessions.
Union action has become an annual ritual since a new performance
pay scheme kicked in at American in 2006.
The harmonious labor relations that fostered cost-cutting deals
under American's "Working Together" initiative have long since
soured, with sporadic protests by flight and ground personnel over
the past three years.
"What makes it so frustrating at American is that we worked with
management, making concessions beginning in 2003, and finding new
ways to generate revenue," said TWU President James Little in an
interview.
American and the TWU last month asked federal mediators to help
revive contract talks after the two sides failed to agree on
negotiating terms.
Little said that the recent nomination of Linda Puchala to head
the National Mediation Board should shorten the timescale for
contract talks.
The national advertising campaign focused on Arpey represents a
change of tack: unions had previously focused on a swathe of
executives qualifying for cash and share payouts.
Efforts involving the TWU and unions representing pilots and
flight attendants successfully forced the airline to remove the
cash element of executive compensation.
American, a unit of AMR Corp. (AMR), has defended its
performance-based compensation regime, which it said would make
lower-than-expected payouts in mid-April because of the fall in its
share price.
Rank-and-file staff believe they have not been properly rewarded
for keeping the airline out of bankruptcy. Little estimated that
employee concessions had saved AMR $6 billion, and said union
members have not shared in those gains.
American's latest spat comes amid a raft of contract talks
across the U.S. industry, with many of the deals coming up for
renegotiation.
Little said recently-completed talks with Southwest Airlines Co.
(LUV) went smoothly "I think that Southwest believes that its
employees are its number one asset, and that pays off for the
airline."
United Airlines, a unit of UAL Corp. (UAUA) that has also seen
harsh criticism from uniosn over executive compensation, said it is
set to begin contract talks this month.
-By Ann Keeton; Dow Jones Newswires
312-750-4120;ann.keeton@dowjones.com