Author: Richard Finger
Posted On: April 29, 2013 9:29am
The mistrust that labor harbors for American Airlines management is a feud with a history filled with a powerful vitriol that only duplicitous behavior engenders. It all began back in 2003 when then CEO Don Carty, after multiple years of billions in losses, used the threat of bankruptcy to wring $1.8 billion in wage and other concessions from the three major constituent unions; the APA (American Pilots Association), the TWU (Transit Workers Union, an AFL-CIO affiliate), and the APFA (Association of Professional Flight Attendants). While a somber Mr. Carty preached to labor that in this dark hour the necessity for “shared sacrifice” he failed to mention the deca-millions in retention bonuses of 200 percent of salary that management had concurrently approved for top executives.
The second tranche of perfidy was the major commission of the omission of disclosing the creation of a new “secret” supplemental executive retirement plan (think pension) being squirreled away only for top executives. Apparently, Mr. Carty felt no comfort in being on equal footing with rank and file employees whose primary pensions may potentially be at risk in a bankruptcy scenario. So the CEO in October 2002 clandestinely funded an irrevocable trust for the top 45 executives which specifically delineated in the trust agreement that trust assets “shall not be subject to the claims of the creditors of the corporation in a bankruptcy”….
Employees were so indignant they threatened to abrogate the recently ratified pay cut labor agreements. The retention bonuses were hastily cancelled but the supplemental pension plan remains in place to this day. Further fallout was the swift “resignation” of the woodenheaded Mr. Carty who received no severance package. But thanks to that recently created executive retirement plan, magically Mr. Carty was gifted $8.2 million. The award was actually closer to $12 million as the $8.2 million was an after tax figure. (more…)