Tuesday, April 22, 2003

American Airlines' stock nosedives



The Associated Press

DALLAS - Investors pushed shares of American Airlines' parent down sharply Monday as friction between labor and management simmered at the carrier, which barely avoided bankruptcy last week.

The union representing American's flight attendants plans to hold a new election on whether to rescind cost concessions, following disclosures that the company approved special benefits to shield managers' benefits from any bankruptcy filing while seeking deep givebacks from unions. Insiders think a new vote would result in defeat for American.

The Fort Worth-based airline has said it would file for bankruptcy immediately unless all its major unions agree to concessions, which total about $10 billion over six years for all workers.

In trading Monday on the New York Stock Exchange, shares of parent company AMR Corp. fell $1.15, or 23 percent, to close at $3.85. The shares had jumped 52 percent last week, as American edged back from the brink of bankruptcy after securing nearly $1.8 billion in concessions from its three major unions.

But the Association of Professional Flight Attendants has threatened to throw out results of last week's balloting - in which 52.7 percent of its members approved $340 million in annual concessions, reversing a "no" vote a day earlier when pilots and ground workers unions approved their share of the concessions.

Officials of the world's largest air carrier said they already have a ratified contract with APFA that is scheduled to go into effect May 1.

Lawyers for American could try to get a federal judge to enforce last week's vote by flight attendants, said Neil Bernstein, labor law professor at Washington University in St. Louis. But he predicted a tough, and possibly drawn-out, fight.

"I would think that the flight attendants' lawyers could very easily extend the company's effort to enforce the contract for a good three years in court," Bernstein told he Dallas Morning News. . "I think the union here has a damn good argument that the vote was taken under false and misleading premises, and therefore they're entitled to some relief."

Leaders of the flight attendants' union announced Friday night they would vote again on their share of annual concessions because American belatedly disclosed bonuses for seven top executives and partial funding of extra pension benefits for 45 executives that would be protected from creditors should the company become insolvent.

The perks were approved last year but not disclosed until the end of regular voting by employees on the concessions, which include deep wage and benefit cuts. American rescinded the bonuses Friday, but left in place the funding of the executive pensions.

Leaders of unions representing pilots and ground workers say they are consulting lawyers before deciding on their response.

John Darrah, president of the pilots' union, said he was more bothered by the bonuses. Pilots get supplemental pensions that are funded by the company, similar to the plan for executives.




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