Labor Prods AA Execs To Forego Incentives

Aiming to subdue resentment among American Airlines' unions, the carrier on Friday said that senior management has volunteered to cancel retention plans, including bonuses of two times the base salary for six American officers. Additionally, AMR will cease further contributions to a trust that protects pensions for 45 American executives.

After the loss of several executives last year, American's board of directors created the retention agreements in March 2002. However, AA officials did not make the plans public until last week--as required by the Securities and Exchange Commission--while the unions were voting to ratify the carrier's concessions agreement. The agreement would save the airline an estimated $1.8 billion annually through job cuts and pay reductions.

"I have apologized to our union leaders for this and for the concern it has caused our employees," said American chairman and CEO Don Carty. "Those executives who have made the personal commitment to remain with American during this financial crisis, myself included, are not here solely for monetary reasons and we have all agreed to give up these retention payments in order to give our employees confidence in management's ongoing commitment to shared sacrifice."

Although the unions ratified the concession agreement, the contract, which would stave off bankruptcy for the world's largest carrier, has not yet been signed into effect. Deutsche Bank said that while the concession agreement would be a good start for the airline, AMR still faces the danger of bankruptcy.