FAAA

Los Angeles, CA (April 10)- The Association of Professional Flight Attendants
(APFA), the union representing approximately 18,000 American Airlines flight
attendants, is planning to hold Informational Picketing on April 17, 2007 at
LAX, American Airlines Terminal 4, Upper Level, from 10:00 AM until 2:00 PM to
protest massive bonuses to be received by 874 senior managers this month.

In 2003, American's unions gave up $1.6 billion in pay and benefits, as well as
other concessions, in order to avert a bankruptcy filing by the carrier.

The April 17th picketing event is a coordinated effort amongst all American
Airlines flight attendant bases in the United States, aimed to express the
flight attendant's group outrage at senior management's decision to reward
itself over $200 million in bonuses this year.

"These protests are to remind AMR executives that we all shared in the pain and
will not stand silently while only management's elite reward themselves with the
fruits of our labor," said APFA President Tommie Hutto-Blake.

John C. Nikides, Los Angeles Chairperson for the APFA, and member of the union's
Board of Directors, adds, "There is neither shared sacrifice, nor shared gain,
at American Airlines. In 2003, we were told by management that, as a result of
9/11, increasing fuel costs, and the proliferation of low-cost carriers, the
airline industry had changed forever; that wage and compensation standards in
this industry would change for everybody, whether labor or management, and that
the airline could never again afford to offer the wage and benefit levels
enjoyed previously. Obviously, the world never changed for some, the privileged
few, who continue to enrich themselves to our disadvantage."

jragosta

Does that mean that they're not going to accept the $1 B in stock that AA set aside when they renegotiated the contracts?

JGR01

Why just LAX?

Why not an airport where there will be a lot more passengers?

Why not inside security (hey FAs do not have to have a valid boarding pass to get thru TSA only their badge)??

Why not create badges 'No Bonus' to wear on their uniforms where EVERY passenger will see them?

Why not create stickers for their luggage (like pilots) saying 'No Bonus' so we all see them announcing it at the airports?

One airport . pretty ineffective if you ask me.

ESpen36

They did the above:
http://www.apfa.org/content/category/214/326/517/

sluggoaafa

From: Leslie Mayo ]
Sent: Tuesday, April 10, 2007 6:53 PM
To: apfa-list
Subject: It's Time! More details of Friday the 13th Events in Dallas/Ft. Worth

Dear APFA Member:

The following press advisory will be sent to the media from APFA Headquarters on the morning of April 11, 2007. But first, we wanted our members to receive a few more details about what will be taking place beginning at 9:00 a.m. in Dallas/Ft. Worth on Friday the 13th of April:
__________________________________________________ ______________________________



April 11, 2007
FOR IMMEDIATE RELEASE
MEDIA ADVISORY


FLIGHT ATTENDANTS PROTEST AA EXECUTIVE BONUSES


EULESS, TX (April 11, 2007) – American Airlines flight attendants, represented by the Association of Professional Flight Attendants (APFA), will be staging two events to protest the exorbitant bonus payouts to only the ‘elite’ AA senior executives in April. Since 2003, flight attendants have sacrificed 1.6 billion and, along with all AA employees, stepped up to the plate to keep their company from going bankrupt. Even though American management has touted rhetoric such as ‘Pull Together – Win Together,’ only the top 874 AA senior executives will reap rewards of employee sacrifices. The flight attendants believe that ‘Enough is Enough’ and plan two major protests: the first in Dallas where the union and AMR headquarters is located, and the second at airports nationwide.



FIRST EVENT IN DALLAS AREA:

• WHEN: Friday, April 13, 9:00 a.m.
• WHAT: Protest and Rally
• WHERE: Rally begins at 9:00 a.m. at APFA Headquarters - 1004 W. Euless Blvd, Euless, Texas 76040

The procession travels to AMR HDQ at 9:30 a.m. where a rally will take place with speakers and other special events.


SECOND EVENT NATIONWIDE:

• WHEN: Tuesday, April 17 from 10:00 a.m. – 2:00 p.m. local time
• WHAT: Nationwide Protest Picketing
• WHERE: American Airlines Flight Attendant Base Airports systemwide with several additional airports announced shortly

also from the APFA hotline on Apr 7 to Flight Attendants:
City of Chicago is not allowing too big of an Informational Picketing due to City ordinance: Daily Herald: American Airlines Managers Under Fire

edwin_p_morales

Let's see if we can start *another* round of union bashing...

PUCCI GALORE

I take it that the Flight Attendants who will be protesting will be doing so in their own time and when they are off duty. I am afraid that I for one would not be displeased to see their colleagues leave their aircraft and join them for 30 minutes or so. That would make the point loud and clear.

I am just taking everything here about these bonuses as being true. If it is AA could very well find a wave of unrest go through the airline as I suspect that other groups of workers will be less than amused either. The run up to the summer season is not the best time to have this happen.

jragosta

I, for one, would be furious if my flight were delayed because some whining flight attendant chose to protest rather than doing her job. If they don't like their job or salary, they can work elsewhere. No one's forcing them to stay at AA.

You're hearing one side of the bonus story. The part the flight attendants left out is the billion dollars worth of stock they get to share. Plus the fact that AA avoided bankruptcy - therefore protecting their pension.

FWAAA

That would be an illegal work action under the Railway Labor Act (US federal law) and would subject participants and their unions to potential devastating fines. This ain't Europe, PUCCI.

A couple of things the union leaders don't trumpet very loudly are:

1. AA's employees were given options on 38 million shares in April, 2003 that are now worth (and exercisable, as well) a total of about $1.0 billion. Management is now cashing in to the tune of about $275 - $300 million for not cancelling the stock in bankruptcy (which is what the leaders of UAL, US (twice in three years), NW and DL have done recently).

2. The bankrupt airlines mentioned above (UAL, US, DL and NW) all provided huge piles of new stock worth hundreds of millions of dollars to their execs who managed the firms thru their bankruptcies. AA's management payouts so far (probably a little less than $300 million for 2006-07) are reasonable by comparison. As for Delta, only its elderly CEO, Grinstein, has announced that he will not share in approx. $250 million of stock given to management when DL exits Ch 11 in a few weeks.

3. AA's execs didn't just decide to reward themselves with this stock; the contracts under which the bonuses are paid out were written several years ago and were available to the various unions for their analysis. Unfortunately, the formula for the variable compensation in these contracts placed far too much weight on AMR's stock price performance relative to its peers (nearly all of which canceled their stock in bankruptcy). Nobody thought AMR stock would rise from $1.25/sh in March, 2003 to $41.00 in January, 2007. But it did, and the execs are now taking their cut. AMR stock has outperformed just about every other USA legacy airline stock since March, 2003. Of course it did, since most of the peer group canceled their stock in bankruptcy (prior stockholders got ZERO).

All in all, there's really nothing new here besides paycheck envy. Terrible greedy management has always made more money than working rank and file, and this is more of the same.

Hayden

This looks like a healthy action by the FAs. As we all know, the FAs, pilots, and presumably other AA employees are concerned/unhappy with the bonuses being taken by AAs management employees. At this point, it seems unlikely that management will reverse course, for example by distributing the bonuses broadly among all employees. To my mind, it's healthy to communicate the concern to pax and others--in a way that seems likely to be fairly non-disruptive--and (along the way) blow off some steam. Seems likely to result in happier FAs in the short term, and perhaps a better negotiating position for them when the contract negotiations open in the coming months, which could result in happier FAs in the long-term.

-Hayden

kappa

These were not a cash bonus, it was stock. And how much more "broadly" could it be distributed, as pointed out by FWAAA, than to all employees - to the tune of $1 billion in exerciseable value.

Management got stock as did other employees. But the unions wanted only cash.

venk

Lots of subtlety here that people will spin from both sides.

1. Management is getting stock grants not options. This is the same as getting cash as long as the stocks are liquid on the market. Presumably they are restricted stock so the execs don't dump them all in the market right away. If not, there will be even more howls (from stockholders). It is not clear where these stocks are coming from (unissued, stock buy back, etc) which will make the real difference to how much this is costing AA not the current value of these stock grants.

2. The employees didn't get stock grants of $1B. They got options worth about $190M at the strike price and the stock market valuations increased their value of their stock options. They got these grants in lieu of the pay cuts and were asked to take the entire risk of these options being worth something. The distribution of this valuation per person is not even close to making up the salary cuts they took. On the other hand, the management is getting 175% or so of the amount they would have stood to lose (in variable pay) if the company hadn't done well at a per capita average for the 1000 people getting these bonuses at about $175k although this is very skewed towards the top. This per capita average bonus is more than the annual pay of most AA employees' not getting any bonus.

3. It is a little unfair to bring up the justification for management bonuses that about 25% of their management pay is tied to performance. They get to play this lottery every year. The employees got their pay slashed for good and a one-time grant of stock options. They will need to negotiate every year to make up for their pay cuts and they are starting this year.

PS: If I have gotten any math or numbers substantially wrong above, it is purely accidental. Not intentional. Welcome corrections.

FWAAA

Of the 38 million options given to employees, only 2.9 million of those were given to management and their support staff. The remaining 35.1 million were shared between the employees of the three major unions and the nonunion ticket and gate agents. Pilots received 12.3 million, flight attendants received 6.8 million, mechanics and ground crew received 13.1 million and the nonunion agents received 2.7 million. At the present stock price, the non-management employees have received $930 million in stock profits.

Good points about spin. Everyone is guilty, including me. Just like in your post, my mistakes, omissions and spin are unintentional.

Good points. I've equated stock grants with cash for this simplistic reason: AMR has sold tens of millions of shares to the public since the concessions in 2003, raising well over $1.5 billion in the process. Over $900 million in the past 9 months alone. Stock given to execs is stock the company doesn't get to sell to put cash in the corporate coffers. To me, money is money is money, regardless of the mechanisms used to transfer it from the shareholders to the workers (in this case, management).

To clarify, the employees got options worth ZERO on the date of grant, with a strike price of $5 (the value of the stock on the date the options were granted). The employees were given these options at the last minute in April, 2003, once Don Carty's securities fraud was discovered (his fraud was the delay in filing the 10-K for spurious reasons in the hopes the employees wouldn't discover the SERP funding and retention bonuses). The board hoped that the employees would approve the concessions despite the deception given that these options represented more than 19% of the total stock of AMR.

Those options now represent profit of $1.0 billion (Current stock price less the $5 strike price = $1.0 billion).

Although the employees bore the entire risk that these options would pay off, that's not much different from these PUP payouts to the top execs; the AMR stock performance is the primary driver of the payout formula. If AMR stock had not risen from $1.25 to over $32 today (and $41 in January), the execs PUP payouts would be much, much smaller. The employees' options went from $0 to $1.0 billion. The execs are now grabbing their large share of the largess.

Although it's possible that AMR stock will continue to outperform the peer group, as I pointed out above, that possibility appears extremely remote since the peer group is exiting Ch 11 and their stocks have performed quite well since they were issued.

Compared to the looting by the UAL execs upon Ch 11 exit, the AMR PUP payouts are really quite reasonable. DL execs (except for Grinstein) are gonna take about $250 million worth of new DL stock. Same for US and NW execs.

If AA's employees had not received $1.0 billion in stock profits since their painful concessions, then they would have a very valid complaint about management being unfairly rewarded. The unions make it sound like only management has profited from AMR's recovery.

But as pointed out above, the nonmanagement employees have received over $900 million (based on this morning's stock price) of value from their stock options. Accordingly, this boils down to nothing more than paycheck envy. Greedy management took about $95 million in PUP bonus payments last year and an estimated $175 - $200 million this year. Management always gets a disproportionate share of the compensation, measured on a per capita basis. What else is new?

Of course we can debate whether management did anything to earn that huge payout - but it's disingenuous for the unions to claim that management alone has been rewarded as a result of AMR's financial recovery.

CO's recovery has been impressive as well; CO employees recently shared $111 million in profit sharing. AA's non-management employees have shared more than eight times that amount of value thru their stock options.

venk

There are a few problems with unintentional "spin".

1. Focusing on the total number without the per-capita share is a little bit deceptive. How many people shared that approx $1B? But if one wants to be precise. You are absolutely correct that the employees did get some share of the rewards in a literal sense. So it does boil down to relative pain and gain.

2. As you have noted, the bonuses come out of AA's bottom line (they have to account for it at full value at grant) while the rewards for the employees by stock option valuation comes from the investors who get diluted without a $1B dollar impact on AA's bottom line. To see the difference, imagine if the management had been given $175M in stock option grants as bonuses while the employees were given $1B in stock grants. AA would be bankrupt. Management would not want to take that risk at all for their own compensation.

3. Let us look at the pain vs. gain. Management put about 25% of their total pay at risk every year. And they have made back a small multiple of that back in bonuses over last two years. They get to play with that rule again year after year. Employees get their pay cut for the future (anywhere from 10% to 50% at the extremes) which helps the stock price and they get a fraction of what they gave up back if they sell their exercised options. But then they get stuck with the reduced pay even if the company does well going forward. So can you blame them for being incensed about this?
See above on why the above looks much less justified when you look at more details.
And then the management may decide to change their criterion.

I agree with the point about the payouts to all airline execs. It is extremely lopsided and stacked in management's favor even if you aren't a socialist. There is a point where it goes from a matter of being envy to just being obscene.

AA could have made that disingenuous by awarding $0.01 to each employee as bonus. Would it make their claim any less valid? At what point of individual gain does that become disingenuous? Throwing about $1B or $175M is misleading without mentioning how many on either side.
But a profit sharing is an annual event. The option grant was one-time (to hide even more executive disgrace of looting the company's value) where the stock market alone was responsible for the value. The two cannot be compared. There ought to be a fair profit sharing plan every year for all employees if one goes about making claims of sharing the pain.

FWAAA

Excellent points, as usual.

The bottom line for me is that AA's non-management employees suffered to keep AA out of bankruptcy and their unions failed to negotiate adequate upside in exchange for those sacrifices. IMO, to be fair, the rank and file should have been given more like 50% or 75% of AMR instead of 19%. Massive permanent concessions should have entitled the rank and file to most of the upside.

But the time to complain about that was in 2003, IMO. They should have voted "no" and taken their chances in Ch 11. They might not have fared any worse than they did.

The rank and file's $900+ million stock option gain over the last four years is much more than the rank and file got at any of the bankrupt legacy peers upon exit from Ch 11, and management's PUP totals of $275 - $300 million are at the low end of the bankrupt peer group. When scaled for relative size, AA's execs loot (thus far) is smaller than at UA, US, DL or NW. If AMR's execs persist in taking a couple hundred million a year in future years, however, even I might begin to complain.