FORT WORTH, Texas - AMR Chairman and CEO Don Carty is reaching out to American Airlines employees in Town Hall meetings this week as unionized workers continue voting on consensual agreements to restructure the company’s labor costs and make progress in averting bankruptcy.
“We’re running out of time to do this our way - together,” Carty said of the tentative agreements reached last week with the Transport Workers Union, Allied Pilots Association and the Association of Professional Flight Attendants.
“The cost savings must come quickly. And they must equal $1.8 billion. If they don’t, it will be too little too late,” Carty told a meeting of maintenance, engineering and airport workers in Kansas City on Wednesday.
In the speech outlining his vision for the future of American, Carty praised employees for their dedication and commitment to the airline evidenced by the historic accords reached on March 31 with all three unions.
Carty also praised the contributions of representatives, agents, planners, management employees and support staff, who were targeted for $180 million of the savings.
“Some were saying it couldn’t be done, that American would never reach consensual agreements of such magnitude with its unions and employees in just a few short weeks. They said bankruptcy was a foregone conclusion,” Carty said. “Well, they were wrong.”
Changes in employee pay, benefits and work rules account for $1.8 billion of the total $4 billion in annual savings the company is working to achieve. Every workgroup is affected, including senior executives. Carty cut his base pay by 33 percent and declined a bonus for the third consecutive year.
In addition, the company continues to seek “meaningful accommodations” from its vendors and lessors.
Carty acknowledged that the consensual agreements entail “substantial sacrifices” from employees.
But he cautioned that employees should not harbor “false hope” that they will be able to use the ratification process in an attempt to return to the bargaining table to renegotiate the agreements.
“The fact of the matter is that, unlike past ratifications, there can be no second bite of the apple,” Carty said in his Kansas City remarks.
“Voting ‘no’ is not a vote for a better contract, because a better contract is not an option. Voting ‘no’ is a vote for bankruptcy. Voting ‘no’ is a vote for additional job cuts,” Carty continued. “There is simply no more time, and no more money. This is the painful, simple truth.”
The alternative, Carty warned, is certain bankruptcy that would force an additional $500 million in employee cost cuts and allow outsiders to influence American’s ability to conduct business.
As part of the consensual restructuring, the company announced a new profit sharing program that earmarks 15 percent of the company’s pre-tax earnings above $500 million for employees. In addition, if the union agreements are ratified, AMR will issue stock options equal to an estimated 25 percent of the current outstanding shares in the company. The options will be divided among all employee workgroups.
“Shared sacrifice must lead to shared success, and this is what this plan is all about,” Carty said.