As labor talks between American Airlines Inc. and its pilots continue, the issue of executive compensation is coming into play: Pilots are angry about 21 million dollars in stock that will be paid to the company's top 5 executives in April, and are using it as a bargaining chip to avoid further concessions.
The flight attendant's union is also upset with the bonuses, and according to Tommie Hutto-Blake, president of the flight attendants' union at American, "How do I keep my people pumped up" to offer good service when flight attendants are angry about their reduced pay and management's bonuses?"
While it's certainly tempting to accuse management of hypocrisy in paying big bonuses while attempting to slash the pay for rank and file workers, it looks overblown to me. American Airlines is the only major airline that has never filed for bankruptcy, and its workers are higher-paid than any other airline, with the exception of Southwest. The company's management, who have kept the company afloat while Delta Airlines and others have filed for bankruptcy deserve their pay packages, which are relatively tame compared to what executives in other industries earn.
I'm as much of a critic of high executive pay as anyone, but the unions appear to be using executive bonuses as a red herring here.











Reader Comments (Page 1 of 1)
3-27-2007 @ 8:49PM
Martin Olson said...
Red Herring Zac?
Try doing a little research. Being a Pilot for American for the last 15 years, I can tell you that the rank and file Pilots are irate over this, and are looking forward to going on strike. You make it sound like the management saved the company, in reality it's primarly the Pilots, who took by far the biggest pay cut of all employee groups, to save the company from Bankruptcy. I don't know where you got your pay information from (probably AMR) but you are way off on that one, I for one took a 23% pay cut, and I make less than I did ten years ago, some Pilots took as much as a 50% pay cut. AMR mangers are paying themselves +/- 200 million in bonuses in April, the total profit of AMR for the year was +/- 220 million. Does that make sense to you? If you think it's just overblown, wait until April 18th when they steal $200 million from us for doing nothing,
3-27-2007 @ 11:21PM
rswilkey said...
There are a couple of problems with this...
First, executives are getting somewhere around $200 million, not $21 million (the final amount is based upon market price for AMR at the end of this month). That amount roughly equals the entire profit for the year 2006, our first profitable year since 2000. Share holders deserve better utilization of their capital.
Second, don't compare our executive pay with executives in other industries - other industries may be more profitable and can afford to pay executives excessive bonuses, not the airlines. Otherwise, I'll compare my salary with a manager of a $150 million asset in another more profitable industry, and subsequently demand a massive bonus too.
Third, don't compare my pay with bankrupt carriers. Employees at those airlines were given a choice between bankrupt wages and finding employment elsewhere, since their company was on the verge of liquidation, and could not possible pay a fair wage. The employees have taken a chance, and stuck with their unfair wages in the hope they will one day recover their losses, and become a respectable company paying decent wages again (as did Continental Airlines). We at AA obviously have a viable business plan that is profitable, and do not need to cheat our creditors and employees behind the protective veil of bankruptcy.
Forth, did you think you could slide by that comparison of our pay to Southwest's without anyone noticing? Yes they are nearly the best paid in the industry, (second only to FedEx and UPS Pilots) and no they aren't bankrupt. As such they are an excellent choice for pay comparison. For years when they made less than AA, our pilots were told we needed to match their pay rates. Now that their pilots are making more than ours, where are the cries to match their pay??? The situation with Continental Airlines is very similar. When they were bankrupt, we felt the pressure to lower our wages to match, but now that they are profitable, their wages are conveniently left out of comparisons such as yours. Incidentally, they were profitable in 2006, their management also awarded themselves bonuses, but they acknowledged with great fanfare the role their employees played in that profit, and awarded every employee a significant bonus.
Lastly, a little history is pertinent here. Management chose a path of cooperation with the employees 4 years ago that included shared sacrifice in order to save the company. Pay cuts were handed out company wide, (disproportinatley to the pilots at between 23% and 50% depending upon position) and all were promised shared pain, and sometime in the future, shared gain. It is contradictory to the facts to imply the time of shared pain is over (ie: mgmt. bonuses), but the Pilots' time of pain has just begun (ie: further concessions). Rewards are being paid to managers accross the company - the crisis in the industry is apparently over. It's time for Pilots to correct our pay-scales to again reflect the level of skill, responsibility, and revenue generation attributable to the job. After all, management has.
3-28-2007 @ 7:12PM
laura said...
Although american employees are of the best paid, the non union groups have not received pay raises for 10 years plus they have taken pay cuts, lost 75 percent of holidays, etc.
3-28-2007 @ 7:12PM
laura said...
Pilots were the downfall of the airline because they constantly demanded more pay everytime the airline struggled to make a dime. Even though many of them are earning 300,000 a year and working only one week a month. PILOTS AND FLIGHT ATTENDANTS are of the worlds biggest cry babies. The pilots and mechanics have been on a huge RASH of cancelling flights to make there point. So if you were on a flight recently that was cancelled because of a mechanical reason....its bogus...its a union worker hissy fit .... as usual.
3-29-2007 @ 2:04AM
rswilkey said...
Dear Laura,
Downfall of the airline? AA is the largest airline in the world, is profitable (has been for the last year), and is the only legacy carrier in the country to succeed outside of bankruptcy. We did so on the sacrafice of the unions and their wages ($660 million from pilots alone, $1.2 billion in total). Hardly qualifies as a "downfall". Also, take note that pilots at AA don't make anywhere near $300k per year, and never have. Regarding mechanical delays and their validity, there is no slow down occurring at AA - complicated mechanical things sometimes need repair. Remember that next time you trust you life to all those "cry babies" while hurling through the air at 35,000 feet and 600 mph in a 300,000 pound aluminum tube. BTW, "there" is a place, "their" is possessive. Ignorant people shouldn't blog.
3-29-2007 @ 11:35PM
laura said...
When the pilots and flight attendants dont get 125 percent of what they demand, they will strike at the costs of everyone underneath them to satisfy their own excessive demands. They do this everytime the contract expires. American Air management did not split 200 million. Get your facts straight dear. You are approx 160 million over. There have been massive cancellations due to "mechanical". Where have you been. Its a joke. Only non union groups pull these stunts. The pilots always hold management hostage to their greediness. The only reason they took the paycut in 2001 was because it was do or die. The pilots have never been reasonable.
3-31-2007 @ 2:14PM
laura said...
The pilots have a threatening count down in their website that implies that they will have another costly sick out on the day that American Airlines management cash in on their bonus. www.alliedpilots.org/ In 1999 the pilots had a week long sick out when they didnt get what they wanted. It never bothers this group that they threaten the other more devoted employee non union groups in the company...nor does it bother them that passengers flying on vacation, business trips, or family emergencies are also held hostage to their infantile demands. They always wind up getting what they want because they can really foul up the company with their antics. The president of the U.S., Clinton had to step in the last time to stop the strike. Its hard to belive that this group of people can hold their heads up high and be proud of what they do.
4-04-2007 @ 9:28PM
Scott said...
Laura, Where do you get your information? Show me a pilot for AA making anywhere near 300k. Where did you come up with this threating countdown of a strike. You are so out of your league here. You make comments based not on facts but on what liitle information you have access to. APA is insistant that the Pilots do nbot call in sick. Please, don't show your ignorance and embarrass yourself anymore.
4-05-2007 @ 3:03AM
Billy said...
Laura - You must be part of this executive POS group that is trying to steal (excuse me.. .not $200 million, but $60 million) of profits. Excessive demands by the flight attendents!! .. FU - they have had huge pay cuts. At the expense of huge $60 million in executive bonuses.... Time to replace these executive assholes!!
4-08-2007 @ 3:06PM
LAATINOS said...
Hi, I'm a F/A based in Latin America working for AA.We are called foreign nationals.My basic pay is 500 usd a month and if you add expenses it will rise to $1000 us a month!!!. Me still offer exelent customer servie and we have the lowest "sickness"rates in all the sistem.We haven't had a pay rise for more than 3 years other than the inflation. Is time we have some of the profit too. We all help AA, we all should be honored for it.
4-12-2007 @ 1:11AM
SAV said...
Dear LAATINOS,
Having flown with " Foreign Nationals " for four years I can say it was an honor and a privilege to work with all of you. All of us at AA feel the pain of AMR's managements greed.
4-12-2007 @ 1:34AM
SAV said...
Dear LAATINOS,
Having flown South america for four years. I would like to say that it was a pleasure to fly with the " Foreign nationals ". Yes, you do contribute a tremedous amount to AA. All employees at AA feel the pain of AMR managements greed. i am honered to have flown with all of you.
4-23-2007 @ 6:16AM
aa woman said...
AA Man:
With all the financial problems AA has had, if these are "performance" shares the execs are receiving, then the executives should be paying AA to keep their jobs. Based on you, the executives are the ones that saved AA. With that kind of power and influence and "brains", then why did AA need any help to begin with? The pilots and other employees did without and sacraficed and don't get paid enough. Now the execs are adding insult to injury by getting these outragious "performance shares". The "performance shares" should be divided among all the employees, because without the pilots "performing" the planes would not leave the ground.
5-14-2007 @ 9:50PM
aa man said...
i believe the executives deserve their PERFORMEANCE SHARES ( there not bonuses, a bonus is something you get when your company post such certain amonunt of earnings) these executives have had paycuts as well up to 50 percent or if u wanna talk of arpey u can say hes had a 400 percent cut if it wasnt for the executives there would not be an american airlines...pilots and flight attendants u do not get the companies and families to buy a ticket or get a corporation to use american as their airline for over 40million in revenue a year you donot oversee nething... ur job is much less valuable to the company then an executive u can train someone to be a pilot but u can not train someone to be a good executive and this simply underlines the basic understanding of why these executives are earning these performeance shares...do i believe its a lot tho..not necessarily.. mayb to much to spend.. yeah. but can we help that ..no because its not like oh ok executive heeres 3 million no its like ok heres 80k shares at 3 bucks a piece u can take it and work to make it worth more or u can leave so its not like AA is saying oh heres 120 million of our earnings ...anyone could be getting big bucks mayb all those against are just upset that they didnt invest into the stock u could of.. every share u bought u could have made over 30 bucks .."oh but we didnt know that "some of u might say ..wel ur exactly right and neither did the exexcutives know this at the time but however they did contribute to it and they did see it in the future hints y theyre executives not pilots..since when did ppl who were in charge and ontop of things suppose to get less and share with those below them? do u get paid to go to public schools? no but why were all involved in the schools reputation and what theyre about ..but no we dont get paid and that is because we are simply not on their level my suggestion is if u want the big bucks go get it go be an executive for AA but wait you have to work more then 2 wks a month and u have no union to complain to to neogotiate things and everything good or bad falls on u hmmmmm sounds like a big boy job maybe pilots and flight attnds. shouldnt try it to big of babies...pilots did not save AA the executives did by carrying out the operations that forsee the future pilots you are jus daily workers like that of a garbage truck driver ..jus drive and mind ur business