AA Management Bonuses - Despite More Losses

[AMFAMAN]

Whether you are pro-company or pro-union, execs taking a huge bonus while the workers are under concessions is just wrong. And sure it may be in the contract but where are the ethics in this? Don't those count for something? I understand the "corproate greed", it's everywhere, but justifying it by saying that these bonuses aren't near what some of the others get is just plain stupid. Just because the greed is more or less, does that make it right??

If the company was making huge amounts of money I would not have a problem with the bonuses. I don't think anyone here would but the company IS NOT making big amounts of money so there should be no big amounts of bonuses. Damn, it's not rocket science.

Just my 2 cents. It should be interesting to see what happens. My guess, bonuses either decreased and/or the big ones not accepted. A guy can hope can't he??

Bill, I can almost agree with your whole post, simply amazing.

The one correction or rather point I disagree with is: "If the company was making huge amounts of money I would not have a problem with the bonuses."

I would agree if everyone was back to their pre-concessionary contracts. Basing a bonus plan on stock performance when the workforce is still down almost $2 billion in salaries and benefits and the stock is bouncing off an all-time low is simply wrong.
You have to ask yourself, how much of the stock price is reflective of the concessions and how much is because of great management decisions(excluding concessions)? I would put it at about 90% concessions and 10% management and PR BS.

 

[Bill]

Bill, I can almost agree with your whole post, simply amazing.

The one correction or rather point I disagree with is: "If the company was making huge amounts of money I would not have a problem with the bonuses."

I would agree if everyone was back to their pre-concessionary contracts. Basing a bonus plan on stock performance when the workforce is still down almost $2 billion in salaries and benefits and the stock is bouncing off an all-time low is simply wrong.
You have to ask yourself, how much of the stock price is reflective of the concessions and how much is because of great management decisions(excluding concessions)? I would put it at about 90% concessions and 10% management and PR BS.

 

[eolesen]

I honestly don't believe concessions are why the stock price is up. If that were really the case, then you'd have seen the price skyrocket in 2004.

As much as some of you like to believe that AMR does nothing right, like it or not, management -has- made some good decisions since 2003 which have made the investment analyst community believe that AMR has a fairly sound future. Things like dehubbing STL, buy-on-board, increasing service fees, depeaking the hubs, eliminating fleet types, ending the LGB pissing contest with Jetblue, and eliminating More Room were all management initiated.

You can debate whether or not those were smart moves (or in the case of STL, LGB and MRTC, whether they should have existed in the first place), but the fact remains that Wall Street has reacted positively.

All that said, I am not a participant in the plan, and don't believe the performance unit payout should be made in April.

While I still believe the reasoning behind the plan's existance is valid, the board needs to re-consider in light of the fact that most of the stocks used to index AMR against were rendered worthless by bankruptcies.

 

[AMFAMAN]

FM,

With that said, we have been told to believe that without concessions, AA would have gone BK. So if you add back in the concession salaries and benefits to AA's costs, would AA be in BK? If yes, the main reason the stock is at $22 a share is because of the concessions. If no, then they need to return our money and take the leftovers as bonuses.

 

[eolesen]

Had AMR not gotten concessions, I do believe AA would have filed for bankruptcy, and achieved much bigger concessions.

If you look at a five year performance chart, AMR did go up from $2 right before the concessions were approved, to average at about $11 per share between July 2003 and July 2005. I attribute that jump entirely to the concessions.

In September, when it was clear that AMR was going to be one of last remaining legacy airlines to remain solvent, the price started to climb. That I attribute partly to management having continued to steer AMR towards profitability, and partly to the fact that AMR was a safe stock to invest in for those who wanted to invest in airlines.

View attachment 4068

So, I'd say that half of the stock's increase from pre-concessions until today was due to concessions, and half due to how AMR has weathered the storm. I don't think you can fairly assume that it's one or the other, nor do I agree that you should reward one side without the other. That's why we have controls in place for the incentive compensation plan and the profit sharing plan -- one doesn't pay out unless the other does.


In the meantime, here's this little gem of a headline just out:

SAN FRANCISCO (MarketWatch) -- UAL Corp., parent company of United Airlines, is considering paying Chief Executive Glenn Tilton $15 million in stock after the carrier emerges from bankruptcy, according to a media report Wednesday.

The proposal is part of UAL's latest offer to creditors and unions as the airline seeks to emerge from three years of bankruptcy, said Bloomberg News, citing a consultant's review of the stock proposal.

UAL's restructuring plan, submitted in September, faces a bankruptcy court confirmation hearing set for Jan. 18. See full story.

According to Bloomberg, under the plan, the company's top eight executives would receive, over a period of four years, restricted stock and options valued at $24 million, giving them a 3.3% stake. In all, a total of 11% percent of the company's new shares would be reserved for 400 top executives at United. Creditors objected to a previous plan to award 15% of the company to executives.

Tilton's take would amount to 1.1% of UAL's shares during the four years, according to the document cited by the news service.

Bloomberg quoted UAL spokeswoman Jean Medina as writing in an e-mail that "the dollar value of these grants is theoretical, and by no means guaranteed. It depends upon performance of United's stock. It's in everyone's interests for management to have this component of compensation tied to the future of United's stock price."

United's unions have objected to the new plan, calling it unfair.

"The members find it gross and disgusting that United executives are going to benefit from the workers' sacrifices,'' said Joe Tiberi, spokesman for the International Association of Machinists, according to Bloomberg. The union represents the airline's baggage handlers and customer service agents.

During the past year, UAL has been busy shedding costs. It won court approval to terminate the pension plans of thousands of its former employees, handing over responsibility for billions of dollars in retirement benefits to the federal Pension Benefit Guarantee Corporation.

The company's creditors approved its reorganization plan in late December. With bankruptcy court confirmation, the airline could emerge from bankruptcy as early as February.

 

[TIME FOR CHANGE]

I honestly don't believe concessions are why the stock price is up. If that were really the case, then you'd have seen the price skyrocket in 2004.

As much as some of you like to believe that AMR does nothing right, like it or not, management -has- made some good decisions since 2003 which have made the investment analyst community believe that AMR has a fairly sound future. Things like dehubbing STL, buy-on-board, increasing service fees, depeaking the hubs, eliminating fleet types, ending the LGB pissing contest with Jetblue, and eliminating More Room were all management initiated.

You can debate whether or not those were smart moves (or in the case of STL, LGB and MRTC, whether they should have existed in the first place), but the fact remains that Wall Street has reacted positively.

All that said, I am not a participant in the plan, and don't believe the performance unit payout should be made in April.

While I still believe the reasoning behind the plan's existance is valid, the board needs to re-consider in light of the fact that most of the stocks used to index AMR against were rendered worthless by bankruptcies.

Dude you are stoned

Depeaking STL I just pissed my pants
AA management should have never bought out TWA. Get a grip on yourself. Another management decision that suxed

Buy on board I would love to see the cash cow numbers on that idea

They got rid of the Fokker what other fleet types have dissappeared I am struggling to think of another :huh:

And how much money did it cost the company to start the MORE ROOM then eliminate it. :huh: Another management blunderful idea

I want what youre smoking

Wall street is reacting positively because the employees gave back enough money and benefits to make up for all the management blunders combined.

You are brainwashed keep smoking that pipe and sucking down that kool AAide

 

[AirLUVer]

They got rid of the Fokker what other fleet types have dissappeared I am struggling to think of another :huh:

AA/TWA has got rid of the F100, DC9, MD11, DC10, 717 over the last 5.5 years.

 

[High Speed Steel]

This has become quite the active topic both here and on the floor. But there has been many events to suggest the uptick to the current market value. In review of the past few months there have been some significant signals to Wall Street to the solvency of this company. One is the opening of terminal "D" at DFW, and the other is the 20yr. pension relief to be afforded the airlines. To the best of my memory I believe AA ranked the highest for the most funded DB plans of the legacy carriers. If I can recall The TWU pension plan at years end was funded in excess of 75% and AA had continued to make good on their pension obligations with a contribution to the plan before the 20 yr. deal was made. This signals to investors a company determined to survive. Before you start farting in the bathtub, and biting at the bubbles, "I'm not happy about the topic of this thread either!" Welcome to corporate AMERICA........ <_<

 

[Imagolfer]

You are brainwashed keep smoking that pipe and sucking down that kool AAide

Did you ever think you are brainwashed by your union leaders?

 

[Wretched Wrench]

AMR CEO may meet with unions on executive payouts

http://yahoo.reuters.com/financeQuoteCompa...n1110292_newsml

.

 

[TIME FOR CHANGE]

Did you ever think you are brainwashed by your union leaders?

I am brainwashed by the facts of coorporate greed and Gross mismanagement.

I actually dont know who is worse the twu or AA managment.
I think I they both make me sick :down:

AA/TWA has got rid of the F100, DC9, MD11, DC10, 717 over the last 5.5 years.

The DC9 MD11 DC10 and 717 were all gone before the great and mystifying turnaround plan.
I am still trying to figure out what the turnaround plan is.
Besides the concessions from the employees not much has turned around. And if so then how about some of our concessions back.
you wont see it because nothing has changed :down:

 

[AirwAr]

Before you start farting in the bathtub, and biting at the bubbles

ROFLMAO

 

[aafsc]

First, I don't think these bonuses or whatever one wants to call them are justified since, as someone previously posted, that almost all of our competitors went bankrupt which in turn made our stock look like a stellar performer. Compensation such as this should depend on 3 metrics: stock price, adequate profits on a net basis, and concessions restored with additional raises. In my opinion, middle management is where most of the fat is. To Arpey's credit, he did not participate in this deal and he also declined a raise in his basic salary a while back. That being said, he won't be applying for public assistance anytime soon. AA has been successful in strengthening it's hubs and large cities. AA has a very good route network and has capitalized on it. UA and Iberia have reduced in MIA and AA now has it all to itself in terms of a hub; same with DL in DFW. AA has SJU all to itself hubwise and gives UA and WN a run for their money in ORD and STL respectively. AA is doing well in LAX, JFK, LGA, and BOS. AA also has about 16 slots in LHR and about 6 in NRT.

 

[Hackman]

As the saying goes, for a man with a hammer everything is an anvil. On
this Board anything bad or wrong is the fault of the TWU. This bonus
program based on stock price was announced several years ago and
publicized in SEC filings which were then picked up by the press. It
was opposed by the TWU and the other unions back then, and Arpey told
everyone he was not going to negotiate management compensation with the
unions. All three unions have restated their opposition, but I thought
Little's statement was by far the strongest because he was the only one
who chose not to suck up to Arpey.

Corporate greed in this right wing era is not limited to AA. At UAL
management is treating itself to hundreds of millions of dollars in
stock options, in addition to the millions in perks and bonuses already
approved by the bankruptcy court. At Independence Air-remember them-
the CEO managed to find enough money to give himself a 3.5 million
dollar pay out as he was putting everyone on the street, with nary a
peep from AMFA. And at NWA... well what point is there in talking about
that train wreck.

The bonuses American intends to pay are wrong and I hope the TWU can do
something about it before they come due in April. What ever happens,
I'm sure they will get farther than AMFA or any of the other unions at
the bankrupt carriers. By the way, I just talked to a close friend of
mine who retired from UAL. He is paying 600 dollars a month for medical
and has had 1000 dollars a month taken out of his pension by the PBGC.

Well looky here, the Capt can write! Sure is refreshing not to have another 'Nuts BB lie to slog through. The twu and Jimmy Do-little will do nothing about the bonuses but whine, have a meeting, and produce another slogan t-shirt that says "We're not gonna take it anymore"! Remember; "He who hath the gold...makes the rules." Like management, the twu International didn't take any pay cuts in 03, in fact, the raises have continued every year for the unelected twu cronies. Life is good as a twu stooge.

Another question Capt, when is the afl-cio going to get off its worthless dead ass and start fighting? Never is right. Too busy trying to keep member unions from leaving, along with making sure big business is taken care off so those under the table payments keep coming. Silence is golden, or should I say green.

As far as your buddy at UAL. Make sure you tell him who sold his career and his pension out, the worthless iam. AMFA came in to a scorched earth iam contract at UAL thanks to Buffy and friends. Of course, the same iam also helped their management friends close all the maintenence bases down and outsource everything before they got the boot. Short memory you have.

BTW, since you love quotes, here is one for you from The Mechanic on the twu 20+ years of twu concessions....bringing the whole industry down. Nice Job.

"TM...

Do we really have to post these AA a-holes comments anymore. They have led the way for years with their company friendly contracts and are to blame for the concessions throughout the industry. I know there are a bunch of fighters over there and I appreciate their support, but I'm sick and tired of those "we're better off" posts, especially because of the position it put our negotiators in and at other airlines. A common theme at the table was, "AA does it for this much money."

 

[Bob Owens]

[/quote]

This has become quite the active topic both here and on the floor. But there has been many events to suggest the uptick to the current market value. In review of the past few months there have been some significant signals to Wall Street to the solvency of this company. One is the opening of terminal "D" at DFW, and the other is the 20yr. pension relief to be afforded the airlines. To the best of my memory I believe AA ranked the highest for the most funded DB plans of the legacy carriers. If I can recall The TWU pension plan at years end was funded in excess of 75% and AA had continued to make good on their pension obligations with a contribution to the plan before the 20 yr. deal was made. This signals to investors a company determined to survive. Before you start farting in the bathtub, and biting at the bubbles, "I'm not happy about the topic of this thread either!" Welcome to corporate AMERICA........ <_<

Here we go again, twu/aa suckups bragging that the plan is "only" 25% UNDERFUNDED.

The fact is that they still have not contributed enough to cover the obligations they have made, sure its "legal" for them to underfund the plan but its certainly not something a "union" should cheer about.

How many of you out there remember how in the 90s when the company was posting record profits and we started balking about our TWU negotiated concessions that one of the companys responses was that we should not be fooled by the profits because much of those profits were not from operations, but rather from excess earnings from the pension plan?

Thats right the company withdrew hundreds of millions of dollars out of the pension plan and used it to buy back stock, expand the fleet, build new terminals etc. The buy back of $2 billion worth of stock sent the stock price up, so pension money was effectively distributed to the stockholders. If those monies had been left in the plan there would be no shortage today.

Saving the pension was supposedly the reason why we lost 25% of our pay. Was it worth it for the majority of workers? Lets not forget that by lowering our pay we are also lowering our pension. But if we break it down into numbers we have to compare what we lost in order to save what we might not have really saved.

By the companys own calculations they claim that their contribution to pension comes out to $3000 a year for a mechanic, however the mechanic gave up around $20,000 a year to save that.

So $20000 a year was given up for something worth only $3000 a year, with no guarantee that the pension will survive.

Another thing we see the company/twu doing is throwing out the figures for how much the company has contributed to the pension, however they do not breakdown how these figures correspond to each workgroup. These contribution cover ALL employees, even the executives. My guess is that the overwhelming balance of the payment is going to cover the executives and pilots pensions.

So when the company claims that they contributed $600 million to the pension which makes the fund 75% funded mechanics can figure out how much was put in for them. Basically ignore the $600million, it means nothing. Instead go to jetnet and look it up in your pension. 75% of $3000 was put in, or $2250, they shorted you $750, and you gave up $20,000 in order for them to put in the $2250, which still leaves your reduced pension, reduced because your pension is based upon your reduced wage, underfunded.

Another way is to calculate it as a group is to multiply $3000 times 12000 Title I, which comes out to $36 million X .75 which Equals $27 million. So as a group Title I gave $240 million in concessions to preserve a $27 million pension contribution.

So they put in $600 million and only $27million was to cover Title I. Title I makes up what, around 10% of the workforce if not more? But only around 4% of $600 million was to cover 75% of the Title I pension. Most of the other workers are paid less than titleI. I guess that when you figure all the other TWU which make up at least 1/3rd of the company you will only cover around 15% of the contribution. Throw in the ticket agents, other non union workers and the Flight Attendants and you might be up to 30% of the money with well over 80% of the workforce, so the other 70% of the contribution is to cover the executives and the pilots pensions, and these people make up less than 20% of the workforce.




So once again we have to ask why would the Intnl have us give up $20,000 a year to save something worth only $3000, give up $240 million for just $27 million?

In part, the answer lies with the $3.1 million that the company gives to TWU officials.

You see to the Intnl the $240 million is "other peoples money" -YOURS- but the $3.1 million is "THEIR MONEY".

You see they gave up 17% of their AA paycheck in order to keep 83% of it plus they get to continue to double-dip on the pension-earning both TWU and AA pensions at the same time. If the TWU INtnl had refused to grant AA the most sweeping concessions ever they stood to lose their AA paycheck and would no longer be able to double-dip. They really dont care if we find out about this because we cant remove them anyhow, however Gary Yingst was VERY VERY concerned during his deposition that we would release his home address,which is understandable given that there are a lot of people carrying guns in Oklahoma, in fact the lawyers for the TWU asked the court for an injunction barring me from disclosing anything from the depositions.