AA FA's Reject plan
Sounds like the FA's have pushed the BK car off the cliff..........
AF
Report: Flight Attendants Reject American Airlines Plan
Tuesday, April 15, 2003
In a blow to the world's largest carrier, flight attendants at American Airlines Tuesday voted against a key wage concession agreement, paving the way for an imminent bankruptcy filing, a local news radio station reported.
American, a division of AMR Corp. (AMR), has said it would file for bankruptcy if any of its three main unions did not ratify the concession deals. American is trying to cut labor costs by $1.8 billion a year, or more than 20 percent.
News radio station KRLD reported that the union had narrowly rejected the deal and was in talks with the airline to see if they could quickly poll their members again. Pilots and ground workers at the two other major unions at American had approved concession deals earlier in the day.
The Association of Professional Flight Attendants voted against a deal that would cut annual pay and benefits for flight attendants collectively by $340 million.
Leaders of the three main unions had said they reluctantly supported the cost-cutting deals as an alternative to bankruptcy, which could lead to even deeper cuts.
"There is no upside to bankruptcy," pilots' union president John Darrah said.
But angry employees packed union meetings to complain that terms of the concession deals were too harsh. They objected to the length of the deals -- nearly six years -- and small raises in later years.
American sweetened the deals last week by offering one-time bonuses of up to 4.5 percent in 2006 or later if the company's credit ratings improve sharply.
But workers began voting shortly after their unions reached tentativeagreements with American on March 31, and while pilots and ground workers were able to change their votes until Tuesday, flight attendants were not. Many flight attendants may have rejected the deal before American improved its offer.
American sought $660 million in annual concessions from its 12,000 pilots, $620 million from 34,000 ground workers and $340 million from 24,000 flight attendants. The agreements include layoffs for 2,500 pilots, about 2,000 flight attendants and up to 1,400 ground workers.
American chairman and chief executive Donald J. Carty had warned that if American went into bankruptcy, it would seek $500 million in additional labor concessions. Darrah said he feared bankruptcy would mean another 500 to 1,500 pilots would be laid off.
American's parent, Fort Worth-based AMR, has lost nearly $5.3 billion in the past two years and continues to lose about $5 million a day.
Meanwhile, a source said Monday that American has almost wrapped up $1.5 billion in debtor-in-possession financing, should it file for bankruptcy.
The potential DIP lenders are the lead bank, Citibank , along with J.P. Morgan Chase & Co Inc. , Merrill Lynch & Co Inc. and CIT Group Inc. , the source said.
If Fort Worth, Texas-based American files for Chapter 11 protection, Citibank will put up $750 million in a special credit-card backed DIP, similar to what Bank One Corp. did for UAL Corp.(UAL)'s United Airlines last December.
The four lenders will take equal part in the remaining $750 million of financing. The total DIP loan can be increased to $1.75 billion, if necessary, upon a special vote, the source said.
Reuters and the Associated Press contributed to this report.
