Apparent deal for American Airlines to avoid bankruptcy

Monday, March 31st 2003, 12:00 am
By: News On 6

Verging on bankruptcy, American Airlines has reportedly reached a deal today with each of its 3 labor unions.

It's expected to keep the company out of Chapter 11, and preserve most of the jobs at Tulsa's largest employer.

But as News on 6 Business Reporter Steve Berg learned - it doesn't come without a price. He files this report:

Transport Workers Union Vice-President John McDonald has to tell his workers they're looking at 17.5% pay cut; and that's the best-case scenario.

John McDonald, Vice-President, Transport Workers Union: "The way that I'm relating it to them is the decision they have to make is something that's bad versus something that's worse."

As much as it hurts, many union members say it's better than the situation at United, where a bankruptcy judge is the one deciding what to do with the contract or whether to toss it out altogether.

John McDonald: "I would rather take my chances at what we're lookin' at, than what some of our competitors are looking at."

American Airlines mechanic John Richards went through this once already when he worked for Continental... and hoped he wouldn't have to again.

John Richards, American Airlines mechanic: "With having to try to cover the cost of two sons in college, that does put a financial drain on us... You're lookin' at me losing about 15-thousand dollars per year."

Many of the details involving health benefits and pensions and work rules are still up in the air... but it's likely to be approved, because the alternative is bankruptcy.

"Things that have happened to pensions, benefits, and such in bankruptcy is usually much, much worse."

But Union members are watching closely to see if management takes a pay cut too.

And they definitely want what they call a "snapback" provision... which would give them their old pay back if the airline starts making money again.

The union will likely have its members vote in a couple of weeks.

The labor unions are asking the public for help in urging legislators to provide tax relief for the airlines, in response to the economic aftermath of 9-11. Below are four sample letters they have released as suggestions.
Contact information for Oklahoma legislators is provided below as well.


Dear Senator/Congressman,

As a resident of the Tulsa area, I ask you help in relieving some of the 26 percent tax burden on major airlines. No other industry carries such major tax burden.

I would appreciate your support in keeping our airlines healthy, as American Airlines in our community is a major employer.

Dear Congressman/Senator,

The current financial jeopardy of the U.S. Airline industry is due in large part to dramatic taxation on airlines for increased security measures since the 9-11 attacks. The nation's economy could be severely affected if we do not reverse the trend of airline bankruptcies.

I ask you to act now for airline tax relief.

Dear Congressman/Senator,

The 9/11 attack on America was a terrible day for all of us and I know that Homeland Security is necessary. But with the horrible economic conditions of today, the aviation industry is in dire need of tax relief. Therefore, as a resident in a community with a significant number of jobs in the airline industry I am asking that you help by relieving the 26 percent tax burden on all major airlines.

Dear Congressman/Senator,

As you know, major airlines in America are experiencing very difficult times. A large percent of their expense is federal taxes. The airlines need immediate relief from the exorbitant taxes and fees they are charged. The effect on the national economy is dependent on relief.

Senator Don Nickles (R-OK)Fax - 202-224-6008
SH-133 Hart Senate Office Bldg.Phone - 202-224-5754
Washington, D.C. 20510-3602E-mail -
Senator James Inhofe (R-OK)Fax - 202-224-3144
SR-453 Russell Senate Office Bldg.Phone - 202-224-4721
Washington, D.C. 20510-3603E-mail - Jim
Congressman John Sullivan (R-OK) 1st DistrictFax - 202-225-9187
106 Cannon House Office Bldg.Phone - 202-225-2211
Washington, D.C. 20515-3601E-mail –
Congressman Brad Carson (D-OK) 2nd DistrictFax - 202-225-3038
317 Cannon House Office Bldg.Phone - 202- 225-2701
Washington, D.C. 20515-3602E-mail -
Congressman Frank Lucas (R-ok) 3rd DistrictFax - 202-225-8698
2342 Rayburn House Office Bldg.Phone - 202-225-8698
Washington, D.C. 20515-3603E-mail -
Congressman Tom Cole (R-OK) 4th DistrictFax - 202-226-1463
501 Cannon House Office Bldg.Phone - 202-225-2132
Washington, D.C. 20515-3604E-mail -
Congressman Ernest Istook, Jr. (R-OK) 5th DistrictFax - 202-226-1463
2404 Rayburn House Office Bldg.Phone - 202-225-2132
Washington, D.C. 20515-3605E-mail -
Senator Trent Loft (R-MS)Fax - 202-224-2653
487 Russel Senate Office BuildingPhone - 202-224-2262
Washington, D.C. 20510E-mail -