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American Morning
Airline off Course: Wage-Cut Votes Come Amid News of Exec Perks
Aired April 23, 2003 - 07:13 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: We want to get to a major business story right now. The troubles at American Airlines just will not go away. Outraged flight attendants and other union workers now reconsidering wage concessions they had made after they learned that special pensions and bonuses were set up for the executives. All of this could push the airline into bankruptcy.
And Andy Serwer has been checking into it. He's live with us this morning here.
Good to see you.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning.
HEMMER: Take a step back. What happened in the previous few days that have led us to get to the point where we are right now?
SERWER: Yes, some striking developments here, Bill. Let's recap, though.
First of all, of course, American Airlines, the world's largest airline, close to bankruptcy here, got some wage concessions from its unions, including those from the CEO as well. And here is what these three unions agreed to. You can see 15 to 20 percent, 23 percent cuts. The CEO, Don Carty, also took a 33 percent cut, but we don't know exactly where his options are at this point, so that's a little hard to tell.
Late last week, though, as you mentioned, it was disclosed there were generous pay packages for the top executives. That got the unions mad.
Now, here is where we stand today. Two unions, the flight attendants and the mechanics, have decided they're going to re-vote, basically saying we're not going to agree to those concessions. The third union, the pilots, saying we might not re-vote, but what we're going to do is we're not going to sign off on these concessions. So essentially, they're not agreeing to that, which is incredibly ironic that it could be that hiding this pay package is what could put this airline over the brink and into bankruptcy.
HEMMER: Wow! What does it say for the CEO, Don Carty, then?
SERWER: Well, here's what's going on with Don Carty. "The Dallas Morning News" reporting this morning that board members are actually interested in removing him. It is possible that he could lose his job. There is a conference call with board members this morning, and the board will be meeting tomorrow, a striking development there as well.
HEMMER: Boy, when you put that in with the troubles with United, and you can go right down the list for the past several years, too.
SERWER: And here is the bigger picture, Bill. I mean, what is it with CEOs? I mean, they still haven't gotten it, if you ask me. While the rest of the economy is suffering, while millions of Americans are out of work, you see here that these CEOs are still sort of lining up at the trough. We're going to be taking a look at that later on in the program. CEO pay, it just keeps on ticking.
HEMMER: And they've been a bull's-eye for the past 12 months.
SERWER: Here is the cover of "Fortune" magazine, which I think sums it up pretty well, doesn't it? "Oink! CEO Pay."
HEMMER: Got it. Thank you, Andy.
SERWER: OK.
HEMMER: Talk to you a bit later.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Perks>
Aired April 23, 2003 - 07:13 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: We want to get to a major business story right now. The troubles at American Airlines just will not go away. Outraged flight attendants and other union workers now reconsidering wage concessions they had made after they learned that special pensions and bonuses were set up for the executives. All of this could push the airline into bankruptcy.
And Andy Serwer has been checking into it. He's live with us this morning here.
Good to see you.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning.
HEMMER: Take a step back. What happened in the previous few days that have led us to get to the point where we are right now?
SERWER: Yes, some striking developments here, Bill. Let's recap, though.
First of all, of course, American Airlines, the world's largest airline, close to bankruptcy here, got some wage concessions from its unions, including those from the CEO as well. And here is what these three unions agreed to. You can see 15 to 20 percent, 23 percent cuts. The CEO, Don Carty, also took a 33 percent cut, but we don't know exactly where his options are at this point, so that's a little hard to tell.
Late last week, though, as you mentioned, it was disclosed there were generous pay packages for the top executives. That got the unions mad.
Now, here is where we stand today. Two unions, the flight attendants and the mechanics, have decided they're going to re-vote, basically saying we're not going to agree to those concessions. The third union, the pilots, saying we might not re-vote, but what we're going to do is we're not going to sign off on these concessions. So essentially, they're not agreeing to that, which is incredibly ironic that it could be that hiding this pay package is what could put this airline over the brink and into bankruptcy.
HEMMER: Wow! What does it say for the CEO, Don Carty, then?
SERWER: Well, here's what's going on with Don Carty. "The Dallas Morning News" reporting this morning that board members are actually interested in removing him. It is possible that he could lose his job. There is a conference call with board members this morning, and the board will be meeting tomorrow, a striking development there as well.
HEMMER: Boy, when you put that in with the troubles with United, and you can go right down the list for the past several years, too.
SERWER: And here is the bigger picture, Bill. I mean, what is it with CEOs? I mean, they still haven't gotten it, if you ask me. While the rest of the economy is suffering, while millions of Americans are out of work, you see here that these CEOs are still sort of lining up at the trough. We're going to be taking a look at that later on in the program. CEO pay, it just keeps on ticking.
HEMMER: And they've been a bull's-eye for the past 12 months.
SERWER: Here is the cover of "Fortune" magazine, which I think sums it up pretty well, doesn't it? "Oink! CEO Pay."
HEMMER: Got it. Thank you, Andy.
SERWER: OK.
HEMMER: Talk to you a bit later.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Perks>
