Leaders of the pilots' union at American Airlines will decide next week whether to begin a formal study on buying a controlling interest in the nation's second-largest air carrier, union officials said yesterday.
Members of the Allied Pilots Association at American's major pilot bases in Dallas-Fort Worth, Miami and Los Angeles have approved resolutions asking the union leadership to study the possibility of using an employee stock ownership plan (ESOP) to purchase a majority of the airline's stock.
An APA spokesman said yesterday that the union's 18-member executive board would meet in Dallas all next week and that the ESOP proposal was part of "two-inch-thick agenda" for the meetings. The spokesman cautioned that "this is in the very earliest stages."
American officials would not comment yesterday on the ESOP report, which first appeared in the Wall Street Journal.
The total cost of buying more than half the airline's stock to gain a controlling interest in the company would be about $5 billion at today's prices, and the sale of the company probably would be opposed by American management.
Union officials said the stock-purchase proposal reflects the increasing labor tension between the company and the pilots. The tensions have been heightened by the airline's refusal to consider forgiving a $45.5 million fine levied by a federal judge earlier this year after citing the union for contempt of court because it failed to quickly end a sickout that all but shut down the airline in February.
Although the price tag would be hefty, purchasing a controlling interest of an airline is no longer such a novel notion in the U.S. industry.
United Airlines, the nation's largest airline, is employee-owned; employees at two other major carriers--Northwest Airlines and Trans World Airlines--own large blocks of stock, but do not have controlling interest. Employees at all three carriers have governance rules that give the unions a measure of control over the company management.
At United, where employees own 54 percent of the company stock, the unions have what is called a super majority vote on the board of directors over major corporate decisions such as asset sales, management selection and mergers.
The stock sales at the three carriers occurred earlier in the 1990s when the airlines were in financial trouble. The employees were able to make their purchases through wage, benefit and work rules concessions in exchange for company stock.
The situation at American is different. The airline industry has been experiencing a boom, profits are at record levels and the pressure for concessions has nearly disappeared.
The stock of AMR Corp., American's parent, closed yesterday at $54.62 1/2, up 12 1/2 cents.