American Airlines flight attendants, given a day to change their minds about rejecting pay concessions, narrowly approved them yesterday, probably allowing the airline to avoid filing for bankruptcy in the immediate future.
American chairman and chief executive Donald J. Carty, calling the vote a "race against the clock," praised the results. "These votes clearly demonstrate our employees' dedication and commitment to creating a secure future for American Airlines and its people," he said.
The flight attendants had been the only labor group to vote against the sections of a $1.8 billion concession package that applied to them. American's pilots and mechanics approved the concessions on Tuesday.
After extending the flight attendants' vote by a day on Tuesday, Carty said that if they voted against accepting pay cuts, the airline would immediately seek Chapter 11 bankruptcy protection.
The flight attendants' contract will reduce their pay and benefits by $340 million a year for six years.
Carty stopped short of saying the flight attendants' vote would keep the airline out of bankruptcy in the long term.
"We're not out of the woods yet," he said. "This is a tough economy, and the travel industry has been hit particularly hard. Many of the factors that affect our business are beyond our control. But with the structural changes we have made and unique qualities of our employees, we are now in a much better position to survive the tough times and to take on our toughest competitors."
American granted the extra day of voting after the flight attendants complained of problems on Tuesday. Union officials said that several hundred members had difficulty obtaining identification numbers to cast votes by telephone and that other members did not have up-to-date information on the proposed contract before voting. The contract initially was rejected by 51.2 percent of the flight attendants who voted, a margin of 533 votes.
Wednesday, the contract was approved with a margin of 1,109 votes out of 20,543 cast.
Tension continued during the voting yesterday. John Ward, president of the Association of Professional Flight Attendants, accused American executives of using "pressure tactics" in trying to influence voters. In a letter to Lorraine Mase-Hecker, director of American's employee policy and relations division, Ward wrote that the union had received numerous reports of "interference and coercion" by American managers. Ward wrote that American management must "back off and stay out of our voting process."
American spokesman Bruce Hicks said airport managers gave memos to the flight attendants Tuesday evening and yesterday. He said the memos were reminders of what would happen if the flight attendants voted against the contract. Hicks said that the information was made public on Tuesday, but many of the flight attendants were flying and unaware of the public statements.
"We make no apology for communicating critical information to our employees," Hicks said. "Our employees had the right to know what was happening to our company. We strictly gave them factual information."
Shares of American's parent, AMR Corp, closed at $4.23 yesterday, up 83 cents, or more than 24 percent.
For weeks, American warned that if any of its three unions voted against the company's proposed concessions, it would seek bankruptcy protection. More than 69 percent of American's pilots voted to accept a 23 percent pay reduction and the elimination of 2,000 jobs to save $660 million. More than 53 percent of American's mechanics and baggage handlers voted in favor of $620 million in concessions.
American's cost cutting puts more pressure on airlines such as Delta, Continental and Northwest. United Airlines is significantly reducing its costs in bankruptcy, just as US Airways did during its seven months in bankruptcy, which ended last month.
Yesterday, Northwest said its first-quarter loss more than doubled, to $396 million, from $171 million in the first quarter of 2002. Continental Airlines also reported a first-quarter loss this week.