American Airlines asks employees for pay freeze

Sunday, December 8, 2002

DALLAS -- American Airlines, the world's largest carrier, is asking employees to forgo pay raises they are due next year to help the company stem massive losses.

American, whose parent company lost nearly $3 billion in the first nine months of this year, said cancelling pay raises would save $130 million.

Chairman and chief executive Donald Carty has said the company needs to cut $4 billion in annual costs and has found about half of that by laying off workers, mothballing planes, cancelling orders for new jets, reducing food service and other changes.

"The restructuring of our labor agreements is inevitable and fundamental to our long-term goal of remaining competitive and restoring profitability," Carty and president Gerard Arpey said in a letter Friday to employee groups.

Carty also said he and other managers would go without raises for the second straight year.

American's flight attendants are scheduled to get a 3 percent raise on Jan. 1 and additional raises in July. Mechanics and others represented by the Transport Workers Union are due to get a 3 percent increase March 1.

Nonunion airport and reservations agents are scheduled for an average 90-cent hourly wage increase next year, the company said. Pilots are not due for an increase.

The major U.S. airlines are expected to lose about $9 billion this year and trace many of their difficulties to a weak economy and travelers' reluctance to fly after last year's terrorist attacks.

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