DALLAS (Reuters) - The choices before American Airlines pilots who gathered on Thursday to discuss a concession deal were harsh: accept pay cuts and lay-offs or try for a labor deal in bankruptcy court where the odds were stacked for even greater losses.þþThe pilots at American, a division of AMR Corp. (AMR.N), were one of several labor groups discussing concession deals struck on Monday that staved off an imminent bankruptcy filing of the world's largest carrier.þþThe deals would result in about $1.8 billion in labor cost savings annually. During talks with labor groups to strike the deals, American said it would have been forced to seek up to $2.3 in labor concessions if it were in bankruptcy as a result of debtor-in-possession financing, union officials said.þþThe pot was sweetened for labor groups by the airline, which offered a profit-sharing plan and stock-option deal that could see them owning up to 20 percent of the company.þþThe three major unions at American have until the middle of this month to vote on the tentative concession deals that will cut annual pay for some major groups by 15 percent to 23 percent. News of the deals sent AMR shares soaring this week, but if any union votes against the pact, AMR could very well beheading to bankruptcy court, union leaders said.þþ``The choices are stark. It is either this agreement or take your chances in bankruptcy court,'' said Gregg Overman, a spokesman with the Allied Pilots Association.þþAbout 70,000 union members at the airline -- out of total company staff of about 100,000 -- must approve the pay cuts, and voting should be completed by April 15. Several American pilots at the gathering on Thursday said it was too early to say how their membership will vote on the concessions.þþThe tentative deals include $660 million in savings from pilots, $340 million from flight attendants and $620 million from ground workers and mechanics. The carrier also obtained $180 million in savings from management and other groups. þþSHARED SACRIFICE, SHARED GAINSþþThe pilots' union said it expects to lose about 2,500 positions in the concession deal, mostly through furloughs, while the flight attendants said rough calculations indicate the deal would mean a loss of about 2,300 positions for them.þþ``There is just no question that making these kind of changes is painful. We have said that from the beginning,'' said American spokesman Bruce Hicks. ``We did not ask for more than we needed with intent to negotiate down to some other level.''þþAlso, American labor groups have seen what can happen in bankruptcy court by looking at the fate of their counterparts at United Airlines (UALAQ.OB) and US Airways (USALA.PK), which both recently sought Chapter 11 protection. Labor was forced to take draconian cuts or see contracts revoked.þþ``Employees never benefit by the bankruptcy process,'' said Jim Little, a senior member of the Transport Workers Union, which represents American's ground workers and mechanics.þþ``Along with shared sacrifice comes shared opportunity,'' AMR Chief Executive Don Carty told employees on Monday. ``When the company succeeds, you'll have the opportunity to succeed too.''þþAMR will issue options for employees to purchase up to a quarter of AMR's outstanding shares over the next five years, which could lead to employees owning about 20 percent of the airline. Options will be priced at the close of the trading day following the final ratification agreement.þþThe number of options that can be purchased will be based on a formula derived from the level of concessions and labor costs as a percentage of the total labor costs of the company. Options will be priced price at the closing share price the day following ratification of concessions by the last group.þþTWU workers will receive options to buy 34.7 percent of the total, pilots will receive options for 32.5 percent, flight attendants 17.9 percent, while management, support staff and reservation agents will have the remainder, the airline said.þþThe profit-sharing plan will let employees share 15 percent of pretax operating profits over $500 million, it said. þþþ
Source: NY Times
