Executives Ask for More $$

February 25, 2013

After squeezing employees in bankruptcy court to give up pay, benefits and even some of their jobs, American Airlines management now is asking the court to approve millions of dollars in severance pay and retention bonuses for top executives and managers.

So, even as the company seeks a merger with US Airways to salvage its abysmal business failure, executives look to siphon money out of the airline under the guise of retaining these failed managers or rewarding them for jettisoning employees and customer service.

In a filing in bankruptcy court Feb. 22, American management asked for $30 million for bonuses to retain mid-managers while the companies implement the merger. Bonuses ranging from 50 percent to 100 percent of base pay would go to 15 managing directors, as well as a “select group” of lower-level managers, under the proposal.

Management also asked for another $29 million to be paid to senior managers and directors as incentive bonuses that they presumably “earned” but did not receive in 2011, 2012 and 2013, during the bankruptcy proceedings.

Executives at the rank of vice president and higher would receive a 3 percent raise in the second quarter, under the plan, compared with raises of 50 cents an hour for agents, effective in October.

Under the management plan, departing executives would receive severance packages equal to two times their annual salaries, plus two other bonus payments equal to two times their annual and long-term incentive bonuses.

In addition, these executives would get any pay already earned, accrued vacation pay, health insurance coverage for 24 months, plus stock and first-class seats for the executives and their families for life. More details are available in the Dallas Morning News blog here.

Bankruptcy Court Judge Sean Lane will consider the pay proposals as part of the overall merger agreement at a March 27 hearing. He set March 15 as the deadline to register objections.