Gag Order Placed On American Airlines Employees
Bloomberg Contributor Richard Finger is Curious to Know Why the APFA Agreed to a "Gag Order" that Suppresses Flight Attendants' First Amendment Rights
The issue regarding AMR CEO Tom Horton's $20 million severance package appears to be taking on a life of it's own. With U.S. Department of Justice Trustee Tracy Hope Davis raising objections to Mr. Horton's outrageous severance package on the grounds that it violates the law, Bloomberg contributor Richard Finger is now asking why AMR's unions are standing by Tom Horton in defense of his compensation in direct opposition to Trustee Davis.
The following Bloomberg article delves into the gag order that was integrated into the LBFO. Apparently Mr. Finger was shocked to hear how APFA agreed to a "gag order" and so decided to investigate the rumor for himself. To his surprise he found language that not only suppresses flight attendants' "first amendment rights," but also language that prohibits flight attendants from raising discord over executive compensation knowing that it's dirived from employee concerssions.
What Mr. Finger didn't realize when he wrote this article was that AMR had a secret agreement to pay APFA's financial consultants a $2 million "success fee" once the APFA successfully secured the LBFO, and also an agreement to reimburse APFA's advisors for up to $5 million in carte blanche billings once the LBFO was ratified. When you consider the conflict of union consultants being paid by the very employer who's extorting concessions, the idea that the unions would defend executive compensation makes perfect sense.
Not since 1993 have I seen the government and the media siding with flight attendants in opposition to corporate greed, yet in this instance we have the APFA siding with AMR rather than with the flight attendants. It certainly does make you wonder whose interests are truly being represented. If a writer from Bloomberg can't tell, that should tell you something.
Gag Order Placed On American Airlines Employees
Richard Finger, Contributor
Bloomberg | April 7, 2013
I got a lot of comments on my last article regarding the fleecing of employees and shareholders over the proposed $20 million severance payment that Tom Horton, American Airlines (AMR Corp.) bankruptcy caretaker CEO, is lined up to receive. Among other tidbits, I found out that Mr. Horton is derisively referred to as "ToHo" among many of the union employees. In addition to the critiques received on the Forbes website, I got a number of private e-mails from mechanics, flight attendants and pilots unanimously thanking me for sharing this abomination with the world, shining a bright light on the double standards of the cronyism rampant in corporate America today. I also learned that these workers, the people who actually run the airline, are in complete symbiosis......kindred and mad as hell about Mr. Horton's undeserved windfall. Perhaps my most surprising discovery is the hostility voiced over not being able to express their anger. In each of the recently renegotiated union labor contracts there exists a clause prohibiting anyone from complaining about executive compensation. This was mentioned in numerous e-mails as well as a couple of the Forbes comments. I was astonished so I went to the APFA (Association of Professional Flight Attendants) website and even with my limited computer skills, with a little effort was able to locate the offending section. Have a look:
Issuance of equity: Subject to the foregoing, APFA agrees not to object to or contest the issuance of equity or other consideration in the Bankruptcy Cases to the Company's non-union management employees in respect of the sacrifices made by them in furtherance of the Company's effort to restructure or as incentive for the non-union and management employees' future service to the Company.
What kind of nonsense is that? Not only do mechanics, pilots, and flight attendants receive no wage increases for the last five years now they are told they can't express their dissatisfaction that "ToHo" is going to pocket $20 million after a brief 16 month tenure, all of which has been spent in Chapter 11 bankruptcy. These words are nothing more than a not so thinly disguised gag order and a suppression of fairly basic first amendment rights. I wonder whether it is even legal. It is having the desired effect judging by some of the personal correspondence I have received. One person wrote, "After reading this you will understand why I did not post my comments online. In the past, as I am sure you are well aware, we, the union employees of American Airlines would protest in the media any executive pay bonuses that were rewarded to the management team after AMR executives reduced worker's pay and benefits over the years. After finally taking the bankruptcy route in November 2011, they used the bankruptcy process to "shut us up" by placing a no contest clause in our current negotiated agreement that prevents us from protesting any type of executive pay. Typical AMR behavior. As glad as we are to see Tom Horton go, his $20 million dollar severance package really hits a nerve with the employees of this company. The unfortunate thing is that the employees of this company could risk their jobs by joining in on any media outcry of excessive compensation by any of its executives." A long time flight attendant expresses similar thoughts: "In reference to Mr. Horton's compensation and how the employees should complain...well, while "negotiating" contracts during the BK process, Mr. Horton and his cohorts made sure a term and/or phrase was purposely added to all agreements with the unions....we're not allowed to question or oppose any of the executive's compensation.....or to make known to the media (or whoever else will listen) that the unions disagree. I am a 25 yr. union employee with AA and this is the first time this topic was actually part of a collective bargaining agreement."
Let's parse some of the concepts addressed in management's tawdry effort to mute worker dissidence. There is reference to "sacrifices made" during restructuring the company. I am dearly interested to know of one sacrifice. "ToHo" raked in $3.6 million in 2010 and $4.2 million in 2011 and part of that year was spent in Chapter 11 Bankruptcy. 2012 compensation has not been made public yet. The finances of the airline were in decline during this entire period and though he wasn't even CEO except for the last month of 2011, he still managed to earn significantly more than a "living wage". Sacrifice for a CEO translates, for me, leading by example and taking $1 a year in salary. Another amorphous reference is to "incentives" and "future service" to the company. So unless the top executives aren't given something extra their focus will wane and they will take their eye off the ball. So ostensibly then, big bonuses are a sin qua non if all these essential executives are to keep their apparently non replaceable skill sets in the service of AMR Corp. It is here that a little dose of reality will be interjected.....some smelling salts to pull the patient from his stupor. AMR Corp. is merging with U.S. Airways (LCC). And if we are to believe all the regulatory agencies who blessed this union, there is little overlap to the operating routes of these two airlines. Therefore the main redundancy of the surviving entity will be that all of the vice-presidents and other upper level managers at AMR Corp. will be replaced by the new bosses at U.S. Airways. Management's language implies these managers will leave unless properly incented to stay. They should be on hands and knees begging not to be kicked out. Many will be terminated and should be given something in proportion to what the flight attendants were offered for early retirement: for a minimum of 15 years of service a one-time payment of $40,000. In my opinion, "ToHo" was "gifted" his $20 million after being passed over as new CEO and for agreeing to walk away quietly from the new merged entity. It was a typical backroom shadowy deal probably pre-blessed by U.S. Airways CEO Doug Parker, meaning it was already fully agreed by all parties before it was announced.
Collective bargaining is rough and tumble under the best of circumstances. It is a bare knuckle affair full of palter and equivocation from all parties. American Airlines employees have suffered pay cuts through the years all with the implicit understanding the exigencies necessary in the competitive arena of the airline business. Fair enough. The members in the executive suite should be subject to the same laws of gravity. It is an asymmetry that bastardizes free market capitalism. It should be up to shareholders, not some board beholden to the CEO on how much Mr. Horton and other executives receive as a severance payment. For Mr. Horton's sake, it's a good thing the decision isn't mine.