Airline Unions Fight Corporate Greed

by James Parks, Apr 18, 2007

The AFL-CIO 2007 Executive PayWatch site reports that in 2005, average corporate CEO pay was 411 times that of the average worker. Nowhere is the disparity between corporate executive pay and the wages workers receive more striking than in the airline industry. Hit hard by the aftermath of the 2001 terrorist attacks, many airlines declared bankruptcy and used it as an excuse to cut workers’ pay and pensions. Yet CEO and executive pay kept rising.

Now that the airlines are back on their feet, workers are not sharing in the growing profits. CEOs still are taking a big chunk of the money while workers struggle to make ends meet.

Members of two airline unions are taking action to fight corporate greed and give shareholders more say over executive pay. The Transport Workers (TWU), a union that represents ground crews at American Airlines, is launching an online petition to protest a decision in which American executives get massive bonuses, while the workers who helped build corporate profits get nothing. In fact, American Airlines workers have saved the company hundreds of millions of dollars in cost savings and generated more than $100 million in new revenue since 2003.

Yet the company rejected a union suggestion to reward the workers. Instead, it will give senior executives some $177 million in stock options beginning tomorrow. The stock options equal roughly 80 percent of the company’s 2006 profits of $231 million.

The union is urging supporters to sign an online petition and send e-mails to shareholders, customers and allies in consumer groups and other unions protesting the bonuses and demanding a fair share of the profits for workers.

TWU President James Little says the union hopes to create a viral campaign on the Internet,

where thousands of individuals who find corporate greed as outrageous as we do will join a national conversation, send protest messages to the company and help us lobby for limits on executive compensation through congressional action.

Meanwhile, the Flight Attendants-CWA (AFA-CWA) and the AFL-CIO told Congress that new laws are needed to ensure that workers don’t get the short stick when companies declare bankruptcy.

In a letter to members of Congress, the AFA-CWA pointed out the outrageous pay awarded to United Airlines executives even as employees struggle to regain wages and benefits lost during the airline’s recent bankruptcy.

The Corporate Library found United executives received pay increases of 40 percent, as well as bonuses throughout the company’s bankruptcy, compared with an average increase last year of 9.29 percent for CEOs at the nation’s largest 1,000 companies.

Says Greg Davidowitch, president of AFA’s Master Executive Council at United:

When executive compensation reaches as much as 2,000 times that of the average new Flight Attendant, the system is clearly broken.

Testifying yesterday before the House subcommittee on commercial and administrative law, Antoinette Muoneke, a single mother and flight attendant for 28 years, said:

I cannot escape the conclusion that executives used the bankruptcy laws to enrich themselves at the expense of workers like me.

She says cuts in pay, medical benefits and pensions turned her life upside down.

I worked full-time before, but now my hours away from home have increased by nearly 40 percent—and that extra time at work doesn’t even cover my loss in pay. Higher medical costs have forced me to downgrade our medical insurance. I pray every day that I don’t have to face a major illness that wouldn’t be covered.  Executives also terminated my pension and I will never be able to recover my retirement security.

So, am I angry my CEO was able to preserve his $4.5 million pension trust while he destroyed my future security? Am I angry that last year alone our CEO used the bankruptcy laws to take pay, bonuses and stock equaling over 1000 times my compensation? Am I angry that executives have taken 40 percent or more in raises every year while I don’t know what tomorrow will bring or if I will be a burden to my daughter? Yes, I’m angry, and I’m tired. If the excuse is that the law allows it, then it’s time to change the law.

Testifying before the same committee, Damon Silvers, associate general counsel for the AFL-CIO, said:

Like so much of our system of business regulation and corporate governance, our business bankruptcy system has become a vehicle for the transfer of ever more staggering amounts of wealth from a variety of parties, but in particular long term employees, into the hands of a very, very small number of executives and turnaround specialists.

The AFL-CIO and affiliated unions are working with members of Congress on legislation to reform the nation’s bankruptcy laws to prevent future abuse by CEOs.

Also this week, the House will debate H.R. 1257, the Shareholder Vote on Executive Compensation Act. Introduced by Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, the bill would require public companies to submit executive pay plans to a nonbinding shareholder vote, giving shareholders a “say on pay.”

As TWU President Little says:

American Airlines has become the poster child for H.R. 1257. American’s executives are taking an amount equal to about 80 percent of the company’s 2006 profits, while awarding employees nothing. These are the same corporate leaders that told workers “share the pain and share in the gain.” We’re going to make sure members of Congress know what’s going on at American.

A shareholder voice in the executive compensation process will encourage boards of directors to consider shareholder interests before approving questionable compensation plans.

Click here to urge your representative to support a say on pay.

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