Enron gone, but the great CEO looting spree is still going strong–and airline bosses are leading the way.
Less than two years after top Enron executives shocked the world by cashing out stocks as their employees’ retirement funds evaporated, American Airlines has gone even further to line their pockets at workers’ expense.
While demanding that unions must take $1.8 billion in concessions, or the company would file for bankruptcy, American CEO Donald Carty and 44 other top officials created a special trust fund that will protect their retirement pay even if the airline goes bust.
The details only emerged after American’s unions voted to take pay cuts, ranging from 23 percent for pilots to 15.6 percent for flight attendants “The concessions our members barely ratified the other day were based on the premise of shared sacrifice,” said Jim Little, an official of the Transport Workers Union (TWU), which represents 34,000 mechanics and ramp workers at American.
TWU members and flight attendants narrowly approved $600 million in takebacks–only to find out about the executives’ money-grab afterward. “This [executive retirement] fund is the opposite of shared sacrifice and calls into question the basis of each of our contracts,” Little said. It was only because of legal requirements to file papers on the deal with the federal government that American bosses had to own up to the rip-off.
In an effort at damage control, CEO Carty promised that he wouldn’t accept pay bonuses this year. Yet when it came to the bankruptcy-proof retirement fund, Carty and the rest of the American bosses refused to budge. As Socialist Worker went to press, union officials were threatening to block the deal unless Carty backs down.
The pension rip-off at American is part of a smash-and-grab strategy by executives across the airline industry, which has lost 100,000 jobs since the attacks of September 11, 2001. While executives blame the hijackings, the fact is that the industry built up huge amounts of extra capacity and a crazy price system–both results of industry deregulation and the mad scramble for profits.
Now that the airlines are hemorrhaging cash, executives are stuffing their pockets while they can–and rolling back years of gains by unions. Delta Airlines, for example, lost $1.3 billion last year. But that didn’t prevent CEO Leo Mullin from enjoying a 104 percent raise, bringing his total compensation to $13.8 million. Now Mullin wants concessions from workers–but has tucked away $25.5 million in Delta’s own cash trust fund to guarantee pensions to top executives, just like American.
At Continental Airlines, CEO Gordon Bethune bagged $14.7 million last year, a 172 percent increase over last year. Meanwhile, some 1,200 jobs at Continental will be eliminated this year as part of a plan to slash $500 million in costs.
For its part, US Airways used the pressure of bankruptcy court to turn its pilots’ pensions over to the federal government’s Pension Benefits Guarantee Corp. That saved the company $700 million over the next six years–by slashing annual retirement benefits from an average of $50,000 to $70,000 to a maximum of $28,500 a year for a 60-year-old retiree.
At United Airlines, also in bankruptcy, pilots recently agreed to concessions worth $1.1 billion, and mechanics and flight attendants are set to vote on further givebacks on April 29 that, if approved, would give United $2.5 billion in concessions. United CEO Glenn Tilton has agreed to cut his base pay of $828,500 by 14 percent in a supposed show of solidarity. But considering that Tilton got a signing bonus of $3 million, he won’t feel much of a pinch.
The story is similar at Northwest Airlines, where management announced 4,900 job cuts over the next five years when the Iraq war began–and then demanded mechanics take a pay cut and agree to the elimination of an additional 1,000 jobs.
This is an outrage. All the CEO demands for wage and benefit cuts to “save” companies is a pretext. They want working people who were cut out of the boom to pay the price now–so the employers can keep their wealth and power intact. We can’t let them get away with their rip-off.