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American Airlines staff in U.S. to get raise

Every American Airlines employee in the United States — from baggage handler to top executive — will get a 1.5 percent raise next month.
/ Source: The Associated Press

Every American Airlines employee in the United States — from baggage handler to top executive — will get a 1.5 percent raise next month.

While the raise may seem meager, executives say it shows the progress the nation's largest airline has made in improving its operations and finances.

The board of directors of Fort Worth-based AMR Corp., American's parent, approved the raise this week for all management and nonunion employees, including the airline's top officers, according to a report filed Thursday with the Securities and Exchange Commission. About 6,500 of American's 85,000 employees are classified as managers.

Union employees will also get a 1.5 percent raise, under contracts approved two years ago.

The raises will be effective May 1.

It will be the first raise for Chairman and Chief Executive Gerard Arpey in several years. In 2003, his pay dropped by 14 percent, even as he was promoted to chief executive. Last year, Arpey turned down a proposed 22 percent annual raise, worth $110,000, that the board offered when he took the chairman's job.

American is expected to release full details of Arpey's and other executive officers' compensation packages Friday, when the airline files its annual proxy statement with the SEC.

Denny Breslin, an American pilot and spokesman for the Allied Pilots Association, said it was important that raises for executives and managers remain in line with employee increases.

"If they got more than that, I think you'd see a lot of upset people," he said.

American barely avoided bankruptcy after it lost two planes in the Sept. 11, 2001, terrorist attacks and more than $6.4 billion in revenue over the next two years. The airline reduced wages, laid off workers and cut flights in an effort to rebuild the company.

In 2003, then-chief executive Don Carty was forced to resign after the airline disclosed several executive perks, including bonuses and a bankruptcy-proof pension plan, just after employees approved painful concessions to help save the company.

On Wednesday, AMR reported that it lost $162 million, or $1 per share, for the three months ending March 31, compared with a loss of $166 million, or $1.03 per share, a year earlier. Revenue rose 5.3 percent to $4.75 billion and was just below analysts' forecast of $4.77 billion.

The company said it lost money in the first quarter as high fuel costs more than offset increases in their passenger traffic.