American Airways is one of the largest airports around the world which also means that the company has the largest population of workers. The guerrilla attacks on 11/9/2001 affected the United States airline diligences more than any other diligence. The attack led to loss of workers lives, passenger ridership, and monetary losses. However some of the airlines emerged successful whereas some of the airlines languished. This effect can be associated with the labor relations and unions meant to cater for the welfare of workers. During Mr. Carty’s era as the CEO of the company, he exerted efforts to rally labor relations. However, there are some utterances that he made regarding allowances and petitions that did not auger well with labor unions and consequently led to him to resign from his position as the chief executive of American Airlines. The intent of this paper is to analyze the comment made by Mr. Carty regarding labor relations.
When Don Carty took the place of Bob Crandall as the chief executive in 1998, American Airline Company was targeting a yearly profit of $ 1.3 billion, and his only chief goal was to change the pitiable labor relations. However, his exertion bared no fruits; in fact, it left him struggling to save his job. During his era, a loss of $ 200 million was realized which was an increase of the existing loss of $800 million. He exposed details of officials’ retention advantages and allowance’s securities after most union associates had barely voted to accept $1.62 billion worth of yearly concessions. Carty’s call for shared forfeit was met with a lot of hindrances including unions calling for new votes hence jeopardizing the course he had been fighting attain. The price of Carty’s lack of professionalism led to the loss of his job. Nevertheless, the conflict between Carty and union’s workers was as a consequence of the brimming of the late 1990’s economic bubble that brought havoc to many large corporations. To avoid bankruptcy, Americans had to request employees to take salary cuts to sort the extensive growth and salaries hikes it encouraged before 2001. Yet, the corporate consistently continued to dole out what many persons would call as lavish pay to its top executives, then concealed some reimbursements during negotiations since it was aware of how objectionable Enron-era business behavior had to become to regular pay earner.
The workers were outraged by the fact that Carty had concealed new executive benefits from the union leaders while he was negotiating for deep allowances. The benefits generally referred to as retention bonuses, were paid to seven executives and $41 million pretax compensation was paid to a secured managerial pension trust fund had been approved by the American’s board. This was, however, not revealed until the company made a securities filing after three unions i.e. Allied Pilots Association, the Association of Professional Flight Attendants and Transport Workers Union had voted for the approval of the concessions. Exasperated, the Association of Professional Flight Attendants and the Transport asked for new votes, whereas the Allied pilot Association rebuffed to approve for new allowances. Consequently Carty withdrew the cash advantages and apologized to the workers. However, Carty had announced that the company would retain $41 million of reimbursements in the administration pension trust funds. The union’s workers remained furious despite Mr. Carty’s announcement since Mr. Carty had not sought their approval before authorizing the payment of the anticipated allowances. The commercial airline lost $ 1.04 million in the paramount quarter thus almost putting it in a position of insolvency.
In an effort to address the concerns of the angry workers, the company called Mr. Martin Frost who is a democrat in the Dallas area. Frost was charged with the responsibility of calling a meeting between Mr. Carty and the union’s workers in order to act as a mediator who would broker talks between the two disagreeing parties in a bid to solve the existing stalemate. Frost tried to investigate the root cause of the problem that existed between the two parties. During his investigation, he established that the union leaders were livid since Mr. Carty had been placed in an indefensible position by the company’s workers as a result of deceiving them during talks. Frost argued that they wouldn’t have enough time to conduct an election within 30 days since the company wouldn’t survive in a situation where there was no leadership. Eventually, the two parties were able to work out new terms ofoperation. The other measure that was undertaken is revealing of the secret compensation deals.
Conclusively, it would be appropriate to utter that financial reserves coupled to a strong commitment to workers are pivotal to corporate capabilities to cope with problems facing the business. It is the responsibility of union workers to push pay and work rules to better suit the employee welfare. Executives in their move to compensate workers should ensure that they do not miss out the labor implications. This includes full disclosure of the information relevant to the compensation program before establishing a deal with workers union. Lack of transparency can result to a wide range of issues this may include angry employees, mistrust amid executives and workers unions, and destroying of reputation. It is nearly impossible to run a business where the workers are not fully satisfied or happy. In fact, lack of transparency can lead to a company being declared insolvent as in our case.
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