The fists may fly at American Airlines. The airliner's three major union groups said last week they were considering voting again on $1.6 billion in annual concessions their
members recently approved to help the airliner avoid bankruptcy. The move came after reports that American's board had decided to give seven top executives cash bonuses in 2004
and 2005 equal to or up to twice their annual base salary if they stayed with the company until January 2005. Union members were livid and management quickly rescinded the
bonuses. PR NEWS asked Mike Paul, president MGP& Associates PR, New York, and an adjunct professor of strategic communications and reputation management at New York
University, New School University and The Kings College, for his take on what role communications will play as things shake out for the airliner. Paul has also worked on PR
projects both nationally and locally for United Airlines.
Q: What was American Airlines' management thinking when it decided to hand out bonuses to its executives on the heels of more than a $1 billion worth of labor concessions?
A: It's another example of the hubris and ego-driven decision-making that is unfortunately rampant in Corporate America today. For senior management to be that out of touch to
think -- not that they didn't think about at all -- but not to take the advice of those who understand shows how wrong this decision is. This is a wolf in sheep clothing. This is
not by accident; they thought that they could get away with it. They operate under a different paradigm and that paradigm includes not only arrogance, but also the almighty dollar
personally being the end-goal rather than the welfare of the company.
Q: Do the unions now have the upper hand in terms of how the story plays out in the public?
A: It's a Catch-22 for the unions. They have the unique advantage to know that senior management was thinking about themselves first and the company second. As they go back
into the strategy room, one huge piece of evidence is clear: the veil has been lifted for what management hoped would not be seen by others. Now you not only have the media
microscope, but everyone within the airline industry looking at American Airlines for what not to do...The unions have a decision to make. They can say, "We've won Round 1" but
that doesn't feed your family; they can say "Gotcha," but that doesn't put a check on the table. They have to decide whether they want to work, or to win. There's a big
difference. At least they know now that the money that was going into bonuses has to go into the pot.
Q: How do such negotiations usually unfold after one party has acted in bad faith? What can American's management do to redeem itself with the unions and the public?
A: Management set it up so there were two playing fields, management on one and labor on the other. When people talked about setting up a level playing field, management
clearly said, 'You're not on the same playing field as us...We're always going to be distinct from you.'" Another important point is, where is the accountability of the board?
Senior management doesn't work alone. The board has a fiduciary responsibility to make sure that those types of decisions [at American] don't happen.