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April 28, 2003
Chief of American Airlines Steps down over Executive Benefits
The chief executive of American Airlines resigned on Thursday after receiving criticism from labor unions over executive benefits, the New York Times reports.

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Donald J. Carty, who was also the company's chairman, ended his tenure at the airline as the company continues to struggle to stave off bankruptcy. Labor unions criticized the airline and Carty for giving executives what the unions viewed as lavish perks while at the same time asking unions to make concessions.

Carty caught the unions ire just after the unions narrowly approved the original concessions, when news circulated that American disclosed, in a filing with Securities and Exchange Commission on April 15, that the airline planned to give executives cash bonuses equal to up to twice their salary, the newspaper notes. The airline called the perk a retention bonus. The filing also showed that the airline made a $41 million payment to a trust fund designed to protect the pensions of executives if the company fell into bankruptcy.

The unions said it appeared Carty delayed the filing with the SEC to avoid jeopardizing any votes on the concessions, the newspaper reports.

After the disclosure, unions balked at the concessions.

Almost a week prior to his resignation Carty announced that the airline had cancelled the retention bonuses. The newspaper says it was not enough to save Carty's job.

On Wednesday night, a day before Carty's resignation, union leaders for two of the three unions at American agreed to less costly concessions. The Association of Professional Flight Attendants approved the updated concessions on Friday.

American said that Gerard J. Arpey, president and chief operating officer, would be the next chief executive. Edward A. Brennan, a director at American, would become chairman.


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