One robber baron is down--but the system he represents goes on.
Donald J. Carty, chief executive officer of American Airlines--the
biggest airline carrier in the world--has reluctantly resigned. He and
other top executives in the industry were caught sticking their grubby,
greedy hands into AA assets.
Gerard J. Arpey, a board of directors' favorite, is now CEO. He is a
beneficiary of the same freebies that Carty and the others secretly
grabbed.
Meanwhile, AA union members have suffered mass layoffs and drastic
cuts in wages and benefits. Work loads have increased immeasurably.
Worker safety has been endangered.
In an airline crisis of unprecedented proportions, AA workers had
voted to give up $1.62 billion annually to save the company.
In stark contrast, Carty and seven top executives tried to take
"retention" bonuses for the next two years worth up to twice their base
salaries. Carty's bonus would have been more than $1.6 million, based on
his salary of $811,000.
Infuriated by these obscene financial arrangements, the unions forced
Carty and others to forgo their bonuses. But the bosses refused to give
up a trust fund they control, which protects their pensions regardless
of what happens to AA--including bankruptcy.
Carty admitted that this trust fund was built up with a $41 million
payment last October--at a time when AA was losing money by the minute.
When the leaders of the Allied Pilots Union, the Transport Workers Union
and the Association of Professional Flight Attendants found out, they
withdrew their "yes" votes on the recent $1.62 billion in concessions.
Unfortunately, a few days later, these same union leaders called on a
handful of Democrats to broker a settlement. Under the threat of
bankruptcy, the unions agreed to reverse their decision and accept the
cuts with some minor sweeteners--although the flight attendants held out
to the bitter end.
Underneath the rock of greed and corruption
For a moment, rank-and-file anger against corrupt corporate leaders
shook up a powerful corporation. It's a lesson for other airline
workers.
Similar disclosures have revealed that Delta Air Lines and United
Airlines poured millions of dollars into special pension trust funds and
"retention" bonuses for management. Meanwhile, workers' 401k and other
pension funds are seriously under-funded, some nearly bankrupt.
Regulatory filings will show that all too many companies have set up
privately funded payouts for upper management.
Recently, AA filed its annual proxy state ment with the Securities
and Exchange Commission. Retention bonus es were still there, along with
the pension trusts. (New York Times, April 25)
This high-powered government regulatory agency is supposed to provide
oversight against Wall Street swindles--including the widespread
practice of cooking the books. But the truth is, they're all employed by
the same ruling class, which covers up corrupt practices that exploit
workers and oppressed nationalities.
It is not only AA executives' greed involved in doling out exorbitant
pension benefits to themselves. Corruption is built into the system of
capitalist exploitation.
Interlocking relationships among corporate heads and bankers allow
them to milk the corporations dry. Last year, J.P. Morgan Chase
conspired with Enron to obtain hundreds of millions of dollars in
illegal tax deductions that gave Enron's executives enormous financial
benefits. The bank was rewarded as well.
Recently, the SEC, in consultation with New York Attorney General
Elliott Spitzer, tapped the wrists of some of the biggest investment
companies with a $1.4 billion penalty. Some analysts say these fines are
chicken feed compared to the billions investors lost because of conflict
of interest violations. It's comparable to profits accrued in a few
minutes by the giant Wall Street firms.
SEC Chair William Donaldson revealed the real reason: "to restore
investors' faith in the objectivity of research," which is code for
luring small investors back to the stock market.
It's too late. Millions of workers and middle-class people have lost
their savings, pensions, retirement funds, health benefits and other
insurance plans in the stock market decline. Mass layoffs, plant
closings and bankruptcies have exacerbated the crisis. The banks will
continue to do business as usual and profit from the misery caused by
corporate malfeasance.
If American Airlines goes into Chapter 11 bankruptcy, Citicorp--a
global banking empire--will be the major underwriter to finance the
bankruptcy. The bank is now the beneficiary of the frequent flier miles
program and a valuable credit card business.
Edward A. Brennan, former chair of Sears Roebuck, is the new chair of
the AA board of directors. He also sits on the boards of McDonald's, 3M,
Excelon and, most important, Morgan Stanley--financial advisor to AMR
Corporation, which is the parent of American Airlines. Philip J.
Purcell, CEO of Morgan Stanley, sits on the AMR board. Michael Miles,
chair of the AA compensation board, which approved the handouts, sat
with CEO Carty on the boards of Dell Computer and Sears Roebuck.
The interlocking relationship among boards of directors, CEOs and
bankers is inherent in the system of monopoly capitalism. They, together
with the owners of privately held companies, constitute a ruling class,
which oversees the capitalist government and the current Bush
administration.
The U.S. global war plan is calculated to strengthen this empire of
high finance. Many billions of dollars are pouring in to the Pentagon
occupation of Iraq and future military conquests, while tens of
thousands of airline workers are being laid off.
A job is a right!
The airlines, in the throes of collapse, show the same symptoms that
led to crashes in the steel, telecommunications and dot-com industries,
and that now threaten the auto industry.
Overproduction in the boom years, reckless spending of billions of
dollars to expand, and too much debt have led to the current debacle.
More than 1,300 airplanes stand idle and rusting in the Arizona
desert. Fear of flying since Sept. 11, 2001, the invasion of Iraq and
the emergence of Severe Acute Respiratory Syndrome have exacerbated the
crisis.
AA has now reported a first-quarter loss of $1.04 billion. Bankruptcy
looms despite worker concessions. If it happens, AA--the biggest airline
in the world--will join United Airlines, the second-biggest, in Chapter
11 bankruptcy. Together with US Airways, this would place three out of
six of the major airlines in bankruptcy court.
United Airlines filed for bankruptcy in December 2002, while holding
around $23 billion in assets. In bankruptcy, UAL is no longer the owner
of the property or the assets. Legally, its status is that of a
debtor--it owes about $22 billion--which has been granted possession to
run the airline at the discretion of the bankruptcy judge and an
appointed trustee. UAL executives are unable to sign a check, pay a
bill, or receive their salaries without the court's signature.
The court approved the retention bonuses and pension trust for the
bosses.
The banks are brought in to lend the company--the debtor in
possession--money to pay bills and reorganize the operations. UAL
lawyers point out that the list of other creditors who want their money
fills 32,000 typed pages. (Wall Street Journal, Dec. 10)
These vendors and investors are unsecured creditors who will lose
much of their equity.
The powerful banks led by J.P. Morgan Chase and Citibank--the secured
creditors--will lay claim to the UAL property if the loans are not paid.
Chapter 11 bankruptcy makes it more difficult for airline workers to
overcome the collusion between UAL--a bankrupt airline--and the banks
that are protected by the bankruptcy court.
But it also opens up the opportunity to challenge them and the
bankruptcy court's decisions that threaten the workers' jobs and
benefits.
Clearly, the hundreds of thousands of UAL union members should lay
claim to ownership. They are the principal creditors. They built the
company with their experience, skills and sacrifices. What they gave up
in lost wages, pensions, severance and other benefits is deferred
income.
It amounts to loans to the company--a total of $12 billion over the
next five years, or $2.4 billion annually. The workers have the right to
run the company. It won't happen without a struggle against the
ruling-class conspiracy.
United Airline workers, particularly flight attendants, have made a
tireless effort to educate their members about these facts. They have
formed Airline Workers Unite (AirlineWorkersUnite@yahoo.com).
Their most recent communication declared that the members have the
right to run the airlines and proclaims that "a job is a property
right."
Holding assets during bankruptcy is a common practice of the banks.
It's time for airline workers to recognize that the assets belong to
them--and to take a cue from their 1930s forerunners by fighting for
workers' control.
