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Pilots May Buy Stake in American

October 19, 1999

DALLAS (AP) _ American Airlines’ pilots union, bruised in a yearlong fight with management, is considering buying a stake in the nation’s No. 2 carrier.

Three union locals have petitioned the Allied Pilots Association to consider turning American’s parent, AMR Corp., into an employee-owned company. The issue will be on the agenda when directors of the union, which represents 9,800 American pilots, meets next week near Dallas.

The locals asked the board to create an exploratory committee including outside airline-industry analysts to study the possibility of creating an employee stock-ownership plan.

``I think this is an outgrowth of the frustration we’re experiencing in our relations with management of American Airlines,″ said union spokesman Drew Engelke.

Angered over Fort Worth-based American’s plans to absorb tiny Reno Air and its lower-paid pilots, about one-fourth of American’s pilots called in sick during a 10-day stretch in February. The company said the sickout cost it $225 million, and a federal judge fined the union $45.5 million for disobeying a back-to-work order.

Candidates for union office have previously raised the issue of creating an employee stock-ownership plan to buy part of AMR, but the issue has never come close to fruition, Engelke said. He said there is at least some opposition now.

``There were people who spoke on both sides of the issue″ before the three locals, he said, ``and I don’t believe any of the resolutions passed unanimously.″

A spokeswoman for American said the airline would not comment on the proposal.

In 1994, pilots, machinists and nonunion employees bought 55 percent of United Airlines in return for accepting $4.9 billion in pay and benefit cuts over six years.

However, the United employee buyout occurred when United was in financial difficulty. American is profitable, which analysts suggested made the possibility of a takeover much less likely.

``I don’t regard this as very serious,″ said Glenn Engel, an analyst with Goldman Sachs. ``The union leadership is politically wounded from their miscues earlier this year. This is as much an internal political move as anything else.″

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