AMERICAN TO PROVIDE SPECIAL SEPARATION PAY, PROGRAMS TO EMPLOYEES FACING LAYOFF

With the first installment of a federal aid package now in hand, American Airlines today announced that it can provide special pay, medical, travel privileges and other benefits to thousands of employees who face layoff as a result of the September 11 terrorist attacks in New York and Washington.

"Our overarching challenge during the past two weeks has been to meet the needs of our employees and the company during constantly changing circumstances," said Donald J. Carty, chairman and CEO of American Airlines. "Last Friday’s passage of a federal aid bill, and the delivery of the first installment of aid to the airline this afternoon, will allow us to provide special pay and other benefits to employees who will leave us.

"This is something we have wanted to do but were not sure we would be able to provide given our changing circumstances and the devastating impact of the terrorist attacks on our industry and our company."

Carty said employees who would be eligible for furlough pay in a layoff will be eligible to receive these special payments, medical benefits, travel privileges and the benefit of a comprehensive group of other programs. Those include referrals to other companies that have offered to interview AA employees, job interview support, financial counseling and help with referrals to employment agencies. A voluntary leave program will be available to help to minimize further layoffs. For unionized employees, these special programs are subject to acceptance by the appropriate unions.

"It’s difficult to remember that it has only been two weeks since these devastating attacks occurred," Carty said. "These weeks have been a roller coaster for our employees, our customers and our owners. Our employees have risen to the challenges with grace and professionalism, despite their own personal pain and anxiety. I find it personally gratifying that we have been able to see our way clear to provide these special separation programs for them at this time."

He said the programs will be funded, in part, by a portion of the $900 million American received in federal aid after the terrorist attacks.

The Sept. 11 attacks set off a crisis in the airline industry with ripple effects felt through the world economy. Analysts estimate that the industry will lose $18 billion as a result. Congress passed an aid package late last Friday that provides airlines with $5 billion in cash and $10 billion in loan guarantees. American’s portion of the cash aid is about $900 million.

To respond to reduced demand brought on by the attacks, American cut its schedule by 20 percent, closed premium customer clubs and service centers, halted advertising, reduced food service and grounded airplanes. Carty also announced that he will take no compensation until the end of the year. His senior management staff volunteered to take significant pay cuts as well. Profit sharing and management bonuses will not be paid until the airline is profitable again.

Despite these measures, significant layoffs on an emergency basis are necessary, Carty said. "Our challenge has been to minimize the hardship for employees who are also victims of these attacks," he said. "We hope that one day we can bring many of our people back to a vibrant and growing airline again. In the meantime, we are doing what we can to help members of our American Airlines family, while also taking every step we can to protect the financial position of the company for the future."

Details will be made available to employees through a variety of internal sources.