AIP Grievance Update

Brothers',

Following the Arbitration, the AMR Board of Directors amended the Performance Unit Plan. As a result, AMR will file those Amendments with the SEC. We understand, the change(s) to the Plan may resolve the issues in dispute.

We anticipate a written decision from the System Board of Adjustment early next week.

Have a good weekend,
Fraternally,
John  

FORT WORTH, Texas (AP) -- AMR Corp., the parent company of American Airlines, said Friday it approved a change to a controversial management compensation plan in an attempt to resolve union grievances.
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Under the company's current plan, dating back to 2003, executives receive cash compensation tied to the company's stock price. The new plan, which would go into effect April 19, calls for a maximum of 20 percent cash and the rest in stock, according to Tim Smith, a company spokesman.

In reality, Smith added, most participants would receive less than 20 percent cash.

Jeff Brundage, senior vice president of human resources for American Airlines, said in a statement that the move is an attempt to "resolve the grievances brought by American's unions and to support management, the unions, and all employees" in their efforts to bring the company to financial health "and avoid the confrontational path taken by other airlines."

The 2003 plan was written when the company was nearing bankruptcy, rewarding management if the AMR's stock performed well through the end of 2005. The bonus payments, due in April, were expected in January to top $1 million for some officials, because AMR's shares have remained strong despite the poor financial performance of American Airlines.

Unions have criticized the plan, saying the bonuses were poorly timed, as AMR has lost billions since the beginning of 2001.

The amount of bonuses will be determined based on AMR's stock price on April 19.

Shares closed up 94 cents, or 4 percent, at $27.50 on the New York Stock Exchange.