Union Halts Support for Cost Cuts at American

American Airlines’ flight attendants, angry about the carrier’s decision to pay managers $100 million in bonuses, said they would no longer cooperate with an effort between the company and unions to lower costs.

The dispute, triggered by the January disclosure of the payments, is threatening Chief Executive Gerard Arpey’s attempts to reduce costs and avert bankruptcy by courting the support of unions. The airline, a unit of AMR Corp., and its three biggest labor groups Wednesday began arguing before an arbitrator over whether the bonuses violate workers’ contracts.

The Assn. of Professional Flight Attendants, the airline’s second-largest union, has withdrawn from the joint effort until the bonus issue is resolved, union President Tommie Hutto-Blake said.

Fort Worth-based American, the world’s No. 1 carrier, plans to pay some managers a total of $99.9 million even as it loses money and seeks cost cuts from workers.

Labor leaders, who knew the bonus program had been created by AMR’s board, were surprised by the size of the planned payments, almost $2 million for one executive alone.

The unions contend that the program violates a 2003 agreement establishing annual incentives that were to align management compensation with pay for line employees.

The airline is sorry the flight attendants removed “their name and participation from this issue,” spokeswoman Lisa Bailey said. “We look forward to working with them on future issues.”