Over the end of last week, there were two bits of news concerning large numbers of those folks who fly airplanes.

Yes, the pilots.

Let’s talk about the situation at American Airlines first.

Last week the Allied Pilots Association gave management at the airline a non-variable compensation proposal. APA will provide an additional proposal that addresses variable compensation at some point in the near future.

According to the APA, the proposal, “should not be viewed as a starting point for negotiations. Rather, it is a statement of what is required to return pilot compensation to the minimum level necessary to constitute a reasonable  return on the

investment pilots made in our company in 2003.”

These are the principal components of APA’s non-variable pay proposal.

• Pay Rates: Increase all hourly pay rates 30.5 percent from the 5/1/2008 book rates on the date of signing.

• Annual Pay Raise: Increase all hourly pay rates five percent annually thereafter for the life of a 36-month agreement.

• Extended Pay Rates: Increase all hourly pay rates six percent annually from the amendable date of the contract being negotiated now until the following contract is signed.

• Retroactivity: All pay rate increases are to be retroactive to 5/1/2008 should this agreement not be complete by that date.

• Signing Bonus: Pay a signing bonus of 15 percent of W2 income from 7/21/2006 (the date management opened on APA) to date of signing of this new contract.

There were also some additional components to the proposal as follows:

• New Hire Pay: Increase new hire pay to $4000 per month

• Pay Date: Change pay dates so that 50 percent of pay is paid at the end of the current month with the balance paid by the 15th of the following month.

• Night Differential: Increase Captain night differential to $6.50.

• Premium Pay: Double time (200 percent of hourly rate) for all flying done on major holidays.

• International Override: Increase International Override pay to $10/hour for Captains and $8/hour for First Officers.

• Per Diem: Increase Per Diem to $3/hour International and $2.15 Domestic. Annual increases of $0.25 (international) and $0.10 (domestic) thereafter.

As part of the APA’s presentation to its members, it points out that the senior executives at AMR have recovered approximately seven times what they gave up in 2003.

The chart below illustrates the point.

Or as the APA put it in their proposal outline, “Stated another way, if you were to take the amount of money they gave up, i.e., what they invested in AMR’s recovery, and then computed their return on that investment, it would come out to 98% annual rate of return for the four year period 2003-2007. Over that same period of time, the Dow Industrials produced a 9.6 percent annual rate of return, while the S&P 500 returned 12.2 percent annually. In the final analysis, management has recovered all their compensation sacrifice more than eight times over.”

I look at that chart and wonder what the total numbers were in 2000 and 2001.

I may have to go forage around and find out for myself.

Ticker: (AMR:NYSE)