Airline that needs a class on economy

If there were a league table of crass executive behaviour, the bosses of American Airlines would be outright winners.

Since the September 11 terrorist attacks, airlines have cut thousands of workers from the payroll. Throw in the faltering economy, the war in Iraq and now the threat of Sars, and the airlines are in a perfect storm of troubles. It cannot be easy finding a job in the industry right now.

But American Airlines clearly thinks otherwise.

The airline is hovering on the brink of bankruptcy but nevertheless feels the company's top six executives need to be paid "retention bonuses" of twice their salaries to keep them at their posts until 2005. It has also set up a trust fund to protect the pensions of the 45 senior executives if the airline is forced into bankruptcy.

This comes at the same time as the airline is seeking $1.8bn in pay cuts and other concessions from its workers.

Consider, for a moment - because the airline's senior management obviously doesn't - AA's flight attendants.

They are being asked to take a 17% drop in pay and know they could still be among the 2,000 who are earmarked to lose their jobs.

What message does it send that the richly remunerated top six people in the company should need an incentive to stay at their posts? It doesn't take a qualification from one of America's elite business schools to work it out - although AA's top brass will undoubtedly have a fair few of them on their CVs.

If the pay package is not bad enough, what is more incredible is that the man agement failed to disclose it while negotiating with the unions.

Now, more than ever, good relations with the unions need to be fostered. But instead the unions found out through a filing lodged with the US regulator, the securities and exchange commission.

The incredible greed of a handful of bosses now threatens to undo the hard work of the past few months - trying to find a way for AA to secure its future. The unions have yet to sign the new deals and bankruptcy could yet loom.

If the management is making decisions like these, shareholders in AA's parent company, AMR, should ask just one question - why would anyone want to retain them?

Hogg sticked

If you believe some chairmen - stand up Sir Christopher Hogg - the life of the average FTSE 100 non-executive director is a constant struggle to persuade the chief executive not to accept the latest job offer from a US competitor.

So it's worth pointing out that there is not much evidence to support the Hoggian thesis that British companies need to pay American salaries to retain their chief executives.

In practice, the traffic in executives seems busier from America to Britain, rather than vice versa.

Indeed, our top companies seem to be doing as well as our football clubs in attracting foreign talent. A Footsie international XI could include the Americans at the top of Pearson, Reuters, Lloyds TSB and, soon, Vodafone and Cadbury Schweppes; the Frenchman cum honorary American at GlaxoSmithKline; the Canadian at Barclays; the Belgian at Marks & Spencer; the Argentinian at Safeway; the Dutchman at BT; and the Swiss gentleman at Abbey National. Until British Airways returns to the Footsie, its Aussie leader is consigned to the substitutes' bench.

That little list of names is worth trotting out the next time you hear the keep-up-with-the-Americans argument. And the obvious question is: when was the last time a chief executive of a Footsie company was poached to work for an overseas competitor?

It is hard to think of a single recent example.

Loot in Iraq

News that Bechtel - the Californian company boasting as a member of its board the former US secretary of state George Shultz - has won the first main contract for the reconstruction of Iraq's infrastructure comes as no surprise. But the $680m deal to rebuild the looted country's electrical, water and sewage systems will stick in the craw of British companies trying for even a tiny sliver of the post-conflict action.

After all, whenever a large UK infrastructure project - viz the Jubilee line - goes pear-shaped, Whitehall brings in Bechtel, its most favoured builder. But the US never responds to such largesse in kind, not even to its most faithful military ally.

Just as America's huge and growing defence market is virtually closed to non-US contractors, so Iraq is shut to them bidding for the multibillion-dollar contracts led by USAid, the equivalent of our department for international development.

History is repeating itself, but governments never learn the lesson. After Kosovo, British firms won virtually nothing. Ditto Afghanistan. Even before the Desert Rats moved on Basra, the CBI was enraged by the dilatory approach of Whitehall.

Still, seeing as we've only committed £65m to rebuilding Iraq after spending £3bn on the war, a few sub-contracting crumbs for the likes of Powergen, Balfour Beatty and Costain is really all we can expect.