Bankrupt American Airlines to Slash 13,000 Jobs

Feb. 2, 2012
AMR Chairman and CEO Tom Horton: The airline needs to cut $1.25 billion a year in employee-related costs from 2012 through 2017.

American Airlines plans to slash 13,000 jobs -- around 15% of the company's total workforce -- and cut costs by 20% in order to stay afloat after filing for bankruptcy late last year.

"All workgroups will have total costs reduced by 20%, including management," Tom Horton, chief executive of American parent AMR Corp., said in a letter to employees Wednesday.

"While the savings from each work group will be achieved somewhat differently, each will experience the same percentage reduction," he said.

Local television in the Dallas-Fort Worth area -- home base of AMR -- said the cuts include 1,400 management and support staff, 400 pilots, 2,300 flight attendants, 4,600 maintenance workers and 4,200 fleet service employees.

"These are painful decisions, but they are essential to American's future," Horton said in a statement later on Wednesday.

"We will emerge from our restructuring process as a leaner organization with fewer people, but we will also preserve tens of thousands of jobs that would have been lost if we had not embarked on this path."

He said the airline needs to cut $1.25 billion a year in employee-related costs from 2012 through 2017.

Among the potential cost-cutting measures, AMR said it will seek bankruptcy-court approval to nix its pension plans and to stop subsidizing future-retiree medical coverage for current employees.

A "central element" of American's turnaround plan, AMR noted in a news release, "is the overhaul of its fleet, which will reduce fuel, maintenance and financing costs, and provide improved profitability and growth over time, by enabling American to better match the right equipment to the right routes."

Horton made no references to cutting flights, but said the airline aims to increase departures in five key U.S. markets -- Dallas/Fort Worth, Chicago, Miami, Los Angeles and New York -- by 20% over the next five years.

AMR, which operates American Airlines and American Eagle Airlines and employs nearly 88,500 employees worldwide, filed for Chapter 11 bankruptcy protection on Nov. 29.

The status allows the company to slash its debt burden and restructure operations, with more legal flexibility to renegotiate or cancel service and wage contracts.

AMR has a combined fleet of 900 aircraft serving more than 250 airports in more than 50 countries.

AMR reported a net loss of $904 million in the month of December alone in a filing late Tuesday to the bankruptcy court handling its case.

The enormous December hole was more than the combined $884 million in losses AMR had between January and September of last year.

Copyright Agence France-Presse, 2012

Popular Sponsored Recommendations

How to Have Productive Employee Experiences for Your Employees

May 31, 2023
If you want to gain the competitive edge, the most important investment you could ever make is in your employee experience. In this handbook, you’ll see how you can unlock the...

The Benefits of Continuous Thermal Monitoring

Oct. 17, 2023
Read this eBook to learn more about collecting and using data intelligently to improve performance.

The New Employee Experience Strategy for the Everywhere Workplace

June 14, 2023
HR and Comms leaders are challenged with managing a distributed workforce. Read this ebook for best practices for rebuilding the employee experience and staying connected and ...

7 Crucial Steps to Improve Your OT Security

Oct. 23, 2023
Enhance OT security in manufacturing and production. Uncover the crucial steps to safeguard your operational technology. Protect against evolving threats and bridge the IT-OT ...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!