American Airlines announces 13,000 job cuts

04 Feb BBC

The parent company of American Airlines (AA) says it will shed 13,000 jobs around 15% of its workforce.

AA’s parent, AMR, wants to cut staff costs by 20% in a bid to reduce spending by $2bn (£1.26, 1.52bn euros) and raise revenue by $1bn a year.

AMR, which filed for bankruptcy protection in November, also wants to make changes to its staff pensions.

The 88,000 strong workforce is mostly represented by three main unions, which are opposed to the changes.

AMR said it plans to begin negotiations with the three unions shortly.

AMR lost $884m in the first nine months of 2011, and on Tuesday disclosed a $904m loss for December alone. The company has lost more than $11bn since 2001.

AMR’s chief executive, Thomas W Horton said in a letter to employees: “We are going to use the restructuring process to make the necessary changes to meet our challenges head-on and capitalise fully on the solid foundation we’ve put in place.”

‘Dismay and outrage’ Mr Horton said in December that the company would emerge from bankruptcy with fewer workers.

“I expect dismay and outrage from our membership as details of the proposal are made public,” said Laura Glading, president of the flight attendants’ union.

Mr Horton said the planned cost-cutting moves will include restructuring debt and aircraft leases, grounding older planes, and changing workforce contracts, some management jobs will also go as part of the plans. The biggest cuts about 4,600 are expected to be among maintenance workers.

Baggage handlers could be cut by 4,200, while some 2,300 flight attendants, 1,400 management employees and 400 pilots would also lose their jobs.

The company also wants union approval to drop its traditional pension plans, which pay a defined amount of pension and covers 130,000 employees and retirees, and replace them with a “retirement account”.

AMR’s company pension funds are underfunded by billions of dollars and the company said on its website on Wednesday that it could no longer afford them.

AMR is the latest of several large US airlines to go through Chapter 11 bankruptcy protection in an effort to reduce costs and debt.