American announces 13,000 job cuts

[mstng86]

FORT WORTH – American Airlines top management met with its three labor unions Wednesday morning telling them the company will reduce costs by 20 percent – including management as the airline works through bankruptcy.

Proposed employee cuts included 13,000 in total, including about 4,200 in fleet service and other transportation workers union jobs, 2,300 flight attendants, 1,400 management and staff, 4,600 mechanics and other related jobs and 400 pilots.

“There is no avoiding the fact that the cost reductions will be deep,” Horton told employees in a letter. “And there is no sugarcoating the effect on our people.”

The company did not immediately say whether the cost reductions would include layoffs or furloughs of any employees.

“It looks really bad,” said Darrin Pierce, a TWU local president, who attended Wednesday’s meeting with airline management.

Pierce said the company will meet with union representing pilots, flight attendants and ground workers individually at 2 p.m. to further outline what the 20 percent across the board cuts will entail.

Still, American said it also planned to spend money by investing $2 billion annually in aircraft to create the nation’s youngest fleet by 2017.

In addition, American plans to increase departures across in its five cornerstone cities – Dallas/Fort Worth, Chicago, Miami, Los Angeles and New York – by 20 percent over the next five years.

Still, American said it also planned to save money by restructuring debt and leases, grounding older planes and improving supplier contracts. At least, $1.25 billion in savings will be in employee-related costs, the company said.

“You will hear more detail later today as we share it with our union workgroups, and we will have more information for our non-union groups in weeks to come as we address feedback from them,” read Horton’s letter. “While we are now firmly on a path to a successful growing future, we must acknowledge the near-term pain these changes will require. That’s especially true because we will end this journey with many fewer people.”

American Airlines' parent company AMR could be poised to layoff as many as 20,000 employees. Currently there are close to 87,000 employees between both airlines worldwide.

Union leaders say the mood is somber as they await the official word on how many layoffs will be made at American Airlines and American Eagle.

The leaders confirmed that the FAA is watching the situation to make sure emotions of the day do not affect the quality of work performed.

American Airlines' parent company says it lost $904 million in December — more than in the first nine months of 2011 combined.

Revenue was $2 billion in December, American's first full month operating while under bankruptcy protection.

AMR Corp. also listed $4 billion in cash and short-term investments. That's down from $4.3 billion at the end of September.

AMR disclosed the numbers in a filing Tuesday with a federal bankruptcy court in New York.

Company executives were scheduled to meet with employees Wednesday in Fort Worth, Texas, to detail concessions that they want from unions under a reorganization plan. Unions expected the company to propose job cuts and either freeze or end American's pension plans.

AMR filed for bankruptcy protection on Nov. 29. It lost $884 million in the first nine months of 2011 and about $11 billion since 2001.

For December, the company said its operating loss was $728 million. That figure excludes some reorganization costs, including $102 million for aircraft-refinancing negotiations and $14 million in professional fees.

American's labor unions have raised concerns about the amount that the company is spending to hire lawyers and restructuring consultants.

In the bankruptcy court filing, AMR did not present data from December 2010 for comparison. Previously the company filed its earnings results with the Securities and Exchange Commission on a quarterly basis.

[Lone Sailor]

Not shocking.

[ceyko]

Am I the only one that does not like seeing mechanics being the biggest chunk being cut?

[ram57ta]

But Obama says things are looking better and that the recession is over.

[A_A_G]

Never flew on AA and will continue to do the same.

[UserX]

I hope they make it, I don't want to lose my 700k AAdvantage miles.

[slow99]

But Obama says things are looking better and that the recession is over.

The recession's been over for a long time, just saying.

[CBX1000]

I hope they make it, I don't want to lose my 700k AAdvantage miles.

This!
Been to Hawaii twice using miles, was hoping to have time to do it again.

[Texican]

I guess this is why there was a news crew on Amon Carter on my way to work

[Geor!]

The recession's been over for a long time, just saying.

I would argue that gross stagnation still qualifies as a recession.

[slow99]

I would argue that gross stagnation still qualifies as a recession.

I don't know who you're gonna argue with. The recession was over a while ago. It's a fact.

[Geor!]

I don't know who you're gonna argue with. The recession was over a while ago. It's a fact.

Myself, for starters. It's a fact.

[Vertnut]

Myself, for starters. It's a fact.

I think Jody means by definition. Why are you arguing with a finance guy?

[2011GT]

Dear Colleagues:

Today we outlined a bold plan to address the urgent need to restructure our company. This requires decisive action, difficult changes, and an unwavering commitment to our future success. As Tom discussed in his message earlier today, we are seeking $1.25 billion in permanent annual cost reductions from all employee groups.

Nothing about this process is easy, but the alternatives are harder still. The fact is that we're losing money every day. And every employee will feel the effects of this effort to address our challenges, from the leadership level to the frontline.

A successful restructuring requires that we reduce employee costs by significantly more than what was discussed in Section 6 negotiations. Our goal then was to reach agreements that would create greater financial flexibility as we worked to compete more effectively and avoid Chapter 11. Unfortunately, we ran out of time.

In restructuring, the bar to success is now higher. After losing $10 billion over the last 10 years, and financing those losses with debt, we must now prove to our creditors and the court that we can implement significant cost reductions, remove barriers to flexibility, increase revenue and ultimately be a consistently profitable company. If we don't demonstrate the necessary plan for success, we risk failure or the possibility that others may try to step in and convince the court their way is better.

This afternoon we met with each of the unions and shared proposed changes to our current agreements to achieve the necessary cost reductions. Every workgroup - including management - must reduce its total costs by 20 percent in order to achieve this goal.

Across all workgroups, we are proposing to maintain base pay rates to the greatest extent possible. In some cases, that will mean the savings will come from increased productivity. In others, it will rely on outsourcing. And in all cases, the changes will be focused on creating a successful business.

One of the most difficult outcomes of this process is our need to reduce the size of our workforce to better align with our streamlined and more efficient operations. The business plan and our proposals outline a total reduction of approximately 13,000 employees across our company. Our proposals are consistent with the approach of other airlines and are fundamentally necessary for our long-term success. These include:

Outsourcing a portion of our aircraft maintenance work and seek the closure of AFW


Outsourcing some airport fleet service clerk work


Removing major structural barriers to operational flexibility, including restrictions on code sharing and regional flying


Introducing work rule changes to increase productivity


We also are putting in place changes to certain benefit programs for all employees that are necessary to reach our savings target and move us in line with other airlines and large companies. Among these, we will:

Seek court approval to terminate our defined benefit pension plans. If terminated, the plans would be replaced with a 401(k) plan with a company match.


Seek to discontinue company-subsidized retiree medical coverage for current employees, but will offer access to these plans if employees choose to pay for them.


Move to implement common active medical plans and contribution structures across all employee groups.


We'll meet with representatives from the APA, APFA and TWU to negotiate the necessary changes through a formal process controlled by the court. We hope to reach consensual agreements with the unions in the next few weeks. Only if we can't reach agreement would we ask the court to authorize our proposed changes that we believe are fair, equitable and necessary to a successful restructuring.

Specific changes affecting independent employees - Agents, Representatives, Planners, Management and Support Staff - will be influenced by employee feedback offered in conjunction with restructuring forums held throughout the system in recent weeks. That process is ongoing and we expect to complete those plans in the coming weeks. Additionally, to achieve the 20 percent reduction in management costs, we will launch a redesign of our management and support staff structure that will result, in part, in a 15 percent reduction of management positions. Our goal is to create a leaner leadership culture of accountability and high performance.

As part of this process, we also intend to provide all employee groups annual pay increases and a new, first-dollar profit sharing plan that matches the most generous plans in the industry - provisions we propose as part of a reaching consensual agreements with the unions. Just as our competitors that went through restructuring are now earning consistent profits, we believe there is a real opportunity for American's employees to benefit when we emerge a stronger, more competitive company.

As part of our commitment to providing employees current information and facts on the restructuring process, we've created a new website, www.RestructuringAMR.com. Information will also be available later today on the Restructuring Resource Center on Jetnet. I hope you'll visit these sites often as we move forward.

Today's announcements are difficult news for our company and our people. But we must face this challenge head on and look to the future. We have done everything we can up to this point to cut costs and raise revenues with minimal impact on employees. And, as difficult as our proposals are for everyone, we believe that our plan is the best approach to making the changes necessary to a successful restructuring while saving as many good jobs as possible and acting in the long-term best interest of employees and all other stakeholders.


Sincerely,

Jeff Brundage

[2011GT]

If you have any friends or family at alliance fort worth (afw) start praying for them now.