American Airlines to reduce costs by 20 percent

FORT WORTH, Texas - American Airlines chief executive outlined several ways to streamline business to union leaders Wednesday, including reducing their costs by 20 percent and cutting approximately 13,000 employees.

An AA spokesperson said that 2,100 jobs will be lost at the maintenance base in Tulsa and several hundred jobs at Tulsa International Airport.

The company hopes to save "$2 billion from restructuring debt and leases, grounding older planes, improving supplier contracts and other initiatives, and necessary employee related changes," said Tom Horton, chief executive officer.  "There is no avoiding the fact that the cost reductions will be deep.  And there is no sugarcoating the effect on our people."

Read Horton's letter here

Horton also said,  "All work groups will have total costs reduced by 20 percent, including management. While the savings from each work group will be achieved somewhat differently, each will experience the same percentage reduction."

AMR, the airline's parent company, met with union heads in Fort Worth Wednesday to discuss how the airline will restructure under bankruptcy. 

American Airlines employs more than 6,500 in Tulsa, making it the city's largest employer.

Proposed company-wide reductions include the following:

  • 4,600 mechanics and related positions
  • 4,200 fleet service and other TWU
  • 2,300 flight attendants
  • 1,400 management and support staff
  • 400 pilots
  • TBD agents, reps and planners (the restructuring plan remains under development as the company collects and analyzes employee feedback)

Jeff Brundage, American Airlines senior vice president of human resources, outlined a proposal to reduce the company's workforce that includes outsourcing a portion of the company's aircraft maintenance work and closing Fort Worth Alliance Airport ( AFW); outsourcing some airport fleet service clerk work; removing major structural barriers to operational flexibility, including restrictions on code sharing and regional flying; and introducing work rule changes to increase productivity.

Currently, American is one of the only major airlines in the country that does not outsource maintenance overseas.

In addition to workforce reductions, the company proposed changes to employee benefit programs, including the following:

  • 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.

AMR has created a new website providing details about the company's plans.

Read Brundage's letter here

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