American Airlines to cut 13,000 jobs

The parent of American Airlines wants to eliminate about 13,000 jobs, 15 per cent of its workforce, as the nation's third-biggest airline remakes itself under bankruptcy protection.

The company proposes to end its traditional pension plans, a move strongly opposed by the airline's unions and the United States pension-insurance agency, and to stop paying for retiree health benefits.

AMR Corp said Wednesday that it must cut labour costs by 20 per cent. It will soon begin negotiations with its three major unions, but the president of the flight attendants' union quickly rejected the company's ideas as unacceptably harsh.

CEO Thomas W. Horton said Wednesday that the company hopes to return to profitability by cutting spending by more than US$2 billion per year and raising revenue by US$1 billion per year.

AMR lost US$884 million in the first nine months of 2011, and US$904 million for December alone. It has lost more than US$11 billion since 2001.

"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," Horton said in a letter to employees.

AMR's 88,000 employees have braced for bad news for weeks. AMR, American and short-haul affiliate American Eagle filed for bankruptcy protection in November. Horton said in December that the company would emerge from bankruptcy with fewer workers.

Laura Glading, president of the Association of Professional Flight Attendants, said the proposal was more drastic than she expected.

She claimed that the annual reduction in employee costs, which AMR put at US$1.25 billion, would be closer to US$2.8 billion.

"This is an absolute outrage," Glading said. "There's nothing in here that's remotely acceptable."

Transport Workers Association President James Little declared, "We're going to fight this." His union represents American's mechanics and bag handlers, who would be hit hardest - 40 per cent would be laid off.

The job cuts would include 4,600 maintenance workers, 4,200 baggage handlers, 2,300 flight attendants, 1,400 management and support employees and 400 pilots.

If American and its three unions can't agree on changes, the company could ask a bankruptcy judge in New York to throw out existing labour contracts and impose the company's conditions on workers.

Federal law requires the company to first make a good-faith effort to negotiate agreements with its workers.

The company also wants union approval to drop its traditional pension plans, which cover 130,000 employees and retirees. It would replace them with 401(k)-type plans under which the company contributes to workers' retirement accounts.

This week, the US Pension Benefit Guaranty Corp slapped liens on US$91 million in AMR property after the company paid only US$6.5 million of a required $100 million contribution to the plans.

Horton said AMR also plans to go ahead with orders to buy hundreds of new aircraft to replace older gas-guzzlers.

The bankruptcy judge hasn't approved those new orders, but he has allowed the company to take delivery of some new jets.

American plans to increase flights in New York, Los Angeles, Chicago, Dallas and Miami by 20 per cent over the next five years to raise revenue, Horton said.

- AP