Bankrupt American Airlines To Trim 13,000 Jobs

By: EW News Desk Team   Date: 3 February 2012

About The Author

EW News Desk Team

Always on the look out for the latest news to monitor the state of the world economy.

EconomyWatch, News Desk Team

 

  • Dot Div
  •      
03 February 2012

American’s third largest airline is all but soaring. AMR, parent company of the bankrupt American Airlines, is looking to slash 13,000 jobs and terminate employee pension schemes as part of plans to reduce spending by $2 billion annually.

American Airlines is looking to trim labour costs by 20 percent, a move that would see approximately 13,000 to 15,000 job losses.

On Tuesday, American Airlines CEO Thomas Horton said it was part of the plan to return to profitability, with the goal of saving $2 billion annually in costs.

As you know, our major competitors have used the restructuring process to overhaul their companies and become more competitive in every aspect of their business, Horton said in a letter to employees.

He added:

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.

According to Reuters, American Airlines has “lost $10 billion over the past decade and financed the red ink with debt. The period was marked mainly by industry downturns triggered by the 2001 hijack attacks, recessions, and skyrocketing fuel price.”

Related Infographic: The Travel Industry Post-9/11

Related News: Overweight Passengers Should Pay Extra For Flights: Former Airline Executive

Horton’s cuts announcement, however, is subjected to a ruling by a bankruptcy judge. In November last year, the company filed for Chapter 11 bankruptcy protection from creditors.

Related Information: Chapter Bankruptcy

Nonetheless, American’s bankruptcy has fuelled the speculation of a merger within the industry. CNN reported that US Airways confirmed it has hired investment advisers to weigh the opportunities of a merger or buyover. According to the Wall Street Journal, Delta Air Lines too have been in talks with their own investment advisors from Blackstone.

Related News: US Airlines Hit Out At Government Subsidies To Foreign Rivals

Related News: United Airlines To Fly First Ever US Commercial Flight On Biofuels

Related Infographic: The Best Airports and Airlines for Business and Tech Travellers


  • Dot Div
  •      

Most Popular in Airline Industry

Related Links
blog comments powered by Disqus