Bloomberg News

AMR Unions Urge Early-Exit Incentives to Temper 13,000 Job Cuts

February 22, 2012

Feb. 16 (Bloomberg) -- Unions for American Airlines’ flight attendants, mechanics and baggage handlers urged the bankrupt carrier to offer incentives for voluntary exits to reduce 13,000 planned job cuts as parent AMR Corp. restructures.

As many as 3,000 members of the Association of Professional Flight Attendants may retire under a program for full pensions and medical coverage, the union said yesterday. The Transport Workers Union proposed one-time, $75,000 payments and certain benefits for ground employees who elect to leave.

The plans countered American’s Feb. 1 strategy to chop $1.25 billion from annual labor costs at the third-largest U.S. airline by paring the workforce by about 18 percent, ending pensions and trimming benefits. Fort Worth, Texas-based AMR would be able to ask the bankruptcy court to impose changes if it can’t reach agreements with unions.

“American wants to get their costs down as quickly as they can and get the labor contracts resolved as quickly as they can,” said Michael Derchin, an analyst at CRT Capital Group LLC in Stamford, Connecticut. “If this moves in that direction, they should consider it.”

The airline hasn’t assessed the union plans after receiving them late yesterday, Bruce Hicks, a spokesman, said in an e- mail. He said American seeks lasting savings while keeping as many jobs as possible. The Feb. 1 proposal would end the jobs of 2,300 attendants and 8,800 TWU-represented positions.

Lower Salaries

According to the APFA, incentives for members to leave would let American begin hiring 500 new attendants immediately at lower salaries than those who would take early retirement. The proposal also covers employees at regional unit American Eagle, for which American hasn’t specified any cuts.

“I am calling on management to put this package to our members immediately, and revise their term sheet factoring in these new savings,” union President Laura Glading said in a statement. APFA has more than 16,000 members at American.

The TWU, which represents more than 23,000 workers at the airline, didn’t say how many of its members might take one of two plans sent to American. One option is for workers at least 55 years old with 10 years of service, with a second early-out option for those at least 45 and with 10 years on the job.

“It is in short a fair and humane alternative to the draconian layoff measures currently being contemplated,” TWU International President Jim Little wrote to American.

American’s planned job cuts also include 400 pilots and 1,400 management and support staff. The company hasn’t disclosed reductions among customer-service and reservations agents. Two more executives are leaving in the second round of management restructuring, American said yesterday.

Executive Departures

Peter Dolara will retire as senior vice president for Mexico, Caribbean and Latin America and Thomas Del Valle as senior vice president for airport services and cargo by June 30, American said. Three executives retired at the end of 2011.

“We must seize every opportunity to streamline and enable fast, effective decision making,” Chief Executive Officer Tom Horton said in an e-mail to employees yesterday. “This is an essential part of positioning the new American to win.”

American had a fourth-quarter net loss of $1.1 billion, including $886 million in costs linked to its reorganization and other items, according to U.S. regulatory filing. Excluding those items, the loss widened to $209 million from $69 million on the same basis a year earlier. Revenue rose 7.4 percent to $6 billion.

--Editors: Ed Dufner, Stephen West

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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