Bloomberg News

AMR Rejects Union Plans Aimed at Blunting 13,000 Job Cuts

February 24, 2012

(Updates with company comment in third paragraph.)

Feb. 24 (Bloomberg) -- AMR Corp.’s American Airlines rejected proposals from two unions designed to reduce 13,000 planned job cuts, saying incentives for workers to leave early wouldn’t provide permanent savings for the bankrupt carrier.

American said today it wants to reach agreements “within the next few weeks” on steps to trim annual labor spending by $1.25 billion as it responded to the Association of Professional Flight Attendants and the Transport Workers Union. The APFA had said as many as 3,000 members would retire under its proposal.

“As currently structured, these early-out incentives would significantly increase costs and do not address the company’s need for sustainable cost savings and efficiency,” Fort Worth, Texas-based AMR said in a statement.

AMR’s reply capped a review of union plans offered Feb. 15 to counter the airline’s strategy for dumping 13,000 jobs. The carrier wants to shift some work to third-party vendors, freeze pensions, extend work hours and make other changes to pare an $800 million annual labor-cost disadvantage to its peers.

The APFA program would have provided full pensions and medical coverage to workers retiring early and allowed American to immediately begin hiring 500 new workers at lower salaries. The airline wants to cut 2,300 jobs from among the 16,000 attendants represented by the union.

The TWU, which represents mechanics, baggage handlers and other airport ground workers, proposed a one-time payment of $75,000 and certain health and other benefits for members who chose to leave. American’s plan calls for 8,800 job cuts within the union, which represents more than 23,000 workers.

AMR also is in talks with the Allied Pilots Association, whose board has said it wants the airline to freeze pensions instead of terminating them following the company’s Nov. 29 bankruptcy filing.

American’s plan to secure $1 billion in new annual revenue after leaving Chapter 11 protection rests on winning the $1.25 billion in labor cuts and $750 million in other savings, Chief Commercial Officer Virasb Vahidi said on Feb. 21.

--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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