Airline Studying Headquarters Revamp; Number Of Job Losses Not Yet Set
Aug. 31, 1994
DALLAS (AP) _ American Airlines plans to fire managers and administrators to help convince its unions they won't be the only ones suffering to make the carrier profitable.
The airline said Tuesday that a management restructuring will be part of a plan to cut costs by $1 billion a year - $750 million from labor and $250 million in other expenses.
The company aims to get roughly $75 million of that from its staff of 10,000 managers and administrators, spokesman Tim Smith said.
The restructuring is the latest of several cost cutting moves American has made in recent years. The company has grounded planes and has eliminated 5,000 jobs since the end of 1992 as it attempts to turn around four straight years of losses.
The management streamlining will be studied for four to five months and the number of layoffs has not yet been determined, Smith said.
American chief financial officer Michael Durham told analysts in a conference call Tuesday it is possible the job reductions could run into the thousands, Smith said.
Durham also said a cost-cutting plan aimed at American's 18,000 reservations and other agents, who are not unionized, will be announced in about a month.
The moves come while American enters a difficult period of negotiations with its unions.
Contract talks are ongoing with the Allied Pilots Association, which represents American's 9,500 pilots. The carrier is seeking $300 million in savings from the pilots, Smith said.
Pilot union spokesman Greg Overman said there was little new in Tuesday's announcement.
''We take it as a positive sign that they are looking at all aspects of the airline business, not just labor,'' he said.
American begins arbitration in October with the Association of Professional Flight Attendants. The union for American's 20,000 flight attendants waged a five-day strike against the airline last Thanksgiving over contract terms that have yet to be resolved.
American also said it hopes the Transport Workers Union, representing its 27,000 mechanics and ground handlers, will agree open negotiations earlier than usual on their contract, which becomes amendable next March.
That idea was dismissed Tuesday by Ed Koziatek, a union vice president, who said it's not prepared to start early.
Smith said Tuesday's announcement of management cuts is not an attempt to pressure the unions, but the timing could help show them that the entire airline is being streamlined.