Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
AA To Cut Pay By 1.8B Immediately  
User currently offlineAa777flyer From , joined Dec 1969, posts, RR:
Posted (13 years 3 months 3 weeks 1 day 14 hours ago) and read 3493 times:




Annual Savings Required to Make Airline Competitive
Changes Can Come from Wages, Benefits and Work Rules
Shared Sacrifice Includes Management, Non-union and Union Groups

Citing its unsustainable current losses and the long-term need to restructure its business, American Airlines today asked its labor leaders and employees for $1.8 billion in permanent, annual savings through a combination of changes in wages, benefits and work rules.

"We have together made significant changes in our operation, our product and our service to build a more efficient and innovative airline," the company said in letters to union leaders and non-represented employee workgroups.

"But we need to do more. And we need to do it now. Our financial results make it abundantly clear that American's future cannot be assured until ways are found to significantly lower our labor and other costs."

In the letters, AMR Chairman and CEO Don Carty and President Gerard Arpey noted that, unlike other financially troubled airlines, the company turned to employees as a last resort, and only after pursuing an aggressive restructuring plan that identified $2 billion in annual, structural cost savings.

Company executives have said the airline needs an estimated $4 billion in permanent annual savings to compete effectively and return to profitability.

The company cited pricing actions by low-cost and bankrupt carriers among the factors putting "unrelenting pressure" on the company's financial situation.

"Today, as a last resort, we are taking the difficult step of asking all of our employees to participate in American's recovery by working with us to deliver $1.8 billion in permanent, steady-state savings. We hope to work collaboratively with you to restructure labor agreements to realize these permanent, annual savings and those needed to address our long-term financial health." The company also said it would seek to obtain accommodations from a number of its other stakeholders, including aircraft lessors, lenders and suppliers.

In addition, the company announced the latest steps in its ongoing restructuring efforts, stating it plans to close two of its 10 domestic reservations offices - Norfolk, Va., and Las Vegas - impacting approximately 910 reservations representative positions.

According to the company's proposal, the $1.8 billion in cost savings would be divided by work group as follows:

Pilots: ($660 million)
Flight attendants: ($340 million)
TWU represented employees: ($620 million)
Agents and representatives: ($80 million)
Management and support staff: ($100 million)

Each work group's share was allocated in consideration of American's strategic goals as well as a review of the competitive landscape and labor costs at other airlines. The company said it hopes to work collaboratively through a process of active engagement with union leaders and non-unionized employee groups to determine how each will deliver its share of the targeted savings through a combination of changes in wages, benefits, and work rules.

In the meeting, Carty and Arpey assured labor leaders that management would continue to do its share and emphasized that today's proposed cuts come on top of a second year of across-the-board pay freezes for management and a 22 percent reduction in management and support staff positions, resulting in more than
$200 million in savings to date.

"Unfortunately, we have little other choice," Carty and Arpey wrote. "What we do have is an opportunity no longer available to our counterparts at United and US Airways: the chance to work together to find mutually acceptable solutions to our financial crisis in order to avoid the uncertainty of courts and creditors determining our fate.

"Given the magnitude of this request and the sacrifice we are asking of our employees, the importance and impact of your leadership during this pivotal time is critical to our success," Carty and Arpey wrote to union leaders.

"This is a painful time, but we are confident that the men and women who have built their careers at American Airlines will recognize the gravity of the situation and work with us as we embark upon a difficult but necessary journey toward recovery," Carty and Arpey concluded. "We are grateful for and inspired by the determination and dedication of the people of American and know that with their support, we will succeed."


Additional Jetwires will be issued later today.

4 replies: All unread, jump to last
User currently offlineAIR757200 From United States of America, joined Jul 2000, 1579 posts, RR: 7
Reply 1, posted (13 years 3 months 3 weeks 1 day 14 hours ago) and read 3477 times:

Whatever is necessary.

-AA Agent

User currently offlineSean-SAN- From United States of America, joined Aug 2002, 801 posts, RR: 1
Reply 2, posted (13 years 3 months 3 weeks 1 day 14 hours ago) and read 3447 times:

Cuts to pilots and F/A's seem disproportionate to the cuts in management. Won't go over too well, I can already tell.


User currently offlineGnomon From , joined Dec 1969, posts, RR:
Reply 3, posted (13 years 3 months 3 weeks 1 day 14 hours ago) and read 3433 times:

Let's just hope the pilots and the flight attendants -- arguably American's most inflexible union groups in the past -- will play ball this time. Rather than pointing fingers at management, as the APA has been doing, employees had better recognize the dire straits and work together to resolve AA's economic crisis.

I would submit, in fact, that AA's management cannot be legitimately confused of drilling the company into the same sh*thole that UAL's did at that airline. AA's management, while certainly not extraordinarily conciliatory or generous with the labor unions, has been responsive to changing market conditions and has been presented with several spectacular cases of bad luck (9/11, AA587, etc.). In my $0.02 opinion, it's as simple as that.

User currently offlineGnomon From , joined Dec 1969, posts, RR:
Reply 4, posted (13 years 3 months 3 weeks 1 day 14 hours ago) and read 3430 times:

Correction: Management can't be legitimately ACCUSED, not "confused," as my post above states. Sorry bout that.

Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
US Airways Pilots Offer To Cut Pay By 12.5 Pct posted Sat Jun 26 2004 05:13:30 by InnocuousFox
AA To Cut Domestic Capacity posted Thu Jan 19 2006 01:13:13 by Tu154
US Seeks Court Order To Cut Pay 23% posted Fri Sep 24 2004 18:12:24 by DLKAPA
AA To Cut STL In Half posted Wed Jul 16 2003 17:57:37 by FlyPNS1
Boeing To Cut Production By Half posted Wed Dec 5 2001 13:00:09 by Godbless
SR Wants To Cut Costs By CHF 500 Million posted Wed Jun 6 2001 08:20:04 by Sndp
Eads Airbus To Cut Supplier Base By 80% posted Mon Nov 6 2006 20:49:46 by N328KF
AA To Slash 1,000's Of Jobs/ Pay Cuts. posted Wed Oct 19 2005 15:38:47 by Aa777flyer
WSJ: AA To Increase Pacific Services By 50% posted Fri Dec 31 2004 01:39:41 by Rjpieces
AA And UA To Cut As Many As 65 Flights From ORD posted Thu Jan 22 2004 06:21:18 by GalvanAir777