American Airlines Warns It's Eliminating Jobs
STEVE INSKEEP, HOST:
And speaking of that, American Airlines says it is sending layoff warning notices to 11,000 employees. The company says the news may ultimately be a little less bad. Those actually losing their jobs will number a little over 4,400 in the end. The cuts are part of the Texas company's bankruptcy process, which NPR's Wade Goodwyn is tracking.
WADE GOODWYN, BYLINE: American Airlines announced in February that it planned to lay off 14,000 employees, the vast majority union workers. But after U.S. Airways indicated it was interested in merging with American, and that it would cut far fewer jobs if they did merge, American management discovered it could be a lot more flexible than it first thought. Bruce Hicks is American's spokesman.
BRUCE HICKS: Fortunately through a number of things we expect only about a third of those to be actually involuntarily reduced. We now don't believe that any flight attendants will be involuntarily separated because of the early-out program and the other voluntary programs.
GOODWYN: Eighteen hundred American flight attendants, and more than 800 ground workers, have agreed to take bonuses and leave. Hicks says the cuts are painful but necessary.
HICKS: American Airlines lost over $10 billion in the last decade. We had said in February that we need to reduce our labor costs by over a billion dollars a year, and this is part of that process.
GOODWYN: American has signed agreements with every major union but one, the Allied Pilots Association. The relationship between American's management and its pilots union has been a train wreck for the last 30 years. The low point was in 2003, when the company rung more than $2 billion in concessions from its unions. It was later discovered that American's top managers were quietly taking millions in bonuses and setting up special executive pension plans for themselves worth tens of millions of dollars more.
This week, American's pilots began finding increasing maintenance problems with their aircraft, and the company's on-time performance has plummeted. American's Bruce Hicks.
HICKS: We certainly apologize to all of our customers for any delay or cancellation they faced. This is not the way we run an airline, but these are the issues we're dealing with right now, and we're going to continue to do our best for them.
GOODWYN: Before American can take its next step, whether that be as a stand-alone airline or newly merged, it needs an agreement with its pilots. At one point, American offered the pilots a 13.5 percent stake in the new company, but the pilots turned it down. Helane Becker is an industry analyst with Dahlman Rose & Company. Becker believes the pilots may have made a mistake.
HELANE BECKER: The company presented to the pilots the kind of last best offer, and it was rejected by the pilots because they thought they were going to get a better deal and we would, you know, conjecture they're probably not going to get a better deal.
GOODWYN: But Becker says the pilots are far from powerless. The union can gum up management's happy little bankruptcy plan, and it's in the company's interest to get the pilots on board. You can't fly without them, but with so much bad blood, it is not going to be easy. Wade Goodwyn, NPR News, Dallas. Transcript provided by NPR, Copyright NPR.