American Airlines has announced its restructuring process, which includes cutting 16% of its 80,000-strong workforce, according to The New York Times. The carrier estimates that $2 billion a year could be saved, $1.25 billion of which would come from staff cutbacks.
The Texas-based carrier, whose parent company AMR Corporation filed for Chapter 11 bankruptcy protection in November 2011, wishes to lay off around 13,000 employees, terminate pension plans and cut back on health benefits. Altogether, it hopes to slash employee costs by 20%.
Up to 4,600 mechanics’ jobs, 4,200 ground service positions, 2,300 flight attendants, 400 pilots and 1,400 roles in management and support services are at risk. Some gate agents, service representatives and airline planners could also lose their positions.
Union representatives, who had been in talks with the airline, are said to be stunned by the announcement and intend to fight the proposals.
Labour costs at American Airlines account for 30% of overall expenditure, and the carrier claims that it faced a cost disadvantage of $800million a year compared to other airlines such as Delta and United.
The carrier also plans to introduce more flexible work rules for its remaining staff. Furthermore, it intends to shut down its Alliance Airport maintenance operation in Fort Worth and outsource a portion of its aircraft maintenance work.
Revenue is hoped to increase by $1billion a year through partnerships and more efficient use of American Airlines’ fleet, while significant investments are planned for upgrading and adding to the fleet.