American Airlines to shed 13,000 jobs

American Airlines is to cut 13,000 jobs in a $3 billion five-year cost saving plan.

The carrier, operating under US Chapter 11 bankruptcy protection, aims to reduce the workforce across a range of positions in a major restructuring.

“American informed employees earlier today that all groups, including management, must reduce their total costs by 20%,” the airline said on Wednesday.

“While the savings from each work group will be achieved somewhat differently, the plan provides that each will experience the same percentage reduction.

“These reductions would result in average annual employee-related savings of $1.25 billion from 2012 through 2017.

“American’s business plan and proposals encompass a total reduction of approximately 13,000 employees,” the airline said.

“Included in the total employee impact is the expected result of a previously launched redesign of American’s management and support staff structure that will reduce 15% of management positions.”

The plan targets an annual financial improvement of more than $3 billion by 2017, including $2 billion in cost savings and $1 billion in “revenue enhancements”.

“The additional cash flow will enable American to renew its fleet and to invest several hundred million dollars per year in ongoing improvements in products and services to deliver a world-class travel experience for customers,” the airline said.

“The improved cash flow will also allow American to further reduce its debt and become financially stronger in the years after its emergence from the restructuring process.”

Chairman and chief executive Tom Horton said: “American Airlines is moving forward decisively.

“The plan we are outlining today provides the framework for a new American Airlines, positioned to succeed in an intensely competitive industry that has been transformed by our competitors’ recent restructurings.

“Just as other airlines have done and will continue to do, we must invest restructuring-related cost savings in ongoing innovation and customer service improvements that drive revenue.

“The airlines that have failed to adapt to these changes are no longer in business. Change will be difficult, particularly as we will be ending this process with fewer people, but it is a necessity. American is ready to compete and win.”

Parent company AMR, which operates American Airlines and American Eagle and employs almost 88,500 staff, filed for Chapter 11 bankruptcy protection in November.

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