The parent company of American Airlines wants to cut 13,000 jobs and end its traditional employee pension plans as it reorganizes itself under bankruptcy protection, executives told union leaders and employees today, according to Reuters.
"As you know, our major competitors have used the restructuring process to overhaul their companies and become more competitive in every aspect of their business," AMR Corp. Chief Executive Tom Horton said in a letter to employees, Reuters reported.
AMR filed for Chapter 11 bankruptcy protection in November.
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The job reductions would allow AMR to shrink labor costs by 20 percent, which would help the company reach its goal of reducing spending by $2 billion a year, Horton said, according to the Associated Press.
Maintenance workers and baggage handlers face the biggest cuts, with AMR looking to shed about 4,600 maintenance workers and 4,200 baggage handlers, company spokesman Bruce Hicks told the AP. AMR would also axe 2,300 flight attendants, 1,400 management employees and 400 pilots, he said.
“I expect dismay and outrage from our membership as details of the proposal are made public,” Laura Glading, president of the flight attendants’ union, told the AP.
AMR also said it wants to drop its pension plans since it cannot afford to pay $800 million or so each year to make up for the $10 billion shortfall in its employee pension accounts, the Financial Times reported.
The plans would be replaced with 401(k) plans with a company match, Jeff Brundage, senior vice president for personnel, said, according to the AP.
According to the Financial Times:
If accepted by the court, the move will effectively hand the PBGC, the federal agency that insures private pensions, pensions obligations of about $18.5 billion to some 130,000 participants but only about $8.3 billion in assets to cover those future costs. This would dent the PBGC’s already stretched balance sheet.