Tom Horton, chairman and CEO of AMR Corporation, parent company of American Airlines, sent a letter to employees announcing that the airline will cut all workgroup costs by 20 percent. The savings will be achieved in a variety of ways, Horton said, including a reduction in the number of employees. But Horton said that the cuts will save other jobs.
Horton also said that he did not believe that selling American to another airline or breaking it up and selling parts of it would be in the best interests of the company, its employees or its stakeholders.
Horton told employees that the recent quarterly financial results of other airlines that have gone through the bankruptcy process shows the business benefit of restructuring under Chapter 11. American is the last legacy carrier to go into Chapter 11.
“Network carriers have benefited from investing their restructuring-driven profits in products and services that have helped drive revenue growth,” Horton wrote. “And low-cost airlines continue to benefit from the cost efficiency that has made them a force in our industry. Several network carriers reported profits despite soaring fuel prices.
Horton said that American will invest about $2 billion a year on aircraft so that by 2017 American’s mainline jet fleet will be the youngest in North America, with the versatility to match aircraft size to the markets. This will improve fuel efficiency and save money on maintenance.
American will increase departures across its five key markets — Dallas/Fort Worth, Chicago, Miami, Los Angeles and New York — by 20 percent over the next five years. The airline plans a $3 billion annual financial improvement with these and other measures — $1 billion per year through network scale, fleet optimization and product improvements, and cost savings of $2 billion, from restructuring debt and leases, grounding older planes, improving supplier contracts and other initiatives, and necessary employee-related changes.
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