AMR plans to cut 13,000 workers, close Alliance base

By Andrea Ahles

aahles@star-telegram.com

AMR Corp. plans to cut 13,000 workers across the country and shutter its Alliance Airport maintenance base as part of a broad bankruptcy restructuring that aims to cut costs by $2 billion a year, the company said today.

The Fort Worth-based carrier plans to close its Alliance Airport maintenance facility in Fort Worth, which has 2,200 employees, as it outsources some of its maintenance work along with a portion of its fleet services work, according to a letter from senior vice president of human resources Jeff Brundage sent out Wednesday afternoon.

About 1,200 workers at Alliance will be affected by the closing of the base. That does not include the workers at Alliance's TAESL facility, the joint venture between American and Rolls Royce that repairs and overhauls engines, which apparently will remain open.

The proposed cuts include laying off 400 pilots, 4,600 mechanics & related workers, 4,200 fleet services employees, 2,300 flight attendants, and 1,400 management and support staff, said company spokesman Bruce Hicks.

"The company’s proposal is even more extreme and despicable than we had anticipated, however, just as I expected and not surprisingly, the justification from management simply isn’t there," said Laura Glading, president of the Association of Professional Flight Attendants, which represents close to 18,000 flight attendants.

American also said it wants to terminate all four of its pension plans as part of a broad bankruptcy restructuring that aims to cut costs by $2 billion a year.

"American's pension plans are very expensive – we spend more on them than our competitors spend on their retirement plans. We simply do not see a way we can secure the company’s future without terminating our defined benefit plans," the company said in materials posted on a company website.

American is also proposing to replace its existing retirement benefit plans with defined contribution plans such as 401(k)s. American said all active employees would be offered a 401(k) plan with non-pilot employees receiving a company match dollar-for-dollar of up to 5.5 percent while pilots would participate in a new plan that will replace its defined benefit plan and B plan.

The Pension Benefit Guaranty Corp., which insures pensions based on employer contributions and will be responsible for paying out benefits if American termiantes its plans, said American has yet to prove that terminating the plans are necessary for the company's restructuring plan.

“Before American takes such a drastic action as killing the pension plans of 130,000 employees and retirees, it needs to show there is no better alternative. Thus far, they have declined to provide even the most basic information to decide that," said PBGC director Josh Gotbaum.

Executives are meeting with union leaders today to detail their plans for each work group, and more details are expected to be released later today.

In a letter to employees, AMR's chairman and CEO Tom Horton said the company aims to improve its finances by $3 billion a year, with $1 billion coming in revenue improvements and $2 billion in reduced costs including restructuring debt and leases, grounding older planes and "necessary employee -related changes."

The company aims to reduce employee-related costs by more than $1.25 billion, Horton said, saying that all work groups, including management, would need to reduce costs by 20 percent.

AMR has more than 88,000 employees, including about 25,000 in North Texas.

Sammy Carr, 47, a mechanic at the Alliance maintenance base, said Tuesday afternoon that he did not yet know if he would be laid off.

"We’re kind of in limbo," said Carr, who was hired by American in 2000. "You hope for the best but prepare for the worst."

Carr said he was laid off by American in 2001 and 2003, and had also been laid off by Lockheed Martin.

"I have always gone back to work within one month. I have never had a hard time finding a job," he said. "You can’t worry much about it ... Worry will eat you up, you can’t let it get to you."

Regarding American's future plans, Horton said that the company aims to increase departures from his five major markets -- DFW, Chicago, Miami, New York and Los Angeles -- by 20 percent over the next five years.

Horton stressed that major changes are necessary for American to compete with competitors and remain an independent airline. Noting that other parties would like to shrink the airline, close hubs or acquire the company and break it up, "I do not believe any of these outcomes are in the best interest of American, our people or our stakeholders," he said.

AMR filed for bankruptcy court protection on Nov. 29, following massive losses and unable to reach new labor deals with its unions. It became the last of the major legacy airlines to seek to reduce its costs in bankruptcy.

Staff writer Susan McFarland contributed to this report.

Read the full letter.

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