Wed, Feb 05, 2003
Urgency Cannot be Overstated
its unsustainable current losses and the long-term need to
restructure its business, American Airlines has asked its
labor leaders and employees for $1.8 billion in permanent, annual
savings through a combination of changes in wages, benefits and
"We have together made significant changes in our operation, our
product and our service to build a more efficient and innovative
airline," the company said in letters to union leaders and
non-represented employee workgroups.
"But we need to do more. And we need to do it now. Our financial
results make it abundantly clear that American's future cannot be
assured until ways are found to significantly lower our labor and
In the letters, AMR Chairman and CEO Don Carty and
President Gerard Arpey noted that, unlike other financially
troubled airlines, the company turned to employees as a last
resort, and only after pursuing an aggressive restructuring plan
that identified $2 billion in annual, structural cost savings.
Company executives have said the airline needs an
estimated $4 billion in permanent annual savings to
compete effectively and return to profitability.
The company cited pricing actions by low-cost and bankrupt
carriers among the factors putting "unrelenting pressure" on the
company's financial situation.
"Today, as a last resort, we are taking the difficult step of
asking all of our employees to participate in American's recovery
by working with us to deliver $1.8 billion in permanent,
steady-state savings. We hope to work collaboratively with you to
restructure labor agreements to realize these permanent, annual
savings and those needed to address our long-term financial
health." The company also said it would seek to obtain
accommodations from a number of its other stakeholders, including
aircraft lessors, lenders and suppliers.
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