American to Cut Jobs, Terminate Pensions

American Airlines and its parent, AMR Corp., is planning to cut 13,000 jobs and terminate pensions in an effort to save more than $2 billion in annual costs it said in announcements on the first of this month.

The company said it wants to reduce labor costs by $1.25 billion a year, or 20 percent. That includes cutting its work force of 88,000 by nearly 15 percent, imposing new productivity measures and outsourcing some work. The company is also planning to terminate four pension plans. In a letter to employees Tom Horton, chairman and CEO of AMR Corp. said, “Competing and winning requires a financial improvement of more than $3 billion, and that, in turn, requires significant savings in employee-related costs – of more than $1.25 billion per year. Fair and equitable – All workgroups will have total costs reduced by 20 percent, including management. While the savings from each work group will be achieved somewhat differently, each will experience the same percentage reduction.”

Horton concluded by saying, “The world has changed around us and this is our moment to adapt or lose the opportunity forever. Our industry is now defined by the changes our competitors made in restructuring to secure their futures, and the landscape is littered with those airlines that failed to change.”

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