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AA to fire 7,000 workers

American Airlines will cut 7,000 jobs by March 2003 and retire its 74-jet fleet of Fokker planes as part of a series of moves intended to boost profits, the company announced on its Web site yesterday.

The new initiatives, coupled with cost-saving measures the company has put in place in recent months, will mean US$1.1 billion in structural annual operating savings, the company said.

American Airlines officials could not immediately be reached for comment on the job-cutting plan. In the press release on its Web site, though, the company quoted CEO Donald J. Carty as saying: "Fortunately, in addition to a new age-60 retirement plan, we have been able to fashion a number of options, including selective voluntary programs, a variety of leaves, part-time, and stand-in-stead programs to minimize the impact on our people."

AMR Corp, American's parent company, said last month that it lost US$495 million in the second quarter, blaming the result on low fares driven by discount carriers.

After the terrorist attacks of Sept. 11, in which two American Airlines jets were among the four that were hijacked, the company cut the size of its fleet, delayed capital spending and laid off workers to deal with a drop-off in air travel. The work force at AMR, which also owns TWA and the commuter American Eagle, has fallen from 128,000 to 112,000 in the past year.

The announcement comes amid growing worries about the financial position of US airlines, which were hit hard by the post-Sept. 11 air travel drop.

On Sunday, US Airways decided to file for bankruptcy protection. The nation's seventh-largest carrier received approval to continue normal operations and hopes to emerge from bankruptcy next year.

And with US Airways in bankruptcy, many are wondering if United Airlines might be next. United has implemented a financial recovery plan to stem losses from the terrorist attacks, but the nation's No. 2 carrier faces several obstacles along its road to recovery, including high labor costs and losses of more than US$1 million a day.

Analysts said United could still file for bankruptcy by the end of the year without significant changes that would almost certainly include rolling back some of the hefty raises it negotiated recently. Like US Airways, the majority employee-owned airline would likely continue to operate while reorganizing its operations.
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