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American Asks Labor for $1.8B Cost Cuts
1 hour, 37 minutes ago Add Business - AP to My Yahoo!
By BRAD FOSS, AP Business Writer
NEW YORK - American Airlines pleaded with employees Tuesday to make steep cuts in wages, benefits and work rules in order to save $1.8 billion annually, stressing that the company's livelihood was at stake.
"Our financial results make it abundantly clear that American's future cannot be assured until ways are found to significantly lower our labor and other costs," the company said in statement issued after a private meeting with labor leaders.
As multibillion losses pile up, a number of analysts have speculated in recent weeks that American is increasingly at risk of becoming the next major carrier to file for bankruptcy, joining United Airlines and US Airways, unless it can dramatically reduce costs.
Executives and labor leaders are scheduled to meet again Friday, at which time American president Gerard J. Arpey expects employee representatives to present "palatable" ways to cut labor costs. Arpey said in an interview that the $1.8 billion in cuts were absolutely necessary in order for American to regain profitability.
"We need to get all of it," Arpey said, adding that the company was flexible about how to get it done.
Standard & Poor's airline analyst Philip Baggaley said the labor cuts proposed by American were "slightly less" than those proposed by UAL Corp., the parent company of United Airlines.
The Fort Worth, Texas-based American has been working for the past 18 months to cut annual non-labor expenses by $2 billion, mostly through changes to its flight schedules and fleet. But executives have repeatedly said that it would take a total of $4 billion in costs in order to regain profitability. In 2002, labor expenses totaled $8.4 billion.
Late last month American's parent company, AMR Corp., reported a loss of $3.5 billion for the year, the industry's largest annual loss ever. It is currently burning through $5 million a day and has roughly $2 billion in unrestricted cash on hand.
American, the world's largest airline, said Tuesday it is under "unrelenting pressure" from low-cost carriers and larger rivals that are currently shrinking costs under the protection of bankruptcy courts.
American called the request "a last resort" but stopped short of saying that bankruptcy loomed.
1 hour, 37 minutes ago Add Business - AP to My Yahoo!
By BRAD FOSS, AP Business Writer
NEW YORK - American Airlines pleaded with employees Tuesday to make steep cuts in wages, benefits and work rules in order to save $1.8 billion annually, stressing that the company's livelihood was at stake.
"Our financial results make it abundantly clear that American's future cannot be assured until ways are found to significantly lower our labor and other costs," the company said in statement issued after a private meeting with labor leaders.
As multibillion losses pile up, a number of analysts have speculated in recent weeks that American is increasingly at risk of becoming the next major carrier to file for bankruptcy, joining United Airlines and US Airways, unless it can dramatically reduce costs.
Executives and labor leaders are scheduled to meet again Friday, at which time American president Gerard J. Arpey expects employee representatives to present "palatable" ways to cut labor costs. Arpey said in an interview that the $1.8 billion in cuts were absolutely necessary in order for American to regain profitability.
"We need to get all of it," Arpey said, adding that the company was flexible about how to get it done.
Standard & Poor's airline analyst Philip Baggaley said the labor cuts proposed by American were "slightly less" than those proposed by UAL Corp., the parent company of United Airlines.
The Fort Worth, Texas-based American has been working for the past 18 months to cut annual non-labor expenses by $2 billion, mostly through changes to its flight schedules and fleet. But executives have repeatedly said that it would take a total of $4 billion in costs in order to regain profitability. In 2002, labor expenses totaled $8.4 billion.
Late last month American's parent company, AMR Corp., reported a loss of $3.5 billion for the year, the industry's largest annual loss ever. It is currently burning through $5 million a day and has roughly $2 billion in unrestricted cash on hand.
American, the world's largest airline, said Tuesday it is under "unrelenting pressure" from low-cost carriers and larger rivals that are currently shrinking costs under the protection of bankruptcy courts.
American called the request "a last resort" but stopped short of saying that bankruptcy loomed.
