American Eagle Wants to Cut $75M in Labor Costs
March 22, 2012 0900 MT
American Eagle, which operates feeder flights for American Airlines, said Wednesday that it wants to cut annual labor costs by $75 million and could shed 500 or more jobs over time.
CEO Daniel Garton said that with greater productivity, Eagle could get by with fewer workers, and jobs could be eliminated through layoffs or attrition.
Garton cited 500 jobs, but Eagle spokesman Bruce Hicks said later it could be up to 600 jobs, or nearly 5 percent of the airline's workforce.
Garton said Eagle needs to cut costs to compete for work from American and other airlines. Eagle and American are both owned by AMR Corp., which filed for bankruptcy protection in November.
Eagle was expected to provide more details on bankruptcy cost-cutting during meetings with unions later in the day.
Eagle uses smaller planes than American's to connect passengers from smaller cities to American's hub airports. Its revenue last year was $2.5 billion, about 10 percent of AMR's total.
The cuts announced Wednesday would equal 3 percent of Eagle's 2011 revenue. By contrast, American wants to eliminate 13,000 jobs and cut labor costs by $1.25 billion a year, an amount that equals nearly 6 percent of AMR revenue excluding Eagle.
James C. Little, president of the Transport Workers Union, which represents ground workers at American and Eagle, agreed that American's proposed cuts are much deeper than Eagle's.
"But $75 million spread across a much smaller company is still a major hit," Little said as he awaited details from Eagle.
The president of the flight attendants' union, Robert Barrow, said Eagle "plans to slash operating costs on the backs of labor." He said the company was taking advantage of the bankruptcy process to demand deep, long-term concessions from unions.
The future ownership of Eagle is up in the air. Before the bankruptcy filing, AMR had announced it would sell Eagle or spin it off to AMR shareholders, but that strategy is now on hold.
Garton said moves like cutting labor costs will make Eagle financially stronger and "well-positioned to take advantage of any opportunity" during or after the bankruptcy process.
American wants to shift more of its flying to lower-cost regional airlines, but it also wants to spread the flights among several carriers instead of relying almost entirely on Eagle. Garton said if Eagle fails to cut costs, it will give American more incentive to hire other regional airlines.
Eagle has about 13,000 employees compared to American's 73,000. Eagle has about 260 planes, three-fourths of which have 50 or fewer seats, which makes them costly to operate, especially as fuel prices rise.
AMR filed for bankruptcy protection in November after losing more than $10 billion since 2001.
--By David Koenig, Associated Press
Only a matter of time till Chipaway tries for some pay cuts. There is a reason this was posted. Well he can have his cut's when he loses his job.
March 22, 2012 0900 MT
American Eagle, which operates feeder flights for American Airlines, said Wednesday that it wants to cut annual labor costs by $75 million and could shed 500 or more jobs over time.
CEO Daniel Garton said that with greater productivity, Eagle could get by with fewer workers, and jobs could be eliminated through layoffs or attrition.
Garton cited 500 jobs, but Eagle spokesman Bruce Hicks said later it could be up to 600 jobs, or nearly 5 percent of the airline's workforce.
Garton said Eagle needs to cut costs to compete for work from American and other airlines. Eagle and American are both owned by AMR Corp., which filed for bankruptcy protection in November.
Eagle was expected to provide more details on bankruptcy cost-cutting during meetings with unions later in the day.
Eagle uses smaller planes than American's to connect passengers from smaller cities to American's hub airports. Its revenue last year was $2.5 billion, about 10 percent of AMR's total.
The cuts announced Wednesday would equal 3 percent of Eagle's 2011 revenue. By contrast, American wants to eliminate 13,000 jobs and cut labor costs by $1.25 billion a year, an amount that equals nearly 6 percent of AMR revenue excluding Eagle.
James C. Little, president of the Transport Workers Union, which represents ground workers at American and Eagle, agreed that American's proposed cuts are much deeper than Eagle's.
"But $75 million spread across a much smaller company is still a major hit," Little said as he awaited details from Eagle.
The president of the flight attendants' union, Robert Barrow, said Eagle "plans to slash operating costs on the backs of labor." He said the company was taking advantage of the bankruptcy process to demand deep, long-term concessions from unions.
The future ownership of Eagle is up in the air. Before the bankruptcy filing, AMR had announced it would sell Eagle or spin it off to AMR shareholders, but that strategy is now on hold.
Garton said moves like cutting labor costs will make Eagle financially stronger and "well-positioned to take advantage of any opportunity" during or after the bankruptcy process.
American wants to shift more of its flying to lower-cost regional airlines, but it also wants to spread the flights among several carriers instead of relying almost entirely on Eagle. Garton said if Eagle fails to cut costs, it will give American more incentive to hire other regional airlines.
Eagle has about 13,000 employees compared to American's 73,000. Eagle has about 260 planes, three-fourths of which have 50 or fewer seats, which makes them costly to operate, especially as fuel prices rise.
AMR filed for bankruptcy protection in November after losing more than $10 billion since 2001.
--By David Koenig, Associated Press
Only a matter of time till Chipaway tries for some pay cuts. There is a reason this was posted. Well he can have his cut's when he loses his job.
