American Airlines to cut 7,000 jobs

DALLAS – Seeking to stem 18 months of heavy losses, American Airlines said Tuesday it would cut 7,000 jobs and trim more flights as it tries to slim down and compete better with low-cost carriers.

American, the world’s largest carrier, said the restructuring, plus earlier cost-cutting steps, would save $1.1 billion a year and help ensure its long-term survival.

The company has lost $2.8 billion since the beginning of last year, with the heaviest losses coming after Sept. 11.

“We must get our costs down in order to compete and must focus on the products our customers want and are willing to pay for,” chairman and chief executive Donald J. Carty said.

The restructuring would cut 6 percent of American’s work force and reduce its capacity by 9 percent. By mid-2005, the airline will retire its 74-jet fleet of 100-seat Fokker 100s, which had become expensive to maintain.

Tuesday’s announcement comes as the U.S. airline industry continues to be rocked by a slump in travel caused by the Sept. 11 attacks, the sluggish economy and fierce price competition. US Airways, the nation’s seventh-largest carrier, filed for Chapter 11 bankruptcy protection on Sunday.

Carty had signaled a restructuring was in the works, saying last month that the airline would need fewer employees in the future. Rumors about large-scale layoffs had circulated for weeks among pilots, flight attendants and other workers.

“We’ve kind of been expecting it,” said flight attendant Lisa Dahlgren as she reported for a Tokyo-bound flight at Dallas-Fort Worth International Airport. “It’s just been a tough time for the company. We all understand that.”

The airline didn’t provide a breakdown of the job losses, but a spokesman for the Allied Pilots Association said union leaders were told 550 of the positions were pilots.

Virtually all flew for TWA before American’s parent company bought TWA last year, he said.

The spokesman, Sam Mayer, said pilots were disappointed that Carty has often criticized the industry’s fare structure, “but the first thing they do is go back to the old tried-and-true: ‘We’re going to cut jobs and downsize.’ You don’t return to profitability by getting smaller.”

The company expects to have 2,550 too many flight attendants, but some layoffs could be averted by people taking leave or sharing jobs, said George Price, a union spokesman.

American was losing money last year even before the Sept. 11 attacks, in which two of its planes and two United jets were hijacked. When travel dropped sharply after the attacks, American announced 20,000 job cuts, reduced the size of its fleet and delayed capital spending.

Although some workers were rehired, the work force at parent company AMR Corp., which also owns TWA and the commuter airline American Eagle, fell from 128,000 to 112,000. But the losses continued to pile up – another $495 million in the second quarter, which American blamed on low fares driven by discount carriers.

American said the latest job cuts will be made by next March.

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