American Airlines said Wednesday it will restructure management and administration as part of a company-wide effort to cut labor costs by $750 million and other expenses by $250 million.
The number of staff positions eliminated will be determined in a study expected to take four to five months, the airline said. The restructuring will be directed by Teri Teat, American's treasurer, with the help of an outside consultant."Our industry is undergoing extraordinary and fundamental change, and to keep pace, we must accelerate the rate at which we are changing our own company," chair-man Robert Crandall said in a news release.
Stock in American's parent company AMR Corp. rose on the news. In midday New York Stock Exchange trading, AMR was up 621/2 cents a share at $58.871/2.
The headquarters restructuring comes on top of cost-saving efforts the big U.S. airline has undertaken over the past three years.
American, which has endured four consecutive years of losses, said in September 1993 that it would eliminate 5,000 jobs. The company incurred more losses late last year during a five-day Thanksgiving strike by flight attendants over a contract dispute. American lost $7 million in the first quarter of this year and earned $153 million in the second quarter.
"We must literally reinvent every part of our airline," Crandall said today.
"Much of our recent financial improvement is a product of reducing the size of our fleet, withdrawing from unprofitable markets, reducing the number of people we employ and cutting costs on every front," he said. "That strategy, which has been rewarding in financial terms, cannot be regarded as a formula for long-term success in the airline business."
The carrier also is hoping to get greater productivity from its unions. American is now in contract talks with its pilots and will begin arbitration with its flight attendants' union in October.
In addition, Crandall said the airline has begun talking with the Transport Workers Union, which represents mechanics and ground employees, and hopes they will agree to open negotiations to revise their contract when it becomes amendable in March.
American Airlines is the core business of Fort Worth-based AMR.