American Airlines Bankruptcy: Thomas W. Horton, CEO, Says Company Will Cut Jobs

DALLAS — American Eagle, the regional-flying affiliate of American Airlines, may furlough 223 Texas-based pilots and flight attendants in February as the company cuts costs under bankruptcy protection.

American Eagle notified Texas officials of the possible furloughs on the same day that its CEO told employees that bankruptcy reorganization will mean job losses and unpopular decisions.

Eagle vice president Cathy McCann told the Texas Workforce Commission in a letter received Thursday that 119 pilots and 104 flight attendants in the Dallas-Fort Worth area could lose their jobs around Feb. 13. The employees work for Executive Airlines, an Eagle division that operates turboprop planes between U.S. and Caribbean points.

Eagle spokesman Ed Martelle said that as the company considers cost-cutting moves, "there is a strong possibility" that turboprops used between Dallas-Fort Worth International Airport and other U.S. destinations will be returned to the leasing company in late January.

American, the nation's third-biggest airline, has about 74,000 employees, and Eagle has about 14,000, including part-timers.

AMR Corp., which owns American Airlines and Eagle, filed for bankruptcy protection on Nov. 29. The company hopes to reduce debt and aircraft-lease obligations and reduce labor costs while in bankruptcy.

Separately, AMR's new CEO, Thomas W. Horton, told employees Thursday that the company will cut jobs as it goes through bankruptcy. He didn't give a figure.

"We will have to make very tough and sometimes unpopular decisions that will impact people's lives," Horton said.

Horton said American will focus in coming weeks on renegotiating debt and aircraft-lease deals. He said the company will ground some planes and shrink before it can grow again. According to a Wolfe Trahan & Co. analyst, AMR has cut passenger-carrying capacity for the next three months by 2.5 percent, nearly double the airline's own November forecast.

Horton said American needed to get "competitive labor contracts" with unions – the company says its labor costs are higher than other airlines.

The CEO also said that "opportunists" might try to buy American, sell it or break it up, but he advocated keeping the company together. Analysts have speculated that US Airways Group Inc. could try to buy American.

J.P. Morgan analyst Jamie Baker estimated that AMR will use bankruptcy protection to shrink 10 percent and cut labor and pension costs by $500 million a year, less than the company is targeting. He said AMR will emerge financially "much improved," but not superior to bigger rivals United and Delta.

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Comments

[KC375]

05:10 PM on 12/16/2011

what about your salary Mr. CEO!

[hattrick752]

05:59 PM on 12/16/2011

rachael maddow featured the previous ceo of AA; the guy resigned rather than ask unions to take paycuts and was stifling tears. he is probly the 1 percenter who belongs to the 99 percent...

[offred]

04:25 PM on 12/16/2011

Here's a link to the 2010 American Airlines annual report. Can anyone find out what the salary/bonus is for Mr. Horton?

http://phx.corporate-ir.net/phoenix.zhtml?c=117098&p=irol-reportsannual

[FalconerHK]

03:39 PM on 12/16/2011

When a company goes bankrupt, shouldn't the leadership - starting with the CEO, including the board - be fired?

LOL, I crack myself up.

[GTKZ]

02:26 PM on 12/16/2011

1. How can an airline that now charges per bag fees, high rescheduling fees, serves no food in flights, has fewer people attending reservation and check-in counters, etc., be in such a crappy financial state?

2. Um...would love to see a list of the top AA execs and their salaries.

3. Question #1 answered.

[Michael Lacek]

03:04 PM on 12/16/2011

Also, to #2 I would add....have you seen the MULTI-millon dollar central London mansion they have for executives??

[Michael Niemeyer]

02:08 PM on 12/16/2011

"Merry Christmas, here you go!"
"This is a pink slip."
"Well yes, up in the penthouse Santa gave all of us coal, so we needed your money to get things for ourselves."

[AlaskaLib]

10:48 AM on 12/16/2011

"We will have to make very tough and sometimes unpopular decisions that will impact people's lives," Horton said.

This is how AA is impacting my life right now. Can anyone help? I can't find Koenig's contact number. Sorry this is a bit off topic but I am desperate.

I and husband are in NC right now with dying mother in law, mother , respectively. We were supposed to fly to Pgh today and spend time with my 92 year old father and then fly home to Alaska, but mom is very close to death and we just want to cancel the Charlotte  to pgh leg of trip. AA says if we do not fly the Charlotte leg the rest of our reservations will be cancelled and there is absolutely no way that can be changed. We can change reservation to another date, but from Charlotte to pgh it would cost each of Us over 900 dollars apiece.
So we are getting on the plane as scheduled tonight flying char-Detroit-pgh and we purchased tickets to then fly back to Charlotte on next available flight   I hope she does not die while we are on this nonessential plane ride in hell. And it is extremely likely  Can you help? . Thx

Sent from my iPhone

[rebel9999]

10:05 AM on 12/16/2011

My brother-in-law flies for American. The CEO and other executives have screwed them royally. The union already adjusted their comensation a few years ago to keep the company afloat - taking a 40% cut. He's lost a ton of his retirement. Their company management is pathetic.

Their CEO went to the Obama School of Leadership.

[madeashell]

01:18 PM on 12/16/2011

Nope-he went to the Bush Adminstration how to screw the American people School of Leadership.

[nothingchanges]

09:59 AM on 12/16/2011

They'll cut jobs, but they won't cut managements salaries I'll wager.

"Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration." -Abraham Lincoln-

How far this country has fallen.

[bgofca]

04:41 AM on 12/16/2011

but of course all of the top execs will still get their bonuses...

[becky bradshaw]

10:07 AM on 12/16/2011

The bonuses are indirectly linked to the pay concessions. When the unions conceded pay of $1.8 billion in 2003 , the executive bonuses increased. And don't believe the corporate propaganda about American Airlines employee pay. Other airlines, for example Southwest Airlines, pay their employees more. Take note of the media outlets playing along with AA misinformation campaign.

1. Pay concessions: http://www.wsws.org/articles/2003/apr2003/aa-a18.shtml
2. Executive Bonuses: http://www.star-telegram.com/2011/04/21/3019164/despite-losses-american-airlines.html

[gateking]

11:49 AM on 12/16/2011

Yes, but. Southwest employees are much more productive than AA workers, eg, their pilots fly a lot more each month. Southwest also outsources a great deal of work that AA does in-house, especially in the maintenance arena. So, it isn't quite as simple as you made it out to be.

[Mike Wrona]

12:43 AM on 12/16/2011

Fortunately the bankruptcy is not so bad that it will have a negative impact on American's CEO package. Cutting the pay of the guy who put them into bankruptcy and now has to bring them out certainly needs to be adequately compensated or else he will take his incredible skills to another company and bankrupt it.

[gateking]

11:50 AM on 12/16/2011

Want a fact? The CEO left as they filed for bankruptcy.

[Mike Wrona]

08:05 PM on 12/16/2011

Thank you for the correction. When I'm wrong. I am wrong and admit it. Yes, he left for a moral reason. Commendable.

[El Chingaso]

09:27 PM on 12/15/2011

Americans can no longer...get anything right. The end is very near...

[Kai-HK]

08:14 PM on 12/15/2011

Another unionized company being driven to its knees by its employees

[wmfor]

11:44 AM on 12/16/2011

And the moon is cheese, and things fall up.

[FalconerHK]

03:40 PM on 12/16/2011

Pizza is a vegetable, and Newt is a credible family values candidate.

[Kai-HK]

11:08 PM on 12/17/2011

I accept your surrender.

[ForVivi]

06:59 PM on 12/15/2011

I wonder if AA has been hacked. I got an email today about a ticket to San Antonio they say I bought. I'm not going to open the file which is supposedly the ticket because it sounds like a trick.

[marignymitch]

05:26 PM on 12/15/2011

which was the intent of the filing.

[Rubinwitz12]

05:00 PM on 12/15/2011

airlines are doomed. employee union pay needs to be halved!

[sheila]

05:16 PM on 12/15/2011

genius! in fact, why not just force underpriviledged children to do the work of the mechanics, pilots and ticketing agents, in the Newt Gingrich model?

bring back slavery!

[osofar]

10:06 AM on 12/16/2011

It is indeed most difficult for the slaves to man the oars of the galleys because the plane decompresses when you stick the oars out the windows!?!!

[CptKendrick]

01:07 PM on 12/16/2011

Yeah! They need to dissolve their safety departments too! Total rubbish and waste of company funds!