AMR eliminates five senior management jobs

Tue May 1, 2012 10:25pm EDT

An American Airlines plane sits at its gate at O'Hare International airport in Chicago November 29, 2011. REUTERS/Frank Polich

An American Airlines plane sits at its gate at O'Hare International airport in Chicago November 29, 2011.

Credit: Reuters/Frank Polich

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(Reuters) - The bankrupt parent of American Airlines has eliminated five senior jobs in a restructuring and said its lead labor strategist will step down.

The cuts by AMR Corp (AAMRQ.PK), combined with the previously announced departure of other managers, represents a "20 percent reduction in the company's most senior leadership positions," AMR said in a statement on Tuesday.

An AMR spokeswoman said eight or nine management jobs had been cut so far.

AMR filed for bankruptcy in November, citing a need to slash uncompetitive costs. The company has said it intends to cut its overall costs by $2 billion a year. More than half of the savings will come from labor costs.

"Redesigning the organization will help accelerate our progress toward profitability and success," AMR's chief executive, Tom Horton, said in a letter to employees. "Every step increases our clarity of purpose and helps speed decisions in the interest of best serving our customers."

Among the five departing executives are David Brooks, American's president for cargo, and Susan Garcia, American's vice president for information technology.

In the same statement, AMR said Jeff Brundage, who is AMR's senior vice president of human resources, has been replaced in his role by Denise Lynn, who will carry the job title, senior vice president - people.

The company did not say why Brundage was replaced. He will not immediately leave the company.

"For now, I'm not going anywhere and will continue to work with many of you on the needed changes," he said.

Robert Mann, an airline consultant and former AMR executive, said Brundage's departure is ironic amid the ongoing labor clash between AMR and its management.

As AMR overhauls its management, the airline is battling its unions in court over its request to void their labor contracts and impose terms if workers do not agree to the concessions the company says it needs to survive.

American has been locked for years in fruitless negotiations with its three labor unions, which represent pilots, flight attendants and several classifications of ground workers.

The airline won steep concessions from labor in 2003 as it dodged bankruptcy at the time.

It has about 74,000 full-time and part-time workers and has said it must cut 13,000 union jobs.

BREAK IN COURT BATTLE

AMR and its three primary unions - the Transport Workers Union (TWU), the Association of Professional Flight Attendants (APFA) and the Allied Pilots Association (APA) - are on a two-week hiatus from their court battle over contracts.

The sides are allowed to use the two-week window to negotiate deals, but neither the APFA nor the APA were actively bargaining as of Tuesday, AMR spokesman Bruce Hicks said.

"There are no negotiations scheduled at the present with the APA and APFA, although the company remains available to meet at any time and we are anxious to do so," Hicks said.

A spokesman for APFA confirmed that the union was not bargaining with AMR.

But the Transport Workers Union, representing 26,000 ground workers, dispatchers and other groups, said on Tuesday that it would vote on a proposed contract later this month to avert management-imposed terms.

The latest offer by American would reduce TWU layoffs from the 9,000 originally proposed by AMR to about 6,400, the union said.

The TWU did not endorse the latest offer, but its president, James Little, stressed in a letter to members that the newest proposal or American's unilateral terms, if imposed, would be "concessionary and painful."

Additionally, leaders of the union representing more than 8,000 pilots said in a letter to members on Tuesday that American wants wholesale job cuts.

"Management has said they intend to lay off 400 pilots, but APA estimates that the actual number of American Airlines pilot jobs at risk could easily exceed 2,000," said Dave Bates, president of the Allied Pilots Association.

The airline said in a statement however, that approximately 400 pilots would be furloughed for about a year before retirements, the delivery of new planes, and new federal regulations on staffing would prompt their recall.

"These changes will fuel mid to long-term growth in the number of pilot jobs, pilot pay and career progression," Hicks said.

The pilots also underscored their support for a merger with US Airways LCC.N as a way to save jobs and provide a "much brighter future for American Airlines."

US Airways has not made a bid for American, which has said it wants to formulate its own restructuring plan as a stand-alone company.

AMR's bankruptcy is In re AMR Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-15463.

(Reporting by Nick Brown in New York, Kyle Peterson in Chicago and John Crawley in Washington; Editing by Matt Driskill)

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