* American Eagle says savings from labor imperative
* 5 percent workforce reduction expected - Eagle CEO
* AMR could chose other regional partners - Eagle CEO
By Nick Brown and John Crawley
March 21 American Eagle, a unit of bankrupt AMR
Corp said on Wednesday it was seeking $75 million in
labor cost savings as part of its restructuring.
The company said in a letter to employees that the cost
reduction would be necessary to justify AMR's investment in new
aircraft for Eagle, the primary feeder carrier for AMR's
American Airlines unit.
"If we miss this opportunity to demonstrate that Eagle has
fully competitive costs, it would provide American and AMR
another reason to select other regional carriers to ... provide
the feed we might otherwise provide," Eagle Chief Executive Dan
Garton said in the letter.
Eagle entered bankruptcy last year along with American
Airlines, which is separately seeking $2 billion in cost
AMR has wanted to sell or spin off Eagle, but those plans
were put on hold when the two sought court protection from
creditors. Divestiture is still a possibility for Eagle, Garton
said on a conference call with reporters.
He said he envisions a headcount reduction of about 500 --
about 5 percent of Eagle's workforce. But that does not
necessarily mean layoffs, as attrition or furloughs are also
possibilities, Garton said.
"There are a number of work rule changes that should
increase our productivity, so I think at the end of the day that
would result in our being able to operate the same airline with
less employees," Garton said.
Overall, he said, roughly half of the labor savings will
come from changes to employee compensation.
The Association of Flight Attendants, which represents about
1,800 American Eagle flight attendants, called the savings plan
"Flight attendants are facing an attack on their contract
simply because the cloak of bankruptcy allows for it," union
President Robert Barrow said in a statement. "It is shameful
that flight attendants, who are an instrumental part of a
successful operation, are being handed a list of concessions as
a result of bad management decisions."
Garton said Eagle was meeting with employees throughout the
day on Wednesday.
In his letter, Garton said Eagle must emerge financially
strong to take advantage of "any opportunity that presents
itself during or after our emergence from bankruptcy."
Eagle handles 90 percent of American's regional business,
carrying more than 15 million passengers annually. It operates
more than 260 planes and 1,500 flights daily.
AMR's bankruptcy is In re AMR Corp et al, U.S. Bankruptcy
Court, Southern District of New York, No. 11-15463.