American Airlines to cut capacity -- and thousands of jobs

There were plenty of news-making announcements today at the annual stockholders' meeting of AMR Corp., the parent company of American Airlines (AA), Inc. While most of the attention in the passenger-oriented mainstream news media focused on fare increases, fuel surcharges, and the introduction of $15 charge for the first-checked bag on AA, perhaps the most important announcement had to do with impending cuts in capacity, and the concomitant job cuts that will affect thousands of American Airlines workers.

American Airlines will reduce domestic capacity in the fourth quarter of 2008 by 11 percent to 12 percent, compared to the fourth quarter of 2007. Regional affiliate (i.e., American Eagle) capacity is expected to decline by 10 percent to 11 percent in the fourth quarter compared to fourth quarter 2007 levels. From the AMR Corp. press release:

As a result of significantly reduced flying, AMR expects to retire 40 to 45 mainline aircraft from American's fleet, the majority of which will consist of MD-80s but will also include some Airbus A300 aircraft. The capacity reductions will also result in the retirement of 35 to 40 regional jets, as well as a number of turbo-prop aircraft from AMR's regional affiliate fleet.

The capacity changes will result in workforce reductions at both American Airlines and American Eagle Airlines and could result in facility closures or facility consolidation. AMR is assessing the scope and location-specific impact of any workforce reductions resulting from the capacity reductions. In addition, AMR is assessing the impact of these capacity reductions on its overall cost outlook.

A Reuters article about the AMR annual meeting reported that when CEO Gerard Arpey was asked about the coming work force reductions at American Airlines and American Eagle, he confirmed that job cuts would run into the thousands, and that "every work group would be impacted."

At least one hundred American Airlines pilots, flight attendants, and other employees demonstrated outside the AMR Corp. headquarters in Fort Worth during the annual stockholders meeting to express their concern over the airline's current course. The demonstration was organized by the Allied Pilots Association, the union representing AA's pilots, and co-sponsored by the AA flight attendants' union, the Association of Professional Flight Attendants.

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