AMR cutting jobs to offset fuel prices

2/07/2008 - 22:55

By Kyle Peterson

CHICAGO (Reuters) - AMR Corp , parent of American Airlines, will reduce its employee headcount by about 8 percent as it cuts capacity to offset record-high fuel prices, the company said in an internal memo on Wednesday.

In a letter from Jeff Brundage, AMR's senior vice president in charge of human resources, job cuts would be in line with the overall system capacity reductions, which are expected to total 8 percent.

"While we are still working through the specific impact to employee work groups, both voluntary and involuntary, employee reductions commensurate with the overall system capacity reductions are expected company-wide as we reduce the size of the airline," Brundage said.

AMR, which currently has about 85,500 employees, has said it would reduce domestic capacity by 11 percent to 12 percent as part of the system-wide cuts.

The airline industry, battered this year by record fuel prices, is cutting capacity and shrinking operations. Top airlines have announced job cuts that will total in the thousands.

Earlier on Wednesday the airline said that up to 900 of its flight attendants, or 5 percent, would be subject to furlough.

An AMR spokesman said the company has notified the Association of Professional Flight Attendants, the workers' union, that the furlough would be effective beginning August 31. The workers subject to involuntary furlough would be the carrier's most junior U.S.-based flight attendants.

AMR said in a statement it hopes to limit involuntary layoffs by offering a voluntary retirement option to many U.S.-based and San Juan-based employees who are at least 50 years old with at least 15 years of service.

"Historically, AA has offered many employee groups voluntary options such as leaves-of-absence and stand-in-stead to reduce the impact of any involuntary reductions," the company said.

So far, airlines have provided few details on headcount reductions. UAL Corp , parent of United Airlines, last month said it would reduce the number of pilots by 950.

AMR also said in a government filing that in conjunction with capacity reductions, it would incur a record a non-cash impairment charge of $1.1 billion to $1.2 billion related to its aging MD-80 and Embraer RJ-135 aircraft fleets.

Furthermore, AMR will take a charge in the second quarter of $75 million to $100 million for severance-related costs as it cuts jobs. The company said it expects other accounting charges relating to capacity reductions.

(Editing by Braden Reddall)

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