"American Airlines to Furlough Up to 1,100"

Saturday, October 23, 2004

American Airlines to Furlough Up to 1,100 
By BOBBY ROSS JR.
The Associated Press


DALLAS (AP) -- American Airlines, struggling with rising fuel costs and
competition from low-fare carriers, will furlough up to 650 maintenance
workers in Kansas City and St. Louis and up to 450 pilots, the company said
in a memo given to employees Friday.

The news came two days after Fort Worth-based AMR Corp., parent of American,
reported that it lost $214 million from July through September and expected
an even bigger loss in the fourth quarter.

Jeff Brundage, the company's senior vice president of human resources, wrote
in the memo obtained by The Associated Press that American has worked for
months to "operate more efficiently and return to profitability."

"Despite our success in lowering costs, some circumstances that greatly
impact us, most notably fuel, are out of our control," Brundage said in the
memo. "Unless things change significantly, we know we are in for a difficult
winter."
 
Tim Wagner, a spokesman for American, confirmed a memo went out to
employees, but said Friday night he could not comment because the company
has promised to tell employees about cost-cutting measures before discussing
them publicly.

Before Friday's memo, American had furloughed nearly 2,600 of its 11,000
pilots and more than 4,500 flight attendants, although it was recalling 610
attendants for international routes. The latest cuts would push the number
of furloughed pilots above 3,000.

"We're not happy to lose pilots off the payroll or to put their careers in
jeopardy," Capt. Denis Breslin, a spokesman for the Allied Pilots
Association, said Friday night. "At the same time, we're also having a hard
time overcoming the effects of high fees, historically low fares and
historically high fuel prices that are out of control."

A message left at the office of Jim Little, director of the air transport
division of the Transport Workers Union of America, was not immediately
returned Friday night.
  
Along with employee cuts, American will shrink its domestic flight schedule
by 5 percent in the first quarter of 2005, the memo said. Also, the company
will implement a "simplification that ran this summer in Chicago" and
"showed the potential to save millions."

The airline plans to cut 300 to 400 maintenance positions in Kansas City,
Mo., and 200 to 250 in St. Louis, along with an undetermined number of
maintenance positions throughout the system, the memo said. Flight attendant
levels will be adjusted through voluntary leaves starting in January.

The company has cut 400 management and support staff positions this year and
is evaluating further staffing reductions, the memo said.

AMR on Wednesday reported a net loss of $214 million, or $1.33 a share, on
$3.84 billion in revenues for the three-month period ending Sept. 30.

American said it spent $342 million more on fuel last quarter than in the
same three months of 2003 - turning a potential profit into a loss. The
price of jet fuel on spot markets along the Gulf Coast has jumped from 88.9
cents per gallon at the beginning of the year to $1.56 per gallon last week,
according to the Department of Energy.

The airline expects high fuel prices to continue in the fourth quarter,
which is typically a slow travel period, leading to a "significantly larger"
loss than that of the third quarter.

Some carriers have partly insulated themselves from high fuel prices by
taking options to buy fuel in advance at fixed prices. American could not do
that because of its weak financial position, so it hedged only 9 percent of
its fuel in the third quarter, compared to 80 percent by profitable
Dallas-based Southwest Airlines.

In trading Friday, AMR shares closed down 12 cents, or 1.81 percent, at
$6.52 on the New York Stock Exchange.

On the Net: http://www.aa.com


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