American plans further capacity / staff cuts and $1.3bn charge
05.07.08
American Airlines warned that it could cut 7,000 jobs and ground more aircraft than previously announced. It expects to take a one-off charge of $1.3 billion to cover the cost of redundancies.
American expects to cut nearly 7,000 employees by the end of the year, or about 8 percent of its 85,000 employees worldwide, as it reduces flights and grounds aircraft because of high fuel costs. The airline said in a regulatory filing that it expected to record a second-quarter charge of as much as $1.3 billion to account for the job reductions and to write down the value of the MD-80 and Embraer 135 regional jets that it is retiring as it eliminates flights.
Tim Wagner, an American spokesman, said: ‘These are difficult but necessary changes given the unprecedented challenges we face with overcapacity in the industry, skyrocketing fuel prices, and a worsening US economy.' He added that American hopes many of its job reductions can be achieved through voluntary steps, and that the layoffs would be effective August 31.
Including the cuts disclosed Wednesday by American, airlines have said they plan to cut about 30,000 jobs this year. If job cuts continue at that pace, 2008 will be the second-worst year this decade for job reductions in the airline industry, according to Challenger, Gray & Christmas, a firm that tracks employment data. Airlines laid off more than 100,000 workers in 2001 after the 9/11 attacks in New York and Washington.
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