Posted by: pizzainmotion | April 20, 2012

American Moving Aggresively to Trim Labor Cost

According to this Wall Street Journal article, American Airlines is set to trim about 20% of it’s non-union payroll through job reductions and benefit reductions.

I wrote earlier about the closing of the Admirals Club at my home airport, Washington Dulles.  While I’m disappointed, I do understand the reality that AA is facing.

When AA didn’t declare bankruptcy along with all the other airlines earlier in the last decade, I thought it was the noble thing to do.  Now it looks like that decision has hurt them.

All signs point to them trying to exit BK quickly and remain independent (stay away, US Airways!).  By cutting this much of their non-union labor costs, I think it sets them up well to negotiate similar cuts with the unions.  Ultimately, though, I think the BK judge will end up having to mandate these changes as I don’t think the unions are negotiating in good faith any longer.

This is a painful move, no doubt.  People I have known for a long time will lose their jobs because of this.  But, better this than swallowing a painful merger with a competitor that doesn’t really believe in taking care of it’s loyal customers.


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