American Airlines: Despite restructuring plan, still ‘business as usual in the Valley'

McALLEN — With AMR Corp., the parent company of American Airlines and American Eagle, preparing to slash costs and potentially eliminate 13,000 jobs, how will the upheaval impact McAllen-Miller International Airport?

“Good question, but it’s too early to answer,” American spokesman Ed Martelle wrote in an email. “Keep in mind, the information shared with the unions Wednesday is a starting point for the negotiations.  Any proposed employee reduction number may be different at the end of the negotiations and at the end of the Chapter 11 process, likely months from now. 

“For the foreseeable future, it’s business as usual in the Valley,” Martelle said, echoing the company’s line since AMR filed for Chapter 11 bankruptcy in November.

American currently offers four daily flights from McAllen-Miller to the company’s Dallas-Fort Worth hub. For a time, American replaced one of the Boeing MD-80 flights, which seat 140 people, with a smaller airplane operated by American Eagle.

“I don’t think we’ll see any impact in McAllen from a service standpoint,” said Phil Brown, who oversees McAllen-Miller as the city’s aviation director. “But you never can tell.”

Flight crews heading to work Thursday declined to comment on the company’s wide-ranging restructuring plan, with one man saying they’d leave that to “corporate types.”

AMR announced the restructuring plan Wednesday. Under the proposal, AMR would eliminate 13,000 jobs and reduce benefits for the company’s remaining employees, but also offer new incentives, including profit sharing, once the company becomes profitable again.

“Nothing about this process is easy, but the alternatives are harder still. The fact is that we’re losing money every day,” wrote Jeff Brundage, American’s senior vice president for human resources, in a letter published on a company restructuring website. “And every employee will feel the effects of this effort to address our challenges, from the leadership level to the frontline.”

AMR lost $904 million in December, according to the company’s monthly operating report. That brings AMR’s losses to more than $11 billion since 2001.

With AMR’s bankruptcy filing on Nov. 29, American became the last legacy airline to file for Chapter 11 bankruptcy protection. Delta exited bankruptcy in 2007, following United in 2006 and U.S. Airways in 2005.

All three used the process to streamline operations and reduce labor costs.

American now has the industry’s highest labor costs, along with low productivity rates and restrictive work rules, according to a presentation pitching the restructuring plan released by AMR Corp.

To fix the problem, AMR proposed eliminating 13,000 jobs, with the deepest cuts coming to fleet service clerks and mechanics and related positions. Both would take 40 percent cuts. Other major reductions include the elimination of 2,300 flight attendants.

Those reductions must be negotiated with the various unions that represent airline employees. If a deal can’t be reached, a bankruptcy judge will decide how to proceed.

AMR also proposed eliminating the company’s pension plan, which would dump those obligations on the federal pension-insurance agency. After AMR contributed just $6.5 million of nearly $100 million toward its pension plan last week, the Pension Benefit Guaranty Corp. filed liens against American’s assets.

--

Dave Hendricks covers McAllen and general assignments for The Monitor. He can be reached at dhendricks@themonitor.com and (956) 683-4452.

--

The Associated Press contributed to this article.