American Airlines CEO Calls For 20% Cost Cuts In All Workgroups

American Airlines' parent company has released a letter written by its CEO to all of the company's employees.

Wednesday, February 1st 2012, 11:10 am

By: News On 6


American Airlines' parent company has released a letter written by its CEO to all of the company's employees.

In the letter CEO Tom Horton says change is a necessity, not a choice.  

The letter does not include specific numbers of jobs to be cut; however, it does have specifics on how much money the company is hoping to save.

Horton calls for cutting employee costs by more than $1.25 billion a year.

"All workgroups will have total costs reduced by 20 percent, including management. While the savings from each work group will be achieved somewhat differently, each will experience the same percentage reduction," wrote Horton.

The letter was released after executives met with unions Wednesday in Fort Worth to outline concessions the company wants from the unions under a reorganization plan.

Read letter from AMR CEO Thomas Horton to American Airlines' employees.

AMR, the parent company of American Airlines filed for bankruptcy protection on November 29, 2011.

Late Tuesday, AMR said it lost $904 million in December, more than in the first nine months of 2011 combined.

Revenue was $2 billion in December, American's first month of operating while under bankruptcy protection.

The numbers were part of a filing with a federal bankruptcy court in New York.

In his letter Horton says other airlines used bankruptcy to gain an advantage over American.

"As you know, our major competitors have used the restructuring process to overhaul their companies and become more competitive in every aspect of their business.  Last week, these airlines announced their financial results, which highlighted, once again, a widening profit gap," Horton said.

"Network carriers have benefited from investing their restructuring-driven profits in products and services that have helped drive revenue growth. And low cost airlines continue to benefit from the cost efficiency that has made them a force in our industry," wrote Horton.

The American Airlines maintenance base in Tulsa employs 6,500 workers.

Keep checking here for new developments in this story as we get more details of the restructuring plan throughout the day.

The Associated Press contributed to this story.

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