American Airlines employees in Las Vegas wait for word on layoffs
The 175 employees working for American Airlines in Las Vegas may know by the end of the month how many of them, if any, will be laid off as part of the company’s bankruptcy restructuring plan.
Fort Worth, Texas-based American has announced plans to cut its work force by 13,000 worldwide as part of a proposal to reorganize financially.
The 16 percent reduction in employees is the key proposal in trimming expenses by $2 billion a year. The layoffs, airline officials said, would cut $1.25 billion in costs, with other proposals to eliminate its pension plan and reduce health care for employees and retirees.
Most of the employee layoffs would affect maintenance workers, as the airline looks to outsource work, and pilots and flight attendants. The airline’s largest maintenance bases are in Fort Worth and Tulsa, Okla., where 2,100 workers could lose their jobs.
The restructuring plan was unveiled in early February, two months after American’s parent company, AMR Corp., filed for Chapter 11 protection in U.S. Bankruptcy Court in Manhattan.
Most of American’s workers at McCarran International Airport are customer service representatives and ramp and ground crew personnel to service the airline’s 24 daily flights to American hub airports of Dallas-Fort Worth International, Los Angeles International, Chicago O’Hare, New York’s John F. Kennedy International and Miami International.
At the crux of the filing is American’s inability to sustain its benefit pension plan and corporate debt payments after the cost of fuel doubled to $100 a barrel over the last three years.
An Evergreen, Colo.-based aviation expert said American could afford pension support and high debt when fuel was at $50 a barrel.
Mike Boyd, who heads Boyd Group International, said as of July 2011, American’s long-term debt was $9.4 billion, with $1.7 billion in maturities by 2012. It had $520 million in pension commitments in 2011 and will have $560 million this year.
American pays the most in employee benefits among airlines and is the third most indebted behind Delta and United.
Boyd predicted that American would not drop any prominent routes because it would have gotten rid of unprofitable routes well before the bankruptcy filing if it had planned to do so.
The airline also has obligations to its airline alliance, oneworld, which enables passengers from other alliance members to fly to popular destinations like Las Vegas on American flights.
One division of American that appears to be vulnerable is its commuter operation, American Eagle, but the airline doesn’t have any American Eagle flights to and from McCarran.
Airline officials say they will approach unions about negotiating contract concessions to restructure finances. If the two sides fail to reach agreement, American could move to abrogate its contracts and take its chances in Bankruptcy Court, a scenario that offers more long-term questions than answers.
While there have been reports that Tempe, Ariz.-based US Airways could have an interest in acquiring American, Boyd said the prospects of that happening are slim.
American’s CEO, Tom Horton, also has dismissed that prospect, telling a Dallas Morning News editorial board that he expected a US Airways bid to be as unsuccessful as the company’s efforts to acquire United and Delta in previous years.
“I’m not sure what’s in the water out there in Phoenix,” Horton told the Dallas newspaper. “Maybe it’s the cactus. I don’t know what it is.”
US Airways was once a major operator at McCarran as America West Airlines, but it has gradually reduced its presence in Las Vegas and now has an average 21 flights a day to and from the city.