AMR Posts Big Loss, Reshuffles Managers: February 15, 2012
By DOUG CAMERON and JACK NICAS
The parent of American Airlines on Wednesday disclosed a management reshuffle alongside a net loss of $1.98 billion for 2011 as the carrier continues efforts to restructure under bankruptcy protection.
The changes are the second shake-up since Tom Horton took over as chief executive last November, when the third-largest U.S. airline by traffic filed for Chapter 11.
A fourth-quarter loss of $1.1 billion compared with a $97 million deficit a year earlier, underscoring the challenges facing AMR Corp. as rivals that have already used the bankruptcy process to cut costs reported profits despite the latest spike in fuel costs.
AMR's fourth straight full-year loss included $917 million in special charges and compared with profits of $864 million at United Continental Holdings Inc. and $854 million at Delta Air Lines Inc.
Mr. Horton is seeking to trim AMR's annual costs by $2 billion and boost revenue by $1 billion a year, shedding 13,000 jobs in the process as part of a turnaround plan that has been lambasted by leaders of its main unions.
AMR, which also wants to terminate employee pension plans, is negotiating with unions to reduce labor costs by 20% or $1.25 billion a year. The company told unions officials on Feb. 1 that negotiations would last "a couple of weeks," said James Little, president of the Transport Workers Union, which represents nearly 20,000 AMR workers.
If the two sides don't reach an agreement, AMR could petition the bankruptcy judge to let it modify the labor contracts and impose the changes it seeks. AMR has said it has not set a timeline on negotiations.
Mr. Little said this week that his union has yet to begin substantive contract talks with AMR because it is awaiting answers from the company on how it calculated some of its targeted cost-savings. On Wednesday, Mr. Little's union, which would lose 8,800 members under AMR's plan, asked the company to offer $75,000 buyouts and medical coverage to its members that leave voluntarily.
The flight attendants' union, which would lose 2,300 members under AMR's plan, asked for full pensions and medical coverage for its members that leave voluntarily.
The management changes include the retirement of Peter Dolara, the highly-regarded head of Latin America, who oversaw what is viewed as AMR's most profitable business and a prime target of rivals seeking to acquire all or part of the company. Its senior management ranks have now been cut to 10 from 14.
Mr. Dolara's duties will be assumed in part by Art Torno, who currently oversees its business in New York, where American is squaring off for the world's largest business travel market against expansion by Delta and United Continental, relying in part on a marketing deal with JetBlue Airways Corp. AMR plans to replace Mr. Torno.
AMR said the changes were part of an effort to place all customer-facing activities in a single business unit, with airport services added to the brief of Craig Kreeger, a senior vice president.
Virasb Vahidi, chief commercial officer, will take on oversight of all international sales and marketing.
