The US has begun to show slow growth and most economic reports, even those under forecast, have positive traits. Albeit, a slow recovery, it has all the signs of recovery. Since the economic crisis was not a textbook down cycle, effecting numerous, economic arms simultaneously, allowing them all to come crashing down virtually simultaneously, the recovery will not be by the textbook. Economist, Investors and analysts will have to seep through the mountains of economic data to find signs of recovery. Each report will have to be compared, analyzed and interpreted. That being said, with the US showing positive signs and slow growth the news today was a bit shocking.
American Airlines Said To Cut 15,000 Jobs
In the past 5 years, we grew to expect the unexpected. Each month, we thought we had moved past the major problems and each month a new problem or crisis appeared or a prior solution had failed.
But finally, bank failures declined, job losses declined, bankruptcy filing declined and it seemed at least big business had things under control. That is not to say that they saw improvement, but they had reduced expenses, cut overheads, reduced staff and benefits. They did the same as most countries implemented “austerity” programs. The smart businesses did this while finding new area of growth or income, finding new revenue streams or increasing the value of each of their customers. Companies like AIG, Ford, the banks and brokerages that were so close to failure, found ways to flourish.
The surprise was just a few months ago, when American Airlines parent AMR, filed for bankruptcy. AMR filed for Chapter 11 bankruptcy protection on Nov. 29, 2011 surprising most in the industry.
Not much has been heard publicly since the filing, except emails and statements from AMR that the bankruptcy would not affect schedules, tickets or passengers. Day to day it was forgotten to become an uneventful financial and legal matter.
Until yesterday, when news of a meeting between AMR and labor unions reveals that Americanmay cut up to 15,000 jobs, or about 17% of its workforce, as the carrier seeks to restructure in U.S. bankruptcy court. It was reported that American told the three main union representing pilots, flight attendants and mechanics that it may seek 13,000 to 15,000 job cuts.
American is hoping to save $1.25 billion a year in employee-related costs, according to a letter from AMR Chief Executive Tom Horton. “There is no avoiding the fact that the cost reductions will be deep,” he wrote. “There is no sugarcoating the effect on our people.”
The Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union represent about 54,000 workers. The mechanics may take the biggest job hit as the company moves to shift maintenance work overseas.
All told, AMR is hoping to save $2 billion by restructuring debt and leases, grounding older planes, improving supplier contracts and other initiatives, along with layoffs.
It has long been believed that US airlines like the auto industry are plagued by employee-related costs due to union contracts and agreements made years before in different times and in different business circumstances.
Most businesses have had to streamline their employee costs, cutting benefits that were offered during boom times, or benefits whose costs have soared.
The question is what wills these layoffs due to the slowing improving US jobs market and economic situation. How does the US absorb 15,000 fewer jobs and where do these people find new jobs. Are they destined to a life on unemployment and searching for new careers?
Originally posted here
