American Airlines to cut 8% of staff

The airline plans to cut nearly 7,000 jobs to offset the pain of rising fuel prices, on top of previously announced capacity reductions.

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By Aaron Smith, CNNMoney.com

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NEW YORK (CNNMoney.com) -- American Airlines said on Thursday that it plans to cut nearly 7,000 full-time employees, or 8% of its total staff, by the end of 2008.

AMR Corp., (AMR, Fortune 500) owner of carriers American Airlines and American Eagle, will eliminate about 8% of its 85,000 workers, spokesman Tim Smith told CNNMoney.com. This means that 6,800 workers could lose their jobs.

This reductions follow the airline's Wednesday report that it may cut up to 900 flight attendant jobs, or 5% of its 18,000 active flight attendants roster. Also on Wednesday, carrier AirTran Airways (AAI) said it was seeking to slash overall employee pay by 10%.

Airlines are getting badly squeezed by fuel prices. Southwest Airlines (LUV, Fortune 500) is an exception. The airline has remained profitable because it successfully hedged fuel costs to avoid the high prices. The Air Transport Association expects fuel expenses to total $61.2 billion this year, compared to $41.2 billion in 2007.

Like most of the money-losing airlines, AMR said in June that it would cut capacity, or its total number of flights, to offset the rising cost of fuel. AMR said it would reduce domestic capacity by 11% or 12% by the fourth quarter.

The least fuel efficient flights are being targeted. AMR said it was trimming back flights at hubs in Chicago, St. Louis, Dallas-Fort Worth and at Laguardia Airport in New York City. Also, American plans to shut down all service to airports in Oakland, Calif., and Barranquilla, Colombia, as well as London's Stansted Airport. American Eagle is eliminating service to Albany, N.Y., Providence, R.I., Harrisburg, Pa., San Luis Obispo, Calif., and Samana, Dominican Republic.

Meanwhile, the airlines with the highest annual sales - including Delta Air Lines (DAL, Fortune 500), UAL Corp.'s (UAUA, Fortune 500) United Airlines, Continental Airlines (CAL, Fortune 500), Northwest Airlines (NWA, Fortune 500) and US Airways (LCC, Fortune 500) - also all announced capacity reductions in June. To top of page

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