American Airlines to cut 1,100 jobs

THE airline company seeking to open two new routes between Ireland and the US is expecting huge fourth-quarter losses and planning to lay off at least 1,100 workers.

Texas-based AMR Corporation last month revealed third-quarter losses of $214 million (€166m) and said it expected “significantly larger” losses in the October-December period.

Chairman and chief executive Gerard Arpey said the company would see “more cuts across the board, all workers, in the months ahead”.

AMR had already announced plans to lay off as many as 650 mechanics and 450 pilots.

AMR is the parent company of American Airlines, which has applied for licences from the US Department of Transportation to introduce two new routes into Ireland in 2005.

Licence approval will not automatically guarantee that the Boston-Shannon and Chicago-Dublin services go ahead, however.

They are just two of a number of new international routes which American, the world’s largest carrier, is considering as it attempts to boost revenues.

Seat sales on domestic routes have shrunk, principally as a result of tough competition from low-cost carriers.

As a result, American is seeking to expand its overseas routes, where it has seen revenues grow.

In addition to targeting new routes in Europe, it will also seek to continue its expansion into the growing Asia/Pacific market.

New routes and lay-offs are just two in a series of steps that AMR is taking to increase revenues, cut costs and put its airlines on a stronger financial footing.

American, for example, is adding back a number of seats previously removed from its MD80, 737, 767 and 777 fleets in a bid to increase ticket sales.

It has also announced plans to charge passengers between $10 (€7.76) and $12 (€9.32) for use of a new handheld entertainment system.

But further oil-price hikes could negate any moves the company makes to increase receipts.

It is estimated that American will spend $1.2 billion (€932m) more on jet fuel this year than it did in 2003.

“The harsh reality is that despite our tremendous progress to date, our cost structure remains too high for us to succeed in a world where the price of oil is at such an extraordinary level,” Mr Arpey told investors last month.