(Reuters) - AMR Corp, the bankrupt parent of American Airlines, said on Tuesday it eliminated five senior jobs as part of its restructuring and that its lead labor strategist would step down.
The cuts, combined with the previously announced departure of other managers, represents a “20 percent reduction in the company’s most senior leadership positions,” AMR said in a statement. An AMR spokeswoman said eight or nine management jobs had been cut so far.
AMR filed for bankruptcy in November, citing a need to slash uncompetitive costs. The company has said it intends to cut its overall costs by $2 billion a year. More than half of that amount will come from labor costs.
“Redesigning the organization will help accelerate our progress toward profitability and success,” said AMR Chief Executive Tom Horton in a letter to employees. “Every step increases our clarity of purpose and helps speed decisions in the interest of best serving our customers.”
Among the five departing executives are David Brooks, American’s President - Cargo, and Susan Garcia, American’s Vice President - Information Technology.
In the same statement, AMR said Jeff Brundage, who is AMR’s Senior Vice President of Human Resources, has been replaced in his role by Denise Lynn, who will carry the job title Senior Vice President - People.
The company did not say why Brundage was replaced. He will not immediately leave the company.
“For now, I‘m not going anywhere and will continue to work with many of you on the needed changes,” he said.
Robert Mann, an airline consultant and former AMR executive, said Brundage’s departure is ironic amid the ongoing labor clash between AMR and its management.
As AMR overhauls its management team, the airline is battling its unions in court over its request to void their labor contracts if workers do not willingly make the concessions the company says it needs to survive.
American has been locked for years in fruitless negotiations with its three labor unions, which represent pilots, flight attendants and several classifications of ground workers. The airline won steep concessions from labor in 2003 as it dodged bankruptcy at the time.
The carrier has about 74,000 full- and part-time workers. The company has said it must cut 13,000 union jobs.
Against this backdrop, rival airline US Airways Group is hoping to jumpstart merger talks with AMR, which so far has shrugged off the interest.
To further that goal, US Airways last month struck deals with AMR’s unions, which say US Airway’s plan save more jobs than AMR could through its stand-alone plan.
The unions each have seats on AMR’s creditors committee, meaning they have a say in how AMR exits bankruptcy. For now, however, the carrier has the exclusive right under bankruptcy law to reorganize without interference from outsiders.
The airline says it still hopes to reach consensual deals with its workers. AMR has presented what it calls its last and best offer to the Transport Workers Union, which represents 26,000 workers in seven work groups American Airlines.
A TWU spokesman on Tuesday said information on AMR’s offer will be sent by mail to members this week with voting set to begin next week.
American Airlines is the third-largest U.S. airline. It had been the only major U.S. airline to avoid Chapter 11 in the last decade, a factor that gave rivals a cost advantage.
Reporting By Kyle Peterson in Chicago; editing by Andre Grenon, Bernard Orr