Posted on: Tuesday, December 17, 2002

CEO: American Airlines to focus on cutting costs

By Cheryl Wittenauer
Associated Press

ST. LOUIS — American Airlines chief executive Don Carty told Missouri employees yesterday that the world's biggest airline will not file for bankruptcy and that the St. Louis hub will continue to be a major part of the company's long-term strategy.

Carty also said there will be no pay increases in 2003 as American looks for ways to cut $4 billion in annual costs amid a crisis in the airline industry. American's management team has found about half that total and is asking employees to suggest other cost-cutting ideas.

Carty said those might include changing pilots' work rules, outsourcing some tasks at headquarters and job cuts.

"Everything is on the table," he said, adding that long-term cost-cutting will arise from more automation in passenger check-ins and other efficiencies.

He said American's problem isn't with revenue but rather with costs. "In the third quarter, we were burning $5 million a day," he said.

Carty met for two hours in private talks with about 350 employees of American's third-largest domestic hub, including pilots, flight attendants, mechanics and baggage handlers. He has held similar sessions to discuss the company's financial status with employees in Fort Worth, Texas, Chicago and New York.

The carrier hopes to convince its labor unions that concessions are critical to American's survival.

The Fort Worth-based airline lost almost $3 billion from January through September, and some analysts project it will lose $588 million in the current quarter.

Carty said American doesn't plan to follow United Airlines into bankruptcy court.

He said the airline has never run as well as it is now and that St. Louis is its best-performing hub. American acquired the hub with its purchase of Trans World Airlines.

Pilot Bob Thompson said it was good to hear straight talk to quell rumors and misinformation that have been circulating internationally.