An American Airlines booking centre in central Dublin will not be affected by 7,000 redundancies announced by the airline yesterday, a spokeswoman said. About 253 people are employed at the office on Lower Mount Street.
The redundancies are confined to the US, the spokeswoman added. The cutback announcement follows a decision on Monday by US Airways to file for Chapter 11 bankruptcy protection. That move renewed concerns that United Airlines, which is also struggling, might file for bankruptcy before the end of the year. The company faces huge cash outlays in the last three months of the year.
In addition to axing 7,000 jobs, American Airlines plans to reduce domestic capacity by 9 per cent by November in a bid to restore profitability. It expects the cuts to save more than $1.1 billion in annual operating costs.
The carrier has been hit by sluggish business travel demand and low-cost competition as well as the decline in air travel that followed the September 11th terrorist attacks.
Last month Mr Don Carty, chairman and chief executive of American, warned the airline could not "wait [for consumers] to get over their 9-11 jitters or for a cyclical economic recovery to bail us out. We must face up to the need for fundamental changes in the way we do business."
Mr Geoff Campbell, finance director, who has not ruled out further job cuts, said the usual seasonal decline in capacity was about 2 per cent, "so the 9 per cent fall is a stark reduction, but it is clearly an action that is prudent to take."
The shares rose 5 per cent to $8.77 in early trading. The cuts also reflect an attempt to tackle competition from low-cost carriers. Some 75 per cent of American's routes compete directly with low-cost carriers compared with 65 per cent last year.
This week US Airways filed for bankruptcy protection while United Airlines, the second biggest carrier, has also sought $1.8 billion of federal loan guarantees, saying it could not access capital markets at reasonable rates.
Mr Campbell said American had continued to access the capital markets, raising $500m in tax-exempt financing in July and a further $1.9 billion in secured financing since September 11th.
American will also retire its entire fleet of 74 Fokker jets as part of a wider fleet simplification, and reconfigure aircraft with fewer first class seats. It has deferred 35 aircraft deliveries in 2002 and said it would also seek to defer or cancel new deliveries.
These should reduce capital spending by $1.3 billion on top of $5 billion of cuts already announced, it said.