Boston Consulting is helping American decide which executive and support staff to cut in this latest round of layoffs. Plans call for at least at 15% reductions at locations across the U.S.
Source: Tulsa World
By D.R. Stewart
A fourth round of management layoffs became effective at bankrupt American Airlines on Wednesday, although company executives provided no details on numbers or locations affected.
Management layoffs had been expected at American’s Maintenance & Engineering Center at Tulsa International Airport, where 7,000 people are employed.
American said it needs cuts of 13,000 employees from its work force of 72,872 and labor cost reductions of $1.25 billion a year to be competitive in the airline industry. The company also seeks $1.75 billion a year in other cost savings and a $1 billion a year increase in revenue to emerge successfully from bankruptcy, company executives said.
The management redesign effort, which was announced earlier this year and is expected to be completed by late summer, will reduce executive and support staff at the nation’s third largest airline by 1,400 people, or 15 percent, company executives said.
In an email letter to employees Wednesday, Denise Lynn, senior vice president — people, said, “The company’s organizational redesign continues today with the announcement of layer 4 of the Management and Support Staff Redesign. This process is a major aspect of our restructuring as we reshape our organization to meet the needs of our airline for the future.
“While many layer 4 changes will involve lateral moves for people within their existing level, several departments are seeing significant change. More than a quarter of the layer 4 positions will be filled by new leadership and almost everyone will have additional responsibility.”
Although sources at American confirmed the management shakeup was occurring throughout the system, they declined to name managers who had been cut or reassigned other duties.
“They are moving people around,” said Chuck Schalk, vice president of Transport Workers Union Local 562 at John F. Kennedy International Airport in New York. “Part of the business plan should have been management reduction. We have been complaining for years that we are over-managed.
“We have two managers and three supervisors for 45 guys. We used to run with one supervisor in the 1990s when we had 70 mechanics.”
The management restructuring is being orchestrated by Boston Consulting Group, which is assisting American’s parent AMR Corp. in redesigning and realigning the company’s management structure in a process known as the “cascade project,” bankruptcy court documents show.
“The cascade project will enable the debtors to, among other things, ensure that the right management teams are working on the right tasks; design a management structure that fosters accountability and high performance, adaptability and fast, effective decision making; and create an efficient cost structure,” AMR said in its application to employ BCG.
American’s Lynn, in the email to employees, said the company’s management structure will continue to evolve with each phase of the redesign.
“The need to reduce positions, and the impact this has on people, in this layer and throughout the process is difficult, without a doubt,” Lynn said. “Despite these changes, I’m pleased that we have taken advantage of the shifting structure to provide opportunities for our people where possible. The leaders announced today are a strong reflection of the future of our airline, and I’m encouraged to see the new management team continue to take place.”
In the Boston Consulting Group’s “cascade” management restructuring, the redesign began at the senior management level and is working downward through lower management levels, court documents show.
Each successive management level redesigns and staffs the next lower level, court filings say.
Lynn said the next phase of the management restructuring — layer 5 — is expected to take from four to five weeks, with changes announced by mid-July.
D.R. Stewart 918-581-8451
The Daily Newsletter
Our daily coverage of the global travel industry. Written by editors and analysts from across Skift’s brands.
Have a confidential tip for Skift? Get in touch