According to an article in the Star-Telegram, American Airlines has cut its fleet from 900 planes to 600. Because it has fewer planes, the company announced 700 job losses and the closure of its Kansas City maintenance base. The job losses will affect mechanics, engineers, management as well as union and non-union workers. No job losses have been announced for the Fort Worth maintenance facility; but if the airline industry continues to lose money during this recession we can expect more job losses and even more bankruptcies over the next year or two.
The airline industry has had a pretty rough ride during this recession as fuel costs have increased, credit availability has tightened and passengers have suffered their own personal battles with job losses and other financial issues. For airlines that recently emerged from bankruptcy, the timing is almost perfect. Using bankruptcy they were able to position themselves well by reducing their debt and labor costs which gives them more leverage during tough economic times. Many of the airlines that recently emerged from bankruptcy might not have survived without the help of their debt reorganization. Also, many of the airlines were able to renegotiate labor contracts and implement job losses in Chapter 11 bankruptcy which would have been costly if not nearly impossible outside of bankruptcy.