Airline Bankruptcy Leads To More Layoffs

Just weeks after the American Airlines bankruptcy filing, more announcements come regarding employee layoffs and cutbacks. Having already laid off several pilots and flight crew from their sister airline, American Eagle, AMR is planning to cut another 150 employees by the end of the week.

Questionable Efforts

There are many concerns over some of the bankruptcy decisions being made, such as hiring expensive financial advisers and shutting down flight routes to major hubs.  Already working with Rothschild Inc. for a $400,000 retainer fee plus $200,00 a month in service fees, AMR plans to hire Skyworks Capital for over $6 million to help with its Chapter 11 restructuring efforts.

How do they plan to pay for these expensive financial services?

For one, American has begun terminating vacant lease operations in airports that have been unused for the last several years. Some major international and continental routes have been closed, along with selling off some of its older fleet models. As for employees, more news of layoffs are imminent around the corner, where the additional 150 layoffs this week are expected to be just the tip of the iceberg. AMR remains steady by the claim that further layoffs should are not expected and the current 150 are simply due to the loss of a major business contract with the United Postal Service. After the USPS bankruptcy threat looming, American lost major business in the Postal Service’s decision to cut their own expenses by way of airline contracts.