NEWS
AA reorganization includes plan to cut jobs, ‘modernize’ brand
By Jay Boehmer
American Airlines parent AMR
Corp. on Feb. 1 outlined key objectives for its Chapter 11 reorganization, including plans to cut
employment by 13,000, increase
departures in key markets, “
modernize” its brand and continue
the fleet-renewal efforts it announced last year.
All told, American by 2017
seeks to achieve $3 billion in
“annual improvement,” CEO
Tom Horton told employees in a
memo last week.
While $1 billion of that would
come from additional revenues
“through network scale, fleet optimization and product improvements,” the carrier expects to
achieve the remainder by attacking costs.
Chief among those, American
plans to cut “employee-related
costs” by “more than $1.25 billion
per year,” according to Horton.
American’s senior vice presi-
dent of human resources, Jeff
Brundage, told employees in a
separate memo that AMR man-
agement “met with each of the
unions and shared proposed
changes to our current agree-
ments to achieve the necessary
cost reductions. Every work-
group, including management,
must reduce its total costs by 20%
in order to achieve this goal.”
Of the 13,000 cuts planned,
9,000 are Transport Workers
Union members, according to
TWU International President
James Little, who during a press
conference on Feb. 1 said, “We’re
going to fight this. We’re going to
fight it on behalf of the employ-
ees that we represent.”
He called AMR management
“disingenuous,” alleging the
company filed for bankruptcy as
a way to renegotiate with labor
groups.
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tracts under the bankruptcy code.”
While several analysts viewed
American’s bankruptcy as a
means to shed capacity, Horton
shared plans to increase capacity
by 20% during the next five years
at its five “cornerstone” markets
of Chicago, Dallas, Los Angeles,
Miami and New York.
This report originally appeared
in Travel Weekly’s sister publication Business Travel News.
OBITUARY
Sorensen, YTB co-founder
J. Kim Sorensen, co-founder and
vice chairman of YTB International and president of the controversial YTB Travel Network,
died Feb. 1 at the age of 62.
YTB, a multilevel marketer
based in Wood River, Ill., was
founded in 2001. Three years
later it merged with
The company op-
erated under a re-
ferring travel agent
model and had an
often-uneasy relation-
ship with other travel
agents, former mem-
bers and some sup-
pliers, including some
who alleged that the company
was more interested in signing
up new members than selling
travel and was running a pyra-
mid scheme.
But it recruited thousands of
agents and claimed hundreds of
J. Kim Sorensen
Co-founder
YTB International
millions in travel sales, ranking
No. 34 on Travel Weekly’s Power
List last year.
Sorensen told Travel Weekly
last year that “Our best year was
$425 million in 2007.”
In late 2011, YTB Interna-
tional agreed to sell its travel
operation to Sixth
Scott, which said it
would operate under
the name First Travel
Alliance.
Services for Sorensen, who lived in
Moro, Ill., had not
been finalized at press
time.
“While he will forever be remembered
as our fearless founder
… we all know that he was much
more than that,” YTB International said in a statement. “A
great man, to say the least, Kim
was a husband, father, grandfather and dear friend to so many
of us.”
New York’s Knickerbocker to return
FelCor Lodging Trust acquired
the midtown Manhattan
building that once housed the
Knickerbocker Hotel for $115
million and plans to spend
another $115 million converting
the building back into a luxury
hotel. The hotel, at Broadway
and 42nd Street, will keep the
Knickerbocker name and will
have 330 rooms and a rooftop
bar. It was opened in 1906 by
billionaire John Astor IV, who
died six years later onboard
the Titanic. The building was
later converted into an office
property. FelCor, which is
making a push for more urban
locales, last year acquired two
other New York properties, the
Royalton and the Morgan.
