From:
http://kansascity.bizjournals.com/kansascity/stories/2009/10/26/daily30.html
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Wednesday, October 28, 2009 | Modified: Thursday, October 29, 2009
American Airlines will close Kansas City overhaul base, cut 490 positions
Kansas City Business Journal - by Jerry LaMartina Staff Writer
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American Airlines Inc. will close its overhaul base at Kansas City International Airport in September, cutting about 490 local jobs.
Carmine Romano, American?s senior vice president for maintenance and engineering, said in a Wednesday letter to employees that the airline also will close the Class II station at KCI and downsize line operations in St. Louis, cutting about 80 positions there in September in response to the airline?s reduced flight schedule.
A Class II station operates on a seven-day schedule with one to three shifts and can perform basic aircraft maintenance, an American Airlines spokesman said.
Of the 490 employees at the Kansas City base, 358 are union members, the spokesman said. An unknown number of the base?s employees could be eligible for jobs elsewhere in the company based on seniority, he said.
The changes ? combined with reductions at other American Airlines bases in San Francisco, Minneapolis, Detroit and San Jose, Calif., the spokesman said ? will include a reduction of as many as 700 positions, both management and union, and could affect other employees, according to Romano?s letter.
The airline (NYSE: AMR) will offer an optional separation allowance of $12,500 for eligible employees in Kansas City and St. Louis who choose to leave the company before September.
Romano?s letter said the actions are ?to move toward a more flexible, cost-efficient operation that improves flow and takes into account the long-term impact of the recession on travel, deep capacity cuts across the industry, and a corresponding decline in the (maintenance, repair and overhaul) business, along with the changes to our network and corresponding fleet size.?
?It?s no surprise,? Mark VanLoh, director of the Kansas City Aviation Department, said. ?We didn?t know when they?d pull the trigger, but we knew it would come. As they?ve cut jobs recently, we?ve tried to prepare.?
VanLoh said that the Aviation Department has been marketing the facilility for a few years and that it showed the space to three prospective tenants during the summer.
Officials with the Transport Workers Union Local 530 couldn?t be reached for comment.
Gordon Clark, president of the local union, had said in December that American would cut 100 fewer union workers than previously expected at the overhaul base, leaving about 400 union employees.
In January 2004, American negotiated an escape hatch allowing it to cut its work force at the overhaul base to zero without repaying incentives offered by the city.
Kansas City Treasurer Randall Landes said Wednesday that the city issued $31 million in bonds in August 2005 for the superhangar portion of the city-owned overhaul facility. The state of Missouri agreed to make payments, based on state tax credits, totaling $13.3 million during three years, for upgrades to other parts of the facility, Landes said. Of that money, $8 million was spent.
The annual debt service on the bond issuance costs about $2 million, he said.
The city and the Aviation Department agreed that the department would pay for servicing the bonds, separate from the city?s general revenue fund, Landes said. If the department is unable to service the bonds, the city would be liable to do so, he said.
The Aviation Department plans to render the bonds void, VanLoh said, and will have to pay an undetermined fee.
Earlier this month, American Airlines? parent company, AMR Corp. (NYSE: AMR), reported a loss of $359 million, or $1.26 a share, for the third quarter. The company had revenue of $5.1 billion for the quarter, down 20 percent from the same period last year.
Click here to read Romano?s letter.
jlamartina@bizjournals.com | 816-777-2204
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Draw your own conclusions.
