May 21, 2008
Eagle and Executive Employees,
At today's annual stockholder's meeting, AMR announced its decision to make even deeper capacity cuts for the fourth quarter of this year than previously announced. The rapid growth in jet fuel prices, combined with the weakening economy, has created very difficult conditions for airlines in the United States .
The fuel price impact from January to March was up more than $660 million dollars for AMR compared to prices paid during the same period last year. As we all know, prices for jet fuel – as well as for gasoline – have increased even further in April and May. Although AA has raised prices several times and increased various customer fees, total revenues have not kept pace with expenses. AMR's loss of $328 million during the first quarter was alarming and the continued increase in fuel prices and signs of economic softness are further cause for concern.
Under these conditions, many of AA's and Eagle's routes do not generate enough revenue to pay for variable expenses such as fuel, landing fees, taxes and the salaries of our crews and other operational personnel. As a result of these facts, and to ensure that AMR has enough financial resources to weather this storm, it has decided to reduce its system-wide capacity.
While AA has not made final decisions on the specific schedule changes, it expects to cut 11 percent to 12 percent of fourth quarter domestic mainline capacity from 2007 levels and has directed Eagle to reduce our schedule by approximately the same percent. As a result of these reductions, American plans to retire 40 to 45 mainline aircraft and the regional network will be reduced by 35 to 40 regional jets, as well as some number of turbo-props.
Unfortunately these capacity reductions will result in layoffs at both American and American Eagle – and could result in facility closures or consolidations. As we get a better understanding of the new schedules and carefully evaluate our staffing requirements by work group and by location over the coming weeks, we will communicate specific changes as quickly as we can.
I am grateful for the excellent work Eagle's people do. You are making a difference every day by ensuring that every trip and every job is performed safely, by caring for our customers and finding ways to complete our work efficiently under challenging conditions. I am confident that we will adapt to the changes announced today as well as to the outcome of the ongoing divestiture process and that Eagle will be one of the world's safest, most reliable and successful regional airlines.
Thank you for all your efforts.
Sincerely,
Peter Bowler
President and CEO
Eagle and Executive Employees,
At today's annual stockholder's meeting, AMR announced its decision to make even deeper capacity cuts for the fourth quarter of this year than previously announced. The rapid growth in jet fuel prices, combined with the weakening economy, has created very difficult conditions for airlines in the United States .
The fuel price impact from January to March was up more than $660 million dollars for AMR compared to prices paid during the same period last year. As we all know, prices for jet fuel – as well as for gasoline – have increased even further in April and May. Although AA has raised prices several times and increased various customer fees, total revenues have not kept pace with expenses. AMR's loss of $328 million during the first quarter was alarming and the continued increase in fuel prices and signs of economic softness are further cause for concern.
Under these conditions, many of AA's and Eagle's routes do not generate enough revenue to pay for variable expenses such as fuel, landing fees, taxes and the salaries of our crews and other operational personnel. As a result of these facts, and to ensure that AMR has enough financial resources to weather this storm, it has decided to reduce its system-wide capacity.
While AA has not made final decisions on the specific schedule changes, it expects to cut 11 percent to 12 percent of fourth quarter domestic mainline capacity from 2007 levels and has directed Eagle to reduce our schedule by approximately the same percent. As a result of these reductions, American plans to retire 40 to 45 mainline aircraft and the regional network will be reduced by 35 to 40 regional jets, as well as some number of turbo-props.
Unfortunately these capacity reductions will result in layoffs at both American and American Eagle – and could result in facility closures or consolidations. As we get a better understanding of the new schedules and carefully evaluate our staffing requirements by work group and by location over the coming weeks, we will communicate specific changes as quickly as we can.
I am grateful for the excellent work Eagle's people do. You are making a difference every day by ensuring that every trip and every job is performed safely, by caring for our customers and finding ways to complete our work efficiently under challenging conditions. I am confident that we will adapt to the changes announced today as well as to the outcome of the ongoing divestiture process and that Eagle will be one of the world's safest, most reliable and successful regional airlines.
Thank you for all your efforts.
Sincerely,
Peter Bowler
President and CEO
