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TheStreet Open House

AMR CEO Tom Horton Sends Letter To American Airlines Employees

Stock quotes in this article: AMR

FORT WORTH, Texas, Feb. 1, 2012 /PRNewswire/ -- Tom Horton, Chairman and Chief Executive Officer of AMR Corporation, today sent the following letter to all American Airlines employees:

Dear American Team:

Several weeks into our restructuring process we continue to make progress on a comprehensive plan to restore American to industry leadership, profitability, and growth. From my travels around the system and talking with so many of our folks, I know the fierce commitment we all share to making American a winner again. Today, I want to share with you the framework for the next steps on our path to transform American – not just to compete, but to win.

Change – a necessity, not a choice

As you know, our major competitors have used the restructuring process to overhaul their companies and become more competitive in every aspect of their business. Last week, these airlines announced their financial results, which highlighted, once again, a widening profit gap. Network carriers have benefited from investing their restructuring-driven profits in products and services that have helped drive revenue growth. And low cost airlines continue to benefit from the cost efficiency that has made them a force in our industry.

Now it is time for American to move forward on a decisive path. We are going to use the restructuring process to make the necessary changes to meet our challenges head on and capitalize fully on the solid foundation we've put in place.

Success – achievable goals, profits and growth

The key to our successful restructuring is a business plan with a clear objective. And that is to make American a world-class global airline – America's flag carrier – that is competitive, profitable and growing. To do this, we must consistently deliver:

  • A superior customer experience that earns loyalty and drives revenue
  • A work environment that recognizes excellence and rewards success
  • Attractive financial returns for our investors and stakeholders

With financial and operational flexibility and an improved cost and capital structure, we plan to:

  • Renew and optimize our fleet by investing an average of about $2 billion per year in aircraft, so that by 2017 American's mainline jet fleet will be the youngest in North America, with the versatility to match aircraft size to the markets we serve. This step is central to our transformation and means more profitable flying due to markedly improved fuel and maintenance costs, and higher revenue generation.
  • Build the scale of our network and alliances by increasing departures across American's five key markets – Dallas/Fort Worth, Chicago, Miami, Los Angeles and New York – by 20 percent over the next five years, capitalizing on our loyal customer base and world-class alliance partners, and increasing international flying.
  • Modernize our brand, products and services by investing several hundred million dollars per year in enhancements that will, once again, make American the premier airline of high-value customers.

Our business plan demonstrates that we can achieve and sustain our objectives. Ultimately, we plan to achieve a $3 billion annual improvement, including:

  • Revenue improvements of $1 billion per year through network scale, fleet optimization, and product improvements.
  • Cost savings of over $2 billion, from restructuring debt and leases, grounding older planes, improving supplier contracts and other initiatives, and necessary employee-related changes.

Importantly, these financial improvements not only support our planned investments in our fleet, product and brand; they also enable us to further reduce our debt, becoming financially stronger so that American will be resilient and able to withstand future unforeseen events.

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