Dallas American Airlines will close a maintenance base in Kansas City, Mo., and shrink other repair shops next September as the slump in travel leaves fewer planes to maintain.
The moves will eliminate up to 700 jobs nationwide, about 5 percent of American’s maintenance work force, the company said Wednesday.
Maintenance senior vice president Carmine J. Romano said in a letter to employees that the closures were “a difficult but important step” to reduce maintenance operations as American cuts back on flights because of the yearlong slump in travel.
American has major maintenance bases in Tulsa, Okla., and Fort Worth, Texas. It considered closing one of the bases for several years, but didn’t after picking up work on other airlines’ planes in Tulsa.
The airline said Wednesday that by next September it will also close smaller maintenance stations at airports in Kansas City, Detroit, Minneapolis and San Jose, Calif., and shrink stations in St. Louis and San Francisco.
American’s fleet has dwindled from more than 900 planes to about 600 over the past decade as it has been rocked by the 2001 terror attacks, two recessions, more competition from low-fare carriers, and a sharp decline in business travel.
American parent AMR Corp., based in Fort Worth, has lost $1.1 billion so far this year after losing $2.1 billion last year. Revenue is down 19 percent this year.
American officials said they tried to keep the Kansas City base open by finding work repairing planes for other airlines. Spokesman Tim Wagner said the company had made about a dozen bids in the past 10 months, but “we just didn’t win any of them because our labor costs are too high compared to offshore” shops.
The airline signed a 25-year lease on the building in 2005 that called for annual rent of $1 million, with the payments rising if employment fell below 700 workers. The city was to issue at least $40 million in bonds for renovations, with another $37 million in bonds available if American needed future upgrades.
Mayor Mark Funkhouser said he didn’t blame American for leaving, but the city expects American to honor lease payments of more than $1 million a year through 2029.
The huge, saddle-shaped building has been an economic fixture in Kansas City since the 1950s and was operated by TWA before AMR bought that airline out of bankruptcy in early 2001.