AirTran Airways Plans 5% to 15% Pay Cuts, Furloughs Expected

AirTran Airways Inc (NYSE: AAI) announced Wednesday that the company plans to cut employee pay by 5 percent to 15 percent.

AirTran said officers will take 15 percent pay cuts, and most employees will see pay cuts of 5 percent or 8 percent. Higher-paid employees would see higher pay cuts. AirTran spent $451 million on wages last year.

However, 48 percent of AirTran's work force is represented by unions, so the company will have to negotiate the pay cuts with the unions.

AirTran said it expects the pay cuts to go into effect in August and aims to cut its overall pay rate by 10 percent for six months. The company, which currently has about 8,900 employees, will then review the move again.

The move comes on top of AirTran's decisions to trim capacity-growth plans by 15 percent and shrink its fleet by as much as 8 percent after jet-fuel prices jumped 88 percent in the past year.

AirTran is also expected to announce furloughs of employees, but has not released any information. The airline had planned to grow capacity by 10 percent, but is instead cutting it by 5 percent.

AirTran stock prices dropped 3.4 percent to $1.94, as of 1:40 p.m.

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