IBM, American Air Parent in $217M Deal

AMR Corp., the parent of American Airlines, is hiring International Business Machines Corp. to perform some of its personnel chores in a $217 million deal that will run for 7 1/2 years, the companies said Friday.

AMR expects that hiring an outside firm to do the work will save it $60 million over the length of the contract, said AMR spokeswoman Sue Gordon.

Separately, American Airlines said it planned to restore more than 60 maintenance workers in Tulsa, Okla., to higher-paying jobs as full technicians and recall others to take the lower-skilled positions.

Company officials credited the recalls to an effort by American and the Transport Workers Union to improve productivity at the site. Workers in Tulsa are installing fuel-saving winglets on American jets, and the airline is also attracting work on planes owned by other carriers.

About 18 months before the IBM deal, Fort Worth-based AMR decided to seek outside help for some of its personnel functions in North America, including training employees and operating centers that workers call with questions about benefits.

American has about 200 employees who do that work now. About 10 to 20 will transfer to IBM, and the other jobs will be phased out over the next 18 to 24 months, Gordon said. She said American expected to offer other jobs to the displaced workers and didn't foresee layoffs.

AMR got proposals from IBM, Electronic Data Systems Corp. and other outsourcing firms, Gordon said.

Armonk, N.Y.-based IBM has signed similar deals in the past year to provide back-office help for Avon Products Inc. and CVS Corp. and to run Delta Air Lines Inc.'s computer systems. Financial terms of those deals were not disclosed.

IBM and EDS are aggressively pursuing so-called business-transformation outsourcing deals like the one with AMR to offset slower growth in other parts of their business.

American, the nation's largest airline, has more than 88,000 employees in the United States and Canada.

AMR shares were down 77 cents, 2.3 percent, to $32.96 in afternoon trading on the New York Stock Exchange. IBM was down 46 cents at $91.81.


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