Chief Executive Tom Horton broke the news in a letter to employees on American's business strategy for competing with U.S. rivals who took similar steps in recent years to slash operations and clean up their balance sheets.
American has said it suffers from higher labor costs than its peers and filed for Chapter 11 protection from creditors in November.
Horton said the carrier was aiming for $2 billion in overall annual cost reductions, including $1.25 billion in employee-related expenses. American also plans on restructuring debt and leases as well as grounding older planes.
Total employee-related costs will be reduced by roughly 20 percent across the board, including management.
American also wants to generate $1 billion per year in new revenue through changes in its network, fleet utilization and product improvements.
Part of American's cost-cutting strategy will involve slashing its work force by more than 10,000 employees, or 10 to 15 percent, according to analysts and other insiders.
Horton did not address job reductions in his letter. He also did not touch on the possibility of slashing employee pension plans, which the U.S. government expects the company to try to do during bankruptcy.
(Reporting By Kyle Peterson; Editing by Mark Porter)