O'Hare International Airport
The Chicago Department of Aviation announced Tuesday that the city's O'Hare International (picture here) and Midway airports are reporting more than 1,000 cancellations, and that more are likely to follow, the Chicago Tribune reported. REUTERS

AMR Corp.'s American Airlines will work to slash costs by more than $2 billion annually, the bankrupt company said Wednesday, with most of the reduced expenses coming from big job cuts.

AMR Corp. CEO Tom Horton outlined his plan for a revamped and restructured American Airlines, the nation's third-largest carrier, in a letter to employees on Wednesday. Horton did not give a specific number of job cuts, but he said the company's restructuring from bankruptcy would lead to many fewer people, including managers, at the ailing carrier.

Reuters reported that number of jobs to be cut could climb to 12,000 or 14,000.

Horton said restructuring will ultimately save many jobs.

While we are now firmly on a path to a successful growing future, we must acknowledge the near-term pain these changes will require, Horton wrote in the letter. That's especially true because we will end this journey with many fewer people. But we will also preserve tens of thousands of jobs that would have been lost if we had not embarked on this path -- and that's a goal worth fighting for. As I've said before, our objective is to create the best outcome for the greatest possible number of people.

Horton said the payroll reductions will cut costs by about $1.25 billion.

The restructuring process allows us to spread the effects of cost savings as broadly and evenly as possible, but there is no avoiding the fact that the cost reductions will be deep, Horton wrote. And there is no sugarcoating the effect on our people.

After American Airlines suffered net losses in four straight fiscal years, partly from the effects of several rivals merging, parent AMR filed for bankruptcy protection on Nov. 29.