American Airlines Will Furlough Up To 25,000 Workers This Fall


“The potential cuts American Airlines is preparing for would affect about 29% of the airline’s front-line workers.”

According to The Wall Street Journal, American Airlines Group Inc. told 25,000 workers “that their jobs are at risk after federal aid expires Oct. 1, as air-travel demand falls again amid climbing coronavirus case numbers.”

Airlines are struggling to grapple with “how deeply to make cuts to hold on to enough cash to survive,” wrote The Journal. “The pandemic has caused a rout for air travel deeper and more persistent than almost anyone anticipated. Executives expect it could take years for travel demand to return to its 2019 highs.”

American said in a letter to employees Wednesday that “it expects to have 20,000 more employees than it needs this fall,” the report continued. The Fort Worth, Texas-based carrier sent notices for “potential furloughs to 25,000 of its employees as stipulated by federal labor laws. The figure includes airport and technical operations workers who could be shifted to other locations.”

US carriers received “$25 billion in government aid to cover most of their payroll costs under the broad $2.2 trillion stimulus package approved in March. They agreed not to furlough any workers until the funding runs out Oct. 1. American Chief Executive Doug Parker and President Robert Islom said Wednesday in the letter to employees that passenger demand has started to slow again as infection rates rise,” The Journal reported. “American’s passenger revenue in June was down 80% from the same month in 2019.”

“We had a stated goal of avoiding furloughs because we believed demand for air travel would steadily rebound by Oct. 1 as the impact of Covid-19 dissipated,” Messrs. Parker and Isom wrote. “That unfortunately has not been the case.”

“Unions representing flight attendants, pilots and others are seeking to get federal payroll support extended another six months. American executives voiced support for the effort Wednesday,” according to The Journal. Rep. Peter DeFazio (D-OR), chairman of the House Committee on Transportation and Infrastructure, and six other lawmakers this week “backed a move to extend the aid due to expire Oct. 1, writing in a letter that more funding is needed to prevent hundreds of thousands of job losses.”

Read the full report here.


Economics, Finance and Investing