American Airlines says it's overstaffed by 20,000 employees for fall schedule

Key Points
  • American and its competitors are trying to reduce head count because of weak travel demand.
  • U.S. carriers are prohibited from laying off or cutting the pay rates of staff through Sept. 30 under terms of $25 billion in federal aid.
  • American said it reduced its daily cash burn from $100 million a day in April to less than $35 million a day in June.
An airline employee walks past empty American Airlines check-in terminals at Ronald Reagan Washington National Airport in Arlington, Virginia, on May 12, 2020.
Andrew Caballero-Reynolds | Getty Images

American Airlines on Thursday told staff it has more than 20,000 employees it doesn't need for its reduced fall schedule as the carrier and its competitors face weak demand for air travel during the coronavirus pandemic.

The Fort Worth, Texas-based carrier and other U.S. airlines are urging employees to take buyouts or early retirement options to reduce head count before turning to involuntary measures like layoffs. 

U.S. carriers are prohibited from laying off or cutting the pay rates of their staff through Sept. 30 under the terms of $25 billion in government payroll support aimed at softening the impact of the virus on their business. American had 133,700 employees as of the end of last year.

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"We currently anticipate having 20 to 30% — or more than 20,000 — more team members on payroll than we need to operate our schedule this fall," CEO Doug Parker and President Robert Isom said in a staff note. "To be clear, this doesn't mean 20,000 of our team members will be furloughed in October, it simply means we still have to work to do to right-size our team for the airline we operate."

American and its competitors have been shoring up liquidity and cutting costs as demand remains a fraction of 2019 levels, even for the peak summer travel season.

American and four other airlines reached agreements for portions of $25 billion in federal loans to weather the crisis, the Treasury Department said Thursday. American said it expects to finalize the loan in the third quarter.

At the depths of the demand crisis in April, American had around $11 million in cash receipts, which rose to $358 million in May and more than $1 billion in June, the executives said.

"While that improvement is encouraging, it's compared to an average of $4.2 billion each month during the same period in 2019, so we have a ways to go," Parker and Isom wrote.

The carrier was burning less than $35 million a day at the end of June, down from $100 million a day in April, they said.

American expects international travel demand will stay muted into next year. Earlier this week, it said its long-haul international schedule in summer 2021 would be down 25% from what it offered in the 2019 season and that it would cut 19 routes.

The carrier is also planning to reduce wide-body cabin crew staffing for international and transcontinental routes and will shrink some of its flight-attendant bases and scrap bases in the Raleigh-Durham, North Carolina, area and in St. Louis.

United Airlines, for its part, is also also encouraging staff to take buyouts, telling employees this week that it will accept applications through July 15 and that their last day on the job, if their applications are accepted, will be July 29. 

"We expect that this will be the last [voluntary separation program] extension and there will be no further voluntary offerings," the airline said in a note to staff. "As we shared in this June 15 message, we are likely to issue notices, pursuant to the Worker Adjustment and Retraining Notification (WARN) Act, to some employees this month that signal potential involuntary furloughs that are effective October 1."

Delta Air Lines last week said more than 2,500 pilots would receive WARN Act notices early this month about possible furloughs.

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