American Airlines warns 25,000 employees about potential job cuts as coronavirus continues to sap demand
- U.S. airlines have urged employees to take buyouts or early retirement packages to cut costs.
- American told employees earlier this month that it expects to be overstaffed by more than 20,000 people this fall.
- Carriers are prohibited from laying off workers until Oct. 1 under the terms of $25 billion in federal payroll support.
American Airlines on Wednesday warned about 25,000 front-line employees — roughly 29% of its U.S. mainline workforce — that they could be furloughed this fall, the latest carrier to prepare staff for job cuts as surges in coronavirus cases dash hopes for a quick rebound in travel demand.
The airline also urged employees to take new extended leaves that can last up to two years or early retirement packages to get as many people off payroll as possible before having to involuntarily cut their jobs.
American's revenue in June was down more than 80% than a year ago, CEO Doug Parker and President Robert Isom said in a note to staff.
"And with infection rates increasing and several states reestablishing quarantine restrictions, demand for air travel is slowing again," they wrote.
An average of about 672,000 people a day passed through Transportation Security Administration checkpoints in the first two weeks of July, down 73% from the same period a year ago.
Airlines are prohibited from cutting jobs or pay rates of workers through Sept. 30 under the terms of $25 billion in federal payroll support. Parker and Isom supported calls from lawmakers and unions on extending that aid through the end of March 2021.
The WARN notices will go to 37% of American Airlines' flight attendants, or 9,950 people and to 2,500 of its pilots, or 18%, 3,200 maintenance workers and 4,500 fleet service employees, among others.
The Worker Adjustment and Retraining Notification Act requires employers to notify staff about possible layoffs or temporary furloughs generally 60 days in advance. The workers told their jobs are at risk won't necessarily be laid off.
"This is brutal news," said Dennis Tajer, spokesman for the Allied Pilots Association, which represents some 15,000 American Airlines pilots. He said such deep cuts to pilot ranks could hurt the airline's chances of capitalizing on a rebound in demand "when we get on the other side of this crisis." The union is asking American's management to broaden early retirement packages to more pilots.
Julie Hedrick, president of the Association of Professional Flight Attendants, the union that represents American's cabin crew said the union is also pushing for Congress and the Trump administration to extend payroll support "to help keep aviation front-line workers connected to their pay and benefits as we deal with reduced demand as a result of the pandemic."
Fort Worth, Texas-based American earlier this month said it has around 20,000 more employees than it needs for its reduced fall schedule. CNBC reported earlier this week that the notices were forthcoming.
United last week told close to 36,000 employees — nearly 40% of its workforce — that they could be furloughed and Southwest Airlines on Monday told staff that the carrier needs passenger numbers to triple by the end of the year to avoid layoffs or furloughs.
Delta Air Lines on Tuesday said some 17,000 employees have volunteered to leave the company and that it aims to avoid involuntary furloughs when the federal aid terms expire.
American Airlines' shares were down about 3% in postmarket trading.